Legislature(2003 - 2004)
03/31/2003 03:25 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 152
An Act relating to payment rates under the Medicaid
program for health facilities and to budgeting,
accounting, and reporting requirements for those
facilities; abolishing the Medicaid Rate Advisory
Commission; and providing for an effective date.
JOEL GILBERTSON, COMMISSIONER, DEPARTMENT OF HEALTH & SOCIAL
SERVICES, introduced HB 152. He explained that under the
authority of Article III, Section 18, of the Alaska
Constitution, HB 152 was being transmitted to provide
greater flexibility to the Department of Health & Social
Services to set Medicaid payment rates for Alaska's
hospitals, nursing homes and other health care facilities.
The proposed bill would eliminate the Medicaid Rate Advisory
Commission and place the responsibility for calculating and
setting Medicaid payment rates for health care facilities
under the general authority of the Department of Health and
Social Services.
Commissioner Gilbertson added, historically, the Medicaid
facility rate setting process has been extremely cumbersome
and costly for both the State and the health care
facilities. The current rate-setting process is both a
barrier to effective cost containment as well as problematic
for assuring adequate reimbursement for Alaska's diverse mix
of health care facilities.
Passage of the legislation would allow the Department to
develop in regulation a more flexible, cost-effective rate
setting process that would allow the Department to take into
account the appropriations made by the Legislature for the
Medicaid program when establishing rates.
Commissioner Gilbertson offered to answer questions of the
Committee.
Representative Croft asked what "fair and reasonable" rates
would be replaced with.
BOB LABBE, DEPUTY DIRECTOR, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, responded that it would be facility specific, fair
rates for reasonable costs. The Department is interested in
looking at grouping facilities of a certain type or size as
an option rather than facility specific. He observed that
when the change was complete, the Department would aim to
provide a fair rate while reimbursing reasonable costs.
Facility specific does not provide cost management
incentives.
Representative Croft recommended that there should be
overriding standards indicated somewhere. Mr. Labbe
explained that the replacement standard would comply with
what the federal government now provides, rates that are
adequate and with reasonable service. There are federal
requirements, which the State will have to follow. The
Department is proposing not to do any more than the feds
require.
Commissioner Gilbertson referenced the fiscal note, noting
the savings. He explained that the bill eliminates the need
for expenditures that support commission members' travel,
per diem and other related support costs.
Representative Croft inquired who currently sits on that
Commission. Mr. Labbe replied that there are five members
on the Commission:
· A physician,
· A certified public accountant (CPA),
· A public member,
· A Department of Health & Social Services
representative, and
· A facility administrator.
Co-Chair Harris referenced the letter contained in the
member's packets from the Governor, who recommends
eliminating the Medicaid Rate Advisory Commission. That
agency has the responsibility of establishing Medicaid
rates. He thought such action would provide the Department
more flexibility for determining the Medicaid payment
amounts, thus, saving money.
Commissioner Gilbertson advised that Commission currently
serves only in an advisory capacity and that rate setting
authority currently rests with the Department. He pointed
out that associated with that legislation is an appeal of
the Bouren amendment. By repealing that language, there
would be additional discretion within the Department to
develop multiple methodologies, which is where the savings
emerges. Having one methodology for all the facilities
would not necessarily reflect the relative efficiency of the
various facilities. This action would reduce any excess
payments being made to any facility.
Co-Chair Harris asked how long had the Bouren Amendment been
in place. Mr. Labbe replied it was placed in federal law in
1982 and repealed in 1997. The Bouren Amendment was
initially intended to provide flexibility to the states in
establishing rates. Because of extensive litigation, the
amendment had the reverse effect and years later, after many
federal lawsuits, the amendment was repealed.
Co-Chair Harris questioned if it had been the policy of the
previous Administration to do things in less beneficial ways
to relieve the Medicaid amount the State receives.
Commissioner Gilbertson commented that there are always
various considerations when making changes to Medicaid and
those individuals affected by the changes. At present time,
the Administration believes that the State must have greater
authority and discretion in setting rates that reflect the
actual costs.
Co-Chair Harris remembered that in past years, he had
requested the Department to get the costs of the Medicaid
program down. He voiced frustration that there had not been
the motivation to accomplish that. He voiced his support
for the current work of the Department.
Representative Croft pointed out that the bill would save
about $10 thousand dollars by getting rid of a significant
public process. He claimed that the public input, which
comes from the Commission, is worth that amount of money.
Co-Chair Harris rebutted that eliminating the Commission
would only save about $10 thousand dollars, however, the
process that the Department would then go through will save
considerably more by being more flexible in rates and the
optional rates.
Representative Croft emphasized that it would lower the
rates paid to providers in many areas, which are already too
low. He added that stopping the benefits to these people
have caused tremendous political fights. He emphasized that
they can be called "cost containments", but in reality, they
are getting rid of services.
Co-Chair Williams stated that the bill would be HELD for
further discussion.
HOUSE BILL NO. 152
An Act relating to payment rates under the Medicaid
program for health facilities and to budgeting,
accounting, and reporting requirements for those
facilities; abolishing the Medicaid Rate Advisory
Commission; and providing for an effective date.
Representative Croft MOVED to report HB 152 out of Committee
with individual recommendations and with the accompanying
fiscal note. There being NO OBJECTION, it was so ordered.
HB 152 was reported out of Committee with a "do pass"
recommendation and with fiscal note #1 by the Department of
Health and Social Services.
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