Legislature(2015 - 2016)CAPITOL 106
03/24/2015 03:00 PM House HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s): | |
| HB148 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 148 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 148-MEDICAL ASSISTANCE COVERAGE; REFORM
4:32:46 PM
CHAIR SEATON announced that the final order of business would be
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."
4:33:36 PM
VALERIE DAVIDSON, Commissioner Designee, Office of the
Commissioner, Department of Health & Social Services, said the
bill provided for health care reform in the Medicaid Program,
and improved the health of Alaskans by extending health care
coverage through Medicaid expansion for up to 42,000 Alaskans
who were eligible. She noted that the bill also identifies
savings through the fiscal notes identified earlier by
recognizing savings opportunities that can be transitioned to
Medicaid simply because the federal government will be paying
that portion. She further noted that it infuses approximately
$1.1 billion in federal resources into the Alaska economy for
the initial five - six years. She explained that HB 148
improves health coverage through expansion, and covers
individuals with incomes up to 138 percent of the federal
poverty level. She remarked that technically it is 133 percent
plus a 5 percent disregard. She related that eligible
individuals are single adults with annual incomes of up to
$20,314 per year, with an approximate hourly earnings of $9.76
per hour based upon a 40-hour work week. She offered that a
married couple earning a combined income of approximately
$27,490 per year, or a combined hourly income of $13.21 per hour
based upon a 40-hour work week [is eligible]. It would extend
coverage to Alaskans between the ages of 19 - 64 who do not
qualify for any other reason, such as, a disabling condition.
She said that although approximately 42,000 Alaskans would be
eligible for the expansion, only about 20,000 would actually
sign up in the first year - increasing to approximately 26,000
by the year 2021.
4:36:36 PM
COMMISSIONER DAVIDSON continued her overview and pointed out
that the study performed by Evergreen Economics showed that
approximately 44 percent of the people in the expansion
population have jobs, another 29 percent are collecting
unemployment which means they are actively seeking work. In
terms of the federal match, she explained, under the Patient
Protection and Affordable Care Act the match is 100 percent for
the initial three hard calendar years, 2014 - 2016. The federal
contribution match in 2016 equals 100 percent federal match,
2017 equals 95 percent, 2018 equals 94 percent, 2019 equals 93
percent, and 2020 equals 90 percent, with the match remaining
constant at 90 percent after 2020. She stated that this
compares to the regular Medicaid Program which is matched at
approximately 50 percent, although there is a higher match
available for children. In terms of projection of the average
per enrollee cost of Medicaid, Evergreen Economics, which has
performed Medicaid analysis for Alaska for almost a decade,
estimates that the average cost per enrollee will start at
approximately $7,250, and increase over time. She remarked that
new federal revenue in year one was expected to be $141 million,
increasing to $204.9 million in the year 2021, a total of $1
billion in new federal revenue in Alaska. She conveyed that
some savings have been identified which include savings that
DHSS currently pays for services. For example, she related, the
Department of Corrections services provided for inmates who are
out of the facility for an overnight stay are eligible for
coverage. Additionally, in 2016 there is approximately $1
million in savings for Chronic and Acute Medical Assistance
programs or CAMA programs, and approximately $1.5 million in
behavioral health grants. Additionally, she related, the bill
is clear that there is a provision making Alaska's continued
participation in Medicaid expansion contingent on the federal
match remaining at or above 90 percent. She further related
that the bill also directs the Department of Health & Social
Services (DHSS) to submit to the legislature no later than
January 25, 2016, a proposal to authorize a provider tax to
offset some of the costs of the Medicaid Program. She pointed
out that another equally important portion of the bill is
Medicaid reform, a process that evolves over time by building
upon the reform efforts already undertaken by DHSS. She advised
this includes maximizing the existing 100 percent federal match
opportunities by working with tribal partners to increase the
IHS trust fund beneficiaries who receive services from tribal
providers who are also Medicaid beneficiaries. She said that
when three things come together, IHS beneficiary, Medicaid
beneficiary, and receiving care in an IHS facility, it is 100
percent federally matched. She expressed that this was true
before Medicaid expansion, during expansion, and after Medicaid
expansion. Essentially, she pointed out, there are
opportunities to leverage those federal funds.
4:41:26 PM
COMMISSIONER DAVIDSON stated that additional reforms include
1915(i) and 1915(k) options to take advantage of additional
Federal Medical Assistance Percentage (FMAP) opportunities.
DHSS would use the 1915(i) option to serve Alaskans who do not
meet the nursing level of care, but meet other criteria. For
example, she expressed, they may have Alzheimer's related
diseases, traumatic brain injury, or severe mental illness. She
described this as a savings increasing to the 50 percent match
by the regular Medicaid Program. She indicated that DHSS
anticipates the reforms to be in regular Medicaid, as well as
the expansion population. Currently, DHSS serves people with
Alzheimer's disease, traumatic brain injury, or severe mental
illness, with 100 percent state general funds, but by moving
them to a 1915(i) option, DHSS would increase the federal match
from zero percent to fifty percent. She conveyed that the other
option is a 1915(k) option to replace existing home and
community based services, a waiver services, which increases the
match from 50 to 56 percent. In terms of other reform
opportunities, she pointed out that DHSS also included
demonstration project authority to review payment reform,
whether those are bundling payments or innovative service
delivery models, to allow DHSS to have explicit, express broad
authority that allows pursuing other opportunities as they
arise, and recognizing that reform is a process. She reiterated
that reform is a process that needs broad authority to take
advantage of things as they arise. She opined that there are
incredible opportunities for tele-health, especially in Alaska
with its large geography and small population. She remarked
that, as DHSS and the federal government have audit
requirements, providers are seeing a doubling up of audits and
spending a lot of time on administration rather than being able
to provide programs and services. She advised that those audits
should be streamlined to better coordinate both state and
federal requirements.
4:45:16 PM
COMMISSIONER DAVIDSON continued her overview and noted that a
critical piece of the legislation would allow emergency
regulation authority to implement savings opportunities quickly.
Currently, a Request for Proposal (RFP) recently closed,
requesting that a contractor review opportunities for reform in
Alaska, and ways to change the way Medicaid and health care is
provided. She said those opportunities will allow the state to
move forward, evaluating what other states have done, evaluating
how they might work in Alaska, and developing a plan to work
with stakeholders so that the process is transparent. She
pointed out that there is a link between the broad demonstration
project authority and the RFP, acknowledging that DHSS does not
have all of the best ideas and that some of those may come from
this process.
4:47:09 PM
JON SHERWOOD, Deputy Commissioner, Office of the Commissioner,
Department of Health & Social Services (DHSS), said that in
addition to the provisions regarding expansion and reform, the
Department of Health & Social Services (DHSS) is also making
technical amendments to the statute in order to bring it into
conformity with federal law. He said it is the department's
intention to make clear the standard under which it is
operating.
4:48:07 PM
CHAIR SEATON asked that Mr. Sherwood point out sections where
there are changes to conform to the law and not a proposed
expansion reform.
4:48:38 PM
MR. SHERWOOD responded yes, and offered a sectional analysis as
follows [original punctuation provided]:
Sectional Analysis:
Section 1 Adopts intent language and legislative
findings related to Medicaid expansion and the need to
reform the existing Medicaid program, including
instructing the Department of Health and Social
Services (DHSS) to propose legislation to implement a
provider tax in January 2016, to help offset the cost
of the Medicaid program.
Section 2 Amends AS 44.23.075 to exclude the expansion
population from the current Permanent Fund Hold
Harmless program.
Section 3 Amends AS 47.05.200(a) to clarify the
minimum number of audits that DHSS should conduct each
year, along with instructions that DHSS, should to the
extent possible, minimize duplicative state and
federal audits for Medicaid providers.
Section 4 Amends AS 47.05.200(b) to allow DHSS to
impose interest penalties on identified overpayments
using the post judgment statutory rate.
Section 5 Adopts AS 47.05.250 that authorizes DHSS to
develop provider fines though regulation for
violations of AS 47.05, AS 47.07 or regulations
adopted under those chapters.
Section 6 Amends AS 47.07.020(b) including technical
corrections related to eligibility for Medicaid
authorized under the Affordable Care Act. This section
also provides the authority for DHSS to expand
Medicaid to adults aged 19-64 who are not caring for
dependent children, are not disabled or pregnant, and
who earn at or below 138 percent of the federal
poverty guidelines for Alaska including the 5 percent
income disregard.
Section 7 and 8 Amends AS 47.07.020(g) and (m) to
clarify when DHSS may impose transfer of asset
penalties when determining eligibility for Medicaid.
Section 9 and 10 Amends AS 47.07.036(b) and adds AS
47.07.036(d) to outline cost containment and reform
measures that DHSS must undertake, including seeking
demonstration waivers, applying for other options
under the Medicaid Act and improving telemedicine for
Medicaid recipients.
Section 11 and 12 Amends AS 47.07.900(4) and (17) to
remove the requirement that behavioral health
providers be a grantee of the state of Alaska in order
to bill Medicaid.
Section 13 Instructs DHSS to amend any state plan it
has with the federal government to be consistent with
this Act.
Section 14 Authorizes DHSS to engage in emergency rule
making under the Alaska Administrative Code to
implement Medicaid reform measures and the provisions
of this Act.
Section 15 Instruct the Revisor of Statutes to make
technical amendments to the title of AS 47.07.036 to
conform to amendments in this Act.
Section 16 Provides that Section 13 and 14 are
effective immediately
Section 17 Provides that Section 1- 12 and 15 of the
Act are effective on July 1, 2015.
4:48:40 PM
MR. SHERWOOD said Section 1 is the findings and intent language
around the bill expansion and reform which includes the
provision instructing DHSS to propose legislation for a provider
tax by next session. He noted that Section 2 is the first of
the technical amendments to reflect or accommodate changes in
federal law. The provision amends the hold harmless provisions
in statute for treatment of receipt of the Permanent Fund
Dividend. He remarked that within the Patient Protection and
Affordable Care Act states were required in their Medicaid
Programs to change the way they determined income for children,
pregnant women, and parent caretaker relatives to tax based
rules for income. As a result, DHSS now counts income using a
modified adjusted gross income (MAGI). He pointed out that this
differs from previously as it tends to look more toward annual
income and does not allow income disregards. He pointed out
that in adding the expansion group there was no easy way to
reconcile these MAGI-based Methodology rules with the hold
harmless statute. Previously, he said, the Permanent Fund
Dividend (PFD) was always counted as income under a monthly
receipt, whereas, under MAGI it is annualized. The statute does
not provide for that kind of situation. He remarked that once
the PFD is annualized it becomes a very small amount of monthly
income as the check is divided by 12. He said that there would
be individuals slightly over income for the expansion group, but
these individuals would have the federal market available to
obtain substantially subsidized health insurance. He reiterated
that, in these cases, the individual would go from Medicaid
coverage to a substantially subsidized federal coverage. The
decision was made to exempt this group from the hold harmless
provision and allow them to move into the exchange.
4:51:48 PM
REPRESENTATIVE WOOL asked whether an individual on the fence
could opt not to receive a PFD.
MR. SHERWOOD said he would check under the new federal
regulations as a development of income requirement stated that
an individual entitled to an income must apply for and pursue
it.
4:52:30 PM
REPRESENTATIVE VAZQUEZ questioned how the hold harmless
provision applies at the present time and how this would change.
MR. SHERWOOD responded that presently when determining
eligibility for Medicaid, the statute instructs the state
whether it is possible under federal requirements to disregard
the PFD and not count it as income. In this case there is no
asset test for the expansion group, but individuals can have up
to four months of hold harmless coverage which means the state
replaces the federal benefit that is provided. Essentially, he
explained, DHSS would continue to leave them on Medicaid but for
those 1 - 4 months that they were ineligible due to receipt of
the PFD, DHSS would not claim federal funds for those
individuals. In that case, the lost federal revenue is actually
paid out of the PFD account and not the general fund account.
4:54:11 PM
COMMISSIONER DAVIDSON explained that with this provision, the
PFD hold harmless provision does not apply to the expansion
population.
4:54:22 PM
REPRESENTATIVE VAZQUEZ asked for an example.
COMMISSIONER DAVIDSON offered a scenario of an individual who is
potentially eligible for Medicaid expansion, but has an income
almost at 138 percent of the federal poverty level. When that
individual receives a PFD that puts them over 138 percent of the
federal poverty level, they would not be eligible for expansion.
Rather, the individual would then be directed to the federally
facilitated market place in Alaska where they could choose to
purchase a substantially subsidized market place plan.
4:55:11 PM
CHAIR SEATON offered that this also relates to other programs,
such as, food stamps. In the event an individual earns too much
money, they don't qualify. The PFD actually pays the difference
of what the individual was losing in their benefits in receiving
the PFD. He pointed out that the hold harmless was not being
changed, it just does not apply to the expansion population.
MR. SHERWOOD answered "That is correct."
4:56:08 PM
REPRESENTATIVE VAZQUEZ questioned whether the department had
considered that the hold harmless also applies to food stamps
and asked whether there had been any thought about excluding
food stamp recipients in the hold harmless program.
COMMISSIONER DAVIDSON replied that the food stamp program is not
a subject of this bill.
4:56:45 PM
MR. SHERWOOD said that Section 3 is the provision which reduces
the mandatory number of audits required under the statute. He
offered that since the law passed there has been an increase in
the amount of oversight of providers through other state and
federal initiatives. The Division of Quality Assurance in the
department [indisc.] 14 different kinds of oversights the
providers can be subject to depending upon the type of provider,
federal or state. He opined that one of the prime purposes of
audits is the sentinel effect and DHSS believes there is enough
activity that it is achieving that. He explained that the
section also gives DHSS clear authority to coordinate the audits
to avoid duplication with other state or federal audit
activities.
4:57:57 PM
CHAIR SEATON conveyed there had been a discussion regarding
certain audits being identified as being an acceptable
substitute when there is coordination in receiving the results
of these audits. He asked if DHSS was still thinking that would
work in some instances.
MR. SHERWOOD responded that DHSS does coordinate among the
audits which also avoids any duplicative penalties. To the
extent possible, the department would take the federal audit as
part of the DHSS oversight strategy.
4:59:04 PM
MR. SHERWOOD stated that Section 4 allows the department to
impose penalties on overpayments when the overpayment
determinations become final. This section creates an incentive
for prompt resolution when there are audit findings as there is
a disincentive for the provider to drag out the dispute of the
findings.
4:59:39 PM
REPRESENTATIVE VAZQUEZ referred to [Sec. 4, AS 47.05.200(b)],
page 3, lines 17-20, which read:
(b) ... The department may assess interest penalties
on any identified overpayment. Interest under this
section shall be calculated using the statutory rates
for post-judgement interest accruing from the date of
the issuance of the final audit.
REPRESENTATIVE VAZQUEZ asked what statutory rate for post-
judgement interest is being applied.
MR. SHERWOOD answered that the language came from "our legal
folks," and he assumed it was clear as to which one. He agreed
to research the answer and get back to the committee.
REPRESENTATIVE VAZQUEZ said it should clearly be set forth what
statutory rate it is making reference to for avoiding confusion.
5:01:03 PM
MR. SHERWOOD conveyed that Section 5 allows DHSS to impose fines
on providers for violation of statute or regulations. Currently
the only financial recovery with providers is through the audit.
He said it has been discovered that it makes more sense for both
parties to assess a fine. He offered as an example, if there
was evidence of poor documentation that was not systemic, DHSS
may choose to impose a fine rather than actually performing an
audit where both sides have to drill down to determine what the
evidence shows. He conveyed that there may be occasions when an
audit is over-kill or impractical and simply assessing a
financial penalty for failing to follow the statute or
regulations is a more appropriate and efficient tool.
CHAIR SEATON asked whether the fine was in dispute or someone
prefers an audit, would that fine language be permissive and be
part of the regulations that can be challenged.
MR. SHERWOOD responded in the affirmative and stated that by
adding it as a sanction there is an appeal process for any
substantial sanction.
5:02:36 PM
REPRESENTATIVE VAZQUEZ referred to [Sec. 5, AS 47.05.250(a)],
page 3, lines 22-23, which read:
(a) ...The department may adopt regulations to impose
a civil fine against a provider who violates AS 47.05
...
REPRESENTATIVE VAZQUEZ noted that AS 47.05 deals with medical
assistance fraud. She said if this legislation passes, it
appears the department may adopt regulations to impose a civil
fine against a provider who violates. Usually, she opined, in a
criminal case there is restitution to be made, so why would DHSS
need a separate section.
MR. SHERWOOD offered that this does not extend simply to the
fraud provisions of AS 47.05, but to the other administrative
provisions of AS 47.05 and AS 47.07, essentially the Medicaid
statute. All violations of regulations governing Medicaid would
be subject to fines.
REPRESENTATIVE VAZQUEZ reiterated her question whether a
criminal case under AS 47.05 deals with Medicaid fraud and
spells out the criminal sanctions. She pointed out that it is
clearly a criminal process, and asked why this particular
provision is included in that it interferes with the criminal
statute. She noted that restitution is in criminal cases, and
the criminal code sets forth the parameters of that restitution.
MR. SHERWOOD advised that this provision was intended to allow
DHSS to impose fines for violations of regulation which were not
necessarily criminal. He offered that if the question is
whether this language is appropriately placed in this section or
in AS 47.07, he would consult with the Department of Law (DOL)
to provide an answer.
5:05:36 PM
REPRESENTATIVE TARR referred to [Sec. 5, AS 47.05.250(b)], page
3, lines 25-26, which read:
(b) A fine imposed under this section may not be less
than $100 or more than $25,000 for each occurrence.
REPRESENTATIVE TARR said the provision reads like a problem that
does not meet the standard of a criminal proceeding. The
department wants a mechanism to encourage good behavior and the
threat of a fine will likely do that.
MR. SHERWOOD answered that her statement was a good assessment.
Certainly, he said, the deterrent effect is in knowing there are
some situations in which DHSS is not likely to pursue a full
blown audit simply to obtain a modest recovery. Generally, he
offered, all of DHSS sanctions tend to be progressive so initial
and minor occurrences tend to be modest fines, and repeat or
serious offenses tend to be higher fines.
5:06:53 PM
REPRESENTATIVE VAZQUEZ commented that there may be a need to
include a provision for fines but as this covers all of AS
47.05, which also covers Medicaid fraud, she suggested there
should be an explicit exception to the criminal statutes, which
includes criminal charges, and follows a whole criminal process
and not a civil process.
CHAIR SEATON asked [Mr. Sherwood] to check with the legal
department to determine if there should be an exception for
fraud. He stated that if there is actually fraud DHSS does not
want to be submitting a fine for criminal penalties.
5:08:22 PM
MR. SHERWOOD continued with the sectional analysis and stated
that Section 6 amends the Medicaid eligibility statutes to bring
the statute in line with the new MAGI rules, and adds the
expansion group. He referred to MAGI [indisc.] several
categories of coverage including many categories for children.
The legislation amends AS 47.07.020(b)(8) in that it better
describes a group of children that are already covered. He
explained that the language dated back to the early 1990s, which
artfully describes a category of children who weren't ineligible
because they did not meet the old deprivation standards for Aid
to Families with Dependent Children (AFDC). He offered that
DHSS was making technical amendments to clarify this language to
what has always been the coverage for these children who do not
meet the deprivation requirements. He indicated that as the
program has evolved this language has become antiquated and DHSS
does not have people who would track that kind of policy back
that far. The other changes related to MAGI have to do with
eligibility categories for pregnant women and children and their
income levels are set in statute as a percentage of the federal
poverty level, he explained. He reiterated that MAGI gets rid
of all income disregards that are applied before determining
eligibility. The federal government made DHSS calculate the
value of those disregards and adjust the income standards upward
to reflect the loss of disregards for existing categories of
Medicaid, he stated. This legislation is changing the numbers
in the statute to match those new MAGI adjusted amounts. He
offered that it appears income standards are going up, but in
truth it is the equivalent standard. He pointed out that
instead of applying the standard after DHSS has taken out the
income disregards it is now applying the standard of gross
income. Another way of looking at it, he advised, is that the
disregards have been built into the standard.
5:11:19 PM
REPRESENTATIVE VAZQUEZ asked for an example of at least two to
three income disregards that are taken into consideration.
MR. SHERWOOD replied that the disregards that come to mind
include earned income disregards, child care disregards, a child
support disregard, and the PFD disregard.
REPRESENTATIVE VAZQUEZ asked that Mr. Sherwood explain the
definition of disregard, and how it is reviewed by department
personnel determining eligibility.
MR. SHERWOOD answered that when determining an individual's
eligibility the department typically starts with their gross
income for the month, then determines whether adjustments need
to be made. In that instance, a disregard may be a complete
disregard of a certain type of income, or a partial disregard of
earned income, and the amount of disregard is subtracted from
the individual's income. Subsequently, he related, once all of
the disregards have been subtracted, the department reviews the
remaining income and in the old method would compare it to the
income standard.
5:14:29 PM
MR. SHERWOOD advised that another part of Section 6 adds the
expansion group and it contains the provision that the expansion
group is covered only if the federal match rate is at least 90
percent. He referred to Sections 7-8 and advised they are
technical amendments which clarify that individuals determined
eligible using MAGI standards are not subject to transfer of
asset penalties. He explained that transfer of asset penalties
are applied to individuals who receive long term care, nursing
home care, and home and community based waivers. In these
circumstances, an individual has been found to have given away
assets in order to qualify for Medicaid, or for any purpose
other than to receive some sort of direct benefit to themselves.
He pointed out that they may be ineligible for Medicaid for a
period of time - approximately equivalent to the value of the
transfer. He remarked that the legislation clarified that MAGI
standards are not subject to the transfer of asset penalty. He
explained that all the categories of Medicaid that cover
individuals who are aged, blind, and disabled do not use MAGI
standards. He said that the over whelming majority, almost the
entirety of the individuals receiving long term care, qualify
under those standards for aged, blind, and disabled.
5:16:03 PM
MR. SHERWOOD referred to Sections 9 - 10 and advised that the
amendments to the cost containment statutes in the Medicaid
statute include the reform initiatives, the Section 1115
waivers, the 1915(i) and 1915(k) options, other demonstration
authorities, and enhancement and incentivizing telehealth. He
advised that Sections 11 - 12 amend the statute to remove the
Medicaid requirement that behavioral health providers be grant
recipients. He conveyed that Section 13 instructs the
department to amend the state plan in accordance with the
legislation. He further conveyed that Section 14 gives clear
authority to issue emergency regulations for reform and cost
containment. Section 15 includes Reviser of Statutes
instructions. Sections 16 - 17 are effective dates, and he
noted that Sections 13 - 14 are effective immediately, while the
rest of the Act is effective on July 1, 2015.
5:18:09 PM
REPRESENTATIVE TARR asked for clarification that the committee
will not consider amendments on Thursday but get them out for
distribution.
CHAIR SEATON said the committee may consider amendments on
Thursday, before the public testimony comes in, so people will
know what is on the table.
5:18:26 PM
REPRESENTATIVE VAZQUEZ advised she will have many questions and
stated it is only fair for the committee to have time to clarify
certain provisions in order to understand what this bill does
and does not do.
CHAIR SEATON expressed his agreement.
5:19:11 PM
COMMISSIONER DAVISDON offered members to forward their questions
to her in the meantime.
CHAIR SEATON asked the members to forward questions to
Commissioner Davidson and there may be written responses back
with information.
REPRESENTATIVE VAZQUEZ requested that the questions and answers
be distributed to every committee member.
CHAIR SEATON offered that questions could be submitted to him,
and he would forward the questions and receive the answers.
[HB 148 was held over]