Legislature(2015 - 2016)CAPITOL 106
02/02/2016 03:00 PM House HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| HB227 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 227 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 227-MEDICAL ASSISTANCE REFORM
3:03:50 PM
CHAIR SEATON announced that the first order of business would be
HOUSE BILL NO. 227, "An Act relating to medical assistance
reform measures; relating to administrative appeals of civil
penalties for medical assistance providers; relating to the
duties of the Department of Health and Social Services; relating
to audits and civil penalties for medical assistance providers;
relating to medical assistance cost containment measures by the
Department of Health and Social Services; relating to medical
assistance coverage of clinic and rehabilitative services; and
providing for an effective date."
CHAIR SEATON explained that these reform efforts had been
introduced last year in a bill combined with Medicaid Expansion,
and were now being presented separate from Medicaid Expansion.
3:04:42 PM
TANEEKA HANSEN, Staff, Representative Paul Seaton, Alaska State
Legislature, explained that the proposed bill was comprised of
reform components, with a goal to renew the conversation around
Medicaid reform, especially important in the current budget
climate for sustainability and efficiency in all the programs.
These reforms had all been discussed in the last year, and many
of the reforms would require approval by the legislature in
order to give Department of Health and Social Services the
authority to move forward.
MS. HANSEN stated that proposed HB 227 encompassed three
categories: administrative and procedural changes to help the
department administer the program, pursue overpayments, and
lessen the burden on providers; offer direction to the
department in application for waivers to implement cost reform
options, pursue demonstration and pilot projects, and execute
other system wide reforms for improvement to care and
efficiency; require reports which maintain accountability to
the Alaska State Legislature. She reported that, based on the
quantifiable reforms, the initial estimated savings was more
than $300 million, which had since been updated with new
information from Department of Health and Social Services. She
added that additional savings could be recognized from other
reforms in the proposed bill, including the demonstration
projects and super utilizer managed care.
3:08:32 PM
CHAIR SEATON clarified that the proposed bill would not be moved
today, and would be held over for further consideration.
MS. HANSEN declared that health care reform needed to be a
continuous process of ways to improve on the current system and
search for better care.
3:09:17 PM
MS. HANSEN paraphrased from the Sectional Analysis, which read:
Section 1 Page 1-2 Legislative intent language that
asserts that the current Medicaid Program is
unsustainable. The department of Health and Social
Services should take the steps necessary to capture
additional federal revenue, obtain waivers for tribal
partnerships and alternative service models, and
establish prevention of disease a primary model of
health care.
Section 2 Page 2 Adds civil penalties assessed against
Medicaid providers to the procedures covered by
administrative adjudication under AS 44.62.330.
Section 3 Page 2-4 Directs the Department of Health
and Social service to assist Medicaid providers in
developing health care models that encourage nutrition
and disease prevention by adding to the duties of the
department under AS 47.05.010.
MS. HANSEN pointed out that the background information [Included
in members' packets] presented a summary of the projected health
care savings related to Vitamin D sufficiency, which summarized
the findings of two studies reviewing the economic burden of
Vitamin D deficiency in Canada and Germany. If Alaska
recognized similar results as Canada, there could be a 6.9
percent reduction in economic burden, a savings of $28.5 million
in annual savings based on the preceding year costs. She noted
that this was one of the aforementioned reforms that would not
reflect directly in the fiscal notes.
3:11:55 PM
MS. HANSEN moved on and paraphrased from Section 4, which read:
Section 4 Page 4-5 Amends AS 47.05.200(a) to clarify
the minimum number of audits that DHSS should conduct
each year and that DHSS should minimize duplicative
state and federal audits for Medicaid providers to the
extent possible.
Section 5 Page 5-6 Amends AS 47.05.200(b) to allow
DHSS to impose interest penalties on identified
overpayments using the post judgment statutory rate.
MS. HANSEN shared that the intention was for adequate
notification and a grace period, and would provide some
incentive for providers once overpayments had been identified,
to repay the department in a timely manner.
3:13:19 PM
MS. HANSEN paraphrased from Section 6, which read:
Section 6 Page 6 Adopts AS 47.05.250 which authorizes
DHSS to develop provider fines though regulation for
violations of AS 47.05, AS 47.07 or regulations
adopted under those chapters, in addition to other
remedies allowed under the chapter. Allows that
Medicaid providers may appeal civil fines through the
office of Administrative Hearings.
MS. HANSEN explained that the intent was to create a medium
enforcement opportunity, in lieu of an audit. She moved on to
the next sections, which read:
Section 7 and 8 Page 6-8 Amends AS 47.07.020(g) and
(m) to clarify when DHSS may impose transfer of asset
penalties when determining eligibility for Medicaid.
Clarifies under (g) that the department may only
consider information that is verified through a source
other than the claimant.
3:16:20 PM
MS. HANSEN reported on Section 9, which read:
Section 9 Page 7 Amends AS 47.07.030(d) to make the
establishment of a primary care case management for
identified super-utilizers a mandatory service for the
department.
3:17:01 PM
REPRESENTATIVE TARR referenced an earlier pilot program, and
asked if this would instead address "anything going forward."
MS. HANSEN, in response, offered her belief that this would not
interfere.
3:17:47 PM
MS. HANSEN directed attention back to the Sectional Analysis,
which read:
Section 10 Page 7 Requires the department to include
in an annual report to the legislature a description
of state costs for optional and mandatory Medicaid
services.
CHAIR SEATON clarified that previously there had been two
different ideas: provide optional services as opposed to
mandatory services, as the optional services were cheaper; or,
we provide a vast array of services more than required, only
because these optional services were available. Stating that it
was difficult to separate these philosophical approaches without
a report, this section of the proposed bill required a report
detailing the two sets of proposed services.
REPRESENTATIVE TARR presented an example which she opined was
necessary to better understand the optional services, surmising
that these were often less expensive as they offered prevention
to more costly long term chronic health problems.
CHAIR SEATON suggested that representatives from the Department
of Health and Social Services (DHSS) should be questioned for
further clarification regarding this section.
3:20:37 PM
MS. HANSEN discussed the next two sections, which read:
Section 11 and 12 Page 7 Amends AS 47.07.036(b) to
remove conflicting language and adds AS 47.07.036(d)
to outline cost reform measures that DHSS shall
undertake, including demonstration waivers, applying
for the 1915 (i) and (k) options, and improving
telemedicine for Medicaid recipient. Directs the
department to implement at least one demonstration
project using a global payment project and allows for
other similar projects.
MS. HANSEN suggested that discussion could center on the Centers
for Medicare & Medicaid Services (CMS) recommendations and how
these could bolster the aforementioned waivers. She noted that
defining the criteria for the aforementioned options could also
shift some costs to federal funds.
REPRESENTATIVE TARR asked to review the global payment fee
structure.
MS. HANSEN deferred to DHSS and to Ms. Hultberg during her
presentation later in the committee meeting, offering her belief
that this was a version of provider coordinated care.
MS. HANSEN pointed out that the definition of telemedicine
included visual, and that the committee supported its expansion
in appropriate ways.
3:26:55 PM
MS. HANSEN discussed the next sections, which read:
Section 13 and 14 Page 9 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.
MS. HANSEN explained that the intention was to expand access to
behavioral health services, which were important to the Medicaid
population, by removing the grantee language to allow enrollment
for smaller providers and allow for medium level care to help
prevent more intensive care needs.
3:28:09 PM
MS. HANSEN reported on the next section, which read:
Section 15 Page 9 Directs the department to design and
implement a demonstration project utilizing
nutritional counselling and supplementation to reduce
preterm birth rates among pregnancies eligible for the
Denali Kid Care program.
MS. HANSEN explained that a project currently underway in South
Carolina, "Protect our Children Now," was working in
collaboration with Select Health, a managed care organization.
She pointed out that the educational resources and data systems
already existed under this model, and she directed attention to
the summary of the model, which included its cost and savings
[Included in members' packets]. She reported that $450,000
could be spent for the education, supplementation, and testing
of 500 pregnancies under this model, noting that the average
cost of a pre-term birth was $55,000. She shared that research
studies had shown a decrease of 50 percent in the pre-term birth
rate, which would reflect a substantial savings.
REPRESENTATIVE WOOL, noting that the pre-term birth rate in
Alaska was 8.5 percent, asked about this rate in South Carolina
and its corresponding results.
MS. HANSEN opined that, although the background material did not
list the South Carolina pre-term birth rates, it was about 13
percent, higher than that in Alaska. She reported that the two
research studies on which the aforementioned project focused
found a reduction of more than 50 percent in the pre-term birth
rate, with the corresponding substantial savings. She
acknowledged that there could be some differences in Alaska.
REPRESENTATIVE TARR asked what components, other than Vitamin D,
were included in "Protect our Children Now."
MS. HANSEN offered to share the handout from the South Carolina
program, which described the project. She declared that,
although the focus was on Vitamin D, there was other nutritional
counseling in the program. She noted that the research project
was in low income community health centers in ethnic areas which
had higher rates of Vitamin D deficiency due to skin pigment,
even though the state was in a more southerly latitude.
CHAIR SEATON added that the South Carolina model was being
replicated in either Montana or Idaho, and funded by Select
Health, the local insurance provider, in order to study the
savings. He noted that nutritional counseling and non-smoking
counseling were part of this established pre-term birth model.
He reported that it included at least one post-partum test on
Vitamin D status. He pointed out that there was a $1.5 million
savings on a $450,000 investment plus the health benefits. He
asked whether the state wanted to contract with an organization
or have DHSS "start from scratch and develop something." He
declared that there was a pre-term birth problem in Alaska, with
some areas reporting 14 percent pre-term births. He stated that
the goal of the pilot project was "to find out if something
works for Alaska the way it works for other areas of the United
States."
3:35:15 PM
MS. HANSEN moved on to discuss the next section, which read:
Section 16 Page 10 Requires the Department of Health
and Social Services to establish a primary care case
management system for super-utilizers and deliver a
report on the project by January 1, 2017.
MS. HANSEN shared that the intention was to make the terms broad
enough to include the current DHSS projects addressing the
super-utilizer issues, and to require a report to the Alaska
State Legislature. She added that this section also required
the department to provide a report to the legislature on the
Medicaid redesign and expansion technical assistance study, on
the current cost sharing measures, and on the progress on cost
savings of the waivers under Section 12 of the proposed bill.
She stated that the language had been slightly modified relevant
to the Medicaid Redesign report. She explained that the
intention behind the report summarizing cost sharing measures
implemented prior to October 1, 2015, mentioned in subsection
(b), was to list the current status of cost sharing, including
co-pays, to give a better understanding for any consideration
for change.
3:39:22 PM
MS. HANSEN moved on to discuss the remaining sections, dealing
with conditional effects, which read:
Section 17 Page 10 Requires the Department of Health
and Social Services to provide to the legislature
reports on the Medicaid Redesign and Expansion
Technical Assistance study, current cost-sharing
measures in the Medicaid program, and on the progress
and cost savings of the waivers and options applied
for under section 12 of this legislation.
Section 18 Page 11 Informs the revisor of statutes
that the Department of Health and Social Services
shall apply for federal approval for the state plan
amendments necessary under section 9, 12, 15, and 16
of this Act.
Section 19 Page 12 Permits the Department of Health
and Social Services to adopt the regulations necessary
to implement this act, not before the effective date
of the relevant provisions.
Section 20 Page 12 Instructs the revisor of statutes
to make technical amendments to the title of AS
47.07.036 to conform with the changes in this Act.
Section 21 Page 12 Clarifies that changes enacted in
sections 9, 12, 15, and 16 only take effect if the
Department of Health and Social Services receives the
necessary federal approval by the deadlines created in
this Act.
Section 22-25 Page 13-14 States that if AS
47.07.0309(d) as amended by section 9 and section 16,
section 12(e), section 12(f), and section 15 receive
federal approval, each section will take effect the
day after the date the commissioner of health and
social services notifies the revisor of statutes in
writing, as required by sections 18 and 21.
Section 26 Page 13 Provides that sections 17(a), 18,
19 and 21 take effect immediately.
3:40:52 PM
REPRESENTATIVE VAZQUEZ directed attention to page 11 of the
proposed bill, and asked whether there was a report on options
1915(i) and (k).
MS. HANSEN replied that a current requirement under Section 17
required a DHSS report to the legislature on February 1, 2019
regarding these and other waivers.
REPRESENTATIVE VAZQUEZ suggested that there was some information
and experience from other states which indicated that some of
these actions would increase the number of Medicaid
beneficiaries. She asked if there had been any studies for the
number of new enrollees as a result of these two options.
MS. HANSEN deferred to DHSS, and she opined that this would
depend on the definitions of the eligibility criteria.
3:44:20 PM
VALERIE DAVIDSON, Commissioner, Office of the Commissioner,
Department of Health and Social Services (DHSS), offered her
general comments on the proposed bill. She reiterated that the
administration was very committed to Medicaid reform, that
reform was a constant for those states that did it well. She
highlighted that, over the last several weeks, numerous reports
had been released on reform opportunities. She offered that
those reports may provide additional reform opportunities for
the committee to consider.
JON SHERWOOD, Deputy Commissioner, Medicaid and Health Care
Policy, Office of the Commissioner, Department of Health and
Social Services, in response to Representative Vazquez, listed
his areas of responsibility, which included the Medicaid program
as well as four divisions, the Division of Alaska Pioneer Homes,
Division of Public Assistance, Division of Health Care Services,
and Division of Senior and Disabilities Services.
CHAIR SEATON asked for discussion on the 11 fiscal notes for
proposed HB 227.
MR. SHERWOOD pointed out that the 11 fiscal notes did not
necessarily "tie neatly to a section of bill," as there were "a
lot of moving parts in each fiscal note." He summarized that
the net impact was to reduce costs or shift from state general
funds to federal funds or another source of revenue. He
reported that the total of all the fiscal notes would result in
a net reduction to the general fund of $2,889,000 in FY17. He
shared that it would also reflect a change in tribal policy with
a projected reduction of $12,350,000. The savings would
continue to accrue as other programs were implemented, as not
all the programs in the proposed bill would start on Day 1. He
shared that these savings would grow and, for FY2022, there was
a projected reduction in general funds of $88,431,000. He
opined that the cumulative savings were more than $300 million
over the next six years.
3:51:14 PM
MR. SHERWOOD directed attention to the first fiscal note which
reflected the administrative costs at the Division of Behavioral
Health, labelled OMB Component Number 2665, which revolved
around implementation of Section 12 of the proposed bill. He
reported that this included coverage of behavioral health
services administration under the 1115 demonstration waiver to
restructure the services. He explained that this would include
the addition of one full time staff person to work on the
development and administration of a demonstration waiver, at an
annual cost of $127,800 in FY 17, with an additional one time
cost of $8100. He pointed out that these were paid with 50
percent each of general funds and federal funds.
REPRESENTATIVE STUTES asked how long the federal funding would
last.
MR. SHERWOOD replied that this was a 50 percent federal match
funding, a standard administrative activities match for
Medicaid, which had existed since the inception of the Medicaid
program, and it would require congressional action to change
those federal match rates.
REPRESENTATIVE STUTES declared that she was skeptical, and asked
if there was any assurance for this reimbursement.
COMMISSIONER DAVIDSON, in response to Representative Stutes,
said that the guarantee was that federal law mandated this rate,
and it would require a change in federal law and the consent of
both bodies of Congress and the president.
REPRESENTATIVE VAZQUEZ said that her research found that
Congress had changed the federal match several times, and she
offered her belief that it would again be changed in the future.
She asked how often that had been changed.
CHAIR SEATON asked for clarification that the request was for
any changes to federal match, pointing out that the response had
been specifically for the administrative fee.
REPRESENTATIVE VAZQUEZ replied that she wanted to know of any
changes, including the administrative fees.
COMMISSIONER DAVIDSON expressed her agreement that Congress had
occasionally changed the Federal Medical Assistance Percentages
(FMAP), pointing out that most recently there had been
enhancements to increase the federal match and decrease the
match requirement for states. She acknowledged that there had
been a time when the normal calculation for FMAP had indicated a
50 percent match for Alaska, however, then Senator Ted Stevens,
Chair of the Appropriations committee, had provided a rider to
increase the Alaska FMAP beyond the 50 percent. She reported
that it had since been returned to the original rate.
REPRESENTATIVE VAZQUEZ asked if Commissioner Davidson's recent
testimony to no change had changed, stating "maybe your memory
was jogged."
COMMISSIONER DAVIDSON replied that she had not stated that the
FMAP had not changed, and, responding to Representative Vazquez,
she asked "was that in this committee?"
REPRESENTATIVE VAZQUEZ replied that either the commissioner or
Mr. Sherwood had stated that the FMAP had never changed.
COMMISSIONER DAVIDSON offered her belief that the Deputy
Commissioner had stated that the administrative match of 50
percent had not changed.
MR. SHERWOOD, in response to Representative Vazquez, explained
that he had stated that, to the best of his knowledge, there had
never been a change to the basic administrative match of 50
percent, although some other activities had been identified for
enhanced match.
4:01:35 PM
REPRESENTATIVE TALERICO asked if the intention for this section
of the proposed bill was to increase the efficiency.
MR. SHERWOOD replied that this was for effectiveness, "to make
behavioral health services more effective in how we deliver
services." He opined that an expectation would be to gain
efficiencies.
REPRESENTATIVE VAZQUEZ asked for the amount of grants issued to
date in FY16 to behavioral health providers.
COMMISSIONER DAVIDSON offered to provide the information,
pointing out that this was not reflected in the fiscal note
being discussed.
REPRESENTATIVE VAZQUEZ requested the same information for FY15.
She asked if the department posted the list of grantees on its
website.
MR. SHERWOOD replied that he would find out.
REPRESENTATIVE VAZQUEZ, in response to Chair Seaton, asked to
receive the list from FY15 and FY16.
4:04:29 PM
MR. SHERWOOD directed attention to the fiscal note for Medical
Assistance Administration costs to the Division of Health Care
Services, OMB Component Number 242. He said that this would
consist of one long term, 24 month, non-permanent position to
handle the increased volume of appeals for civil fines, with an
annualized cost of $54,000 and an additional one-time cost of
$7600. He said that, from Section 12 of the proposed bill, one
additional full time position would be needed to oversee the
tribal claims, with an annual cost of $86,500 beginning in FY17
and a one-time cost of $7600. He pointed out that the federal
match for these administrative positions was 50 percent. He
pointed out that this would decline over time as the
aforementioned non-permanent position phased out.
CHAIR SEATON asked about the increase in FY18 to $97,300.
MR. SHERWOOD replied that the temporary position would only be
necessary for six months in FY17, noting that experience had
shown that implementation of a new program brought a spike in
the volume of appeals until, as the process was better
understood, the volume would decrease.
CHAIR SEATON asked about any anticipated revenue from those
fines.
MR. SHERWOOD said there had not been a calculation for recovery
to expense, although there was some information for expectations
to recovery in an additional fiscal note.
4:08:27 PM
REPRESENTATIVE VAZQUEZ asked if this proposed position was being
established to address the corrective action plan necessary to
submit to CMS as a result of the recent audit.
MR. SHERWOOD replied that this position was not related to the
corrective action plan addressed in the recent audit, but,
instead, addressed the provisions in the proposed bill. He
stated that the provisions of the proposed bill did not relate
to the recent audit.
REPRESENTATIVE VAZQUEZ asked for clarification what in the
proposed bill would require this additional resource.
MR. SHERWOOD explained that the implementation of the civil
penalties provision, with the authority to impose fines in
Section 6, necessitated this. He noted that new federal policy
on tribal claiming could lead to expectations for enhanced
claiming from tribal health providers, and would need some
degree of oversight and monitoring for eligibility.
4:11:32 PM
REPRESENTATIVE VAZQUEZ, referencing page 6, lines 13 - 16, of
the proposed bill, which discussed the assessment of civil
penalties, asked how this interfaced with the criminal
prosecution of Medicaid providers by the Medicaid Fraud Control
Unit.
4:13:05 PM
STACIE KRALY, Chief Assistant Attorney General, Statewide
Section Supervisor, Human Services Section, Civil Division
(Juneau), Department of Law, in response to Representative
Vazquez, stated that there were two separate processes
contemplated within the proposed bill, whereby DHSS would have
the ability to impose civil fines in the context of civil
actions related to overpayments or sanctions issued against
Medicaid providers. She stated that these would be separate and
distinct from Medicaid fraud prosecution, which could also have
an associated criminal fine or penalty. She pointed out that
criminal conduct was not addressed in the context of this
proposed bill.
REPRESENTATIVE VAZQUEZ asked who made the decision for criminal
or civil prosecution.
MS. KRALY explained that the decision for a criminal case was
determined by the Medicaid Fraud Control Unit. If there was an
allegation of improper billing or activity, DHSS would meet with
Department of Law and the Medicaid Fraud Control Unit to decide
what to do. Even if a criminal action was taken, this did not
limit a civil review by DHSS of inappropriate action. She noted
that sometimes there were concurrent processes, but that the
primary decision for who acted was with the Medicaid Fraud
Control Unit.
REPRESENTATIVE VAZQUEZ asked who made the referral to the
Medicaid Fraud Control Unit.
MS. KRALY replied that this could be made by anyone to either
DHSS or the Medicaid Fraud Control Unit.
REPRESENTATIVE VAZQUEZ stated that she liked Section 6 of the
proposed bill.
4:17:24 PM
REPRESENTATIVE VAZQUEZ directed attention to page 5, lines 1 -
31, and page 6, lines 1 -3 of the proposed bill. She pointed to
page 5, lines 5 - 10, which statutorily reduced the number of
audits, and she opined that reducing the number of audits was
not a good idea as it reduced the accountability. She
acknowledged that, page 5, lines 18 - 20, explicitly stated that
DHSS should "attempt to minimize concurrent state or federal
audits," and she expressed her agreement, although she
"strenuously" objected to the reduction of audits.
COMMISSIONER DAVIDSON, in response, stated that as the national
Medicaid program had further developed, there was an increasing
number of federal audits imposed on providers. In order to
minimize the concurrent state or federal audits mentioned on
page 5, lines 18 - 20, of the proposed bill, it was necessary to
reduce the number of audits, as stated on page 5, line 5. She
declared that, even with this provision, the number of audits
required by the provider community had increased over time.
4:21:38 PM
MR. SHERWOOD, in response to Chair Seaton, asked that, as DHSS
counted enrolled providers in different ways, he would respond
later to ensure that his answer matched the definition used in
the provision.
CHAIR SEATON reflected that the minimum number of audits could
be in the hundreds depending on the required 0.75 percent of all
providers, and he mused whether there was any relevance to the
not less than number.
MR. SHERWOOD relayed that the range of audits was close to 75
during an annual cycle.
REPRESENTATIVE VAZQUEZ pointed out that the auditor used
analytics to look at high risk provider profiles. She offered
her belief that there were about 3000 Medicaid providers, and
that historically, the department had chosen to undertake 75
audits, which she deemed was not "outrageously high."
MR. SHERWOOD replied that he would send the current count to the
committee, and he expressed appreciation for the point that DHSS
did not have random targeting for audits. He noted that the
pool of high risk providers was substantially smaller, and
shared that DHSS did not want to burden the low risk, low volume
providers simply to make a number.
REPRESENTATIVE VAZQUEZ acknowledged that DHSS worked hand in
hand with the audit contractor to help identify the high risk
providers.
MR. SHERWOOD, in response to Representative Vazquez, said that
MMIS (Medicaid Management Information Systems) was a generic
term for the claims processing system under the federal
definition. He clarified that Enterprise was what the vendor
called its specific product. He explained that "capture the
income contingent cost sharing rules set in new federal
regulations" on the last line of page 2, fiscal note 2,
referenced a federal regulation which limited total cost sharing
to 5 percent of household income for some Medicaid recipients.
REPRESENTATIVE VAZQUEZ asked for the citation to that federal
regulation.
MR. SHERWOOD said that he would forward that to the committee.
4:28:16 PM
MR. SHERWOOD moved on to fiscal note 3, labelled OMB Component
Number 2696, from the Office of Rate Review in the Division of
Health Care Services. This office established rates for many of
the provider payments. Directing attention to the proposed
bill, Section 12, subsections (e) and (f), he pointed out that
these outlined the requirement for one or more demonstration
projects focused on innovative payments including one that
includes a global payment fee structure. He reported that
fiscal note 3 included one-time costs for hiring a contractor to
analyze and implement a new payment model at a cost of $500,000
in FY17, with the assumption for on-going actuarial work in
subsequent years associated with the calculation of those
payments, at a cost of $100,000 per year. He noted that as
these were general administrative costs, the state would only
have to pay 50 percent.
REPRESENTATIVE VAZQUEZ asked if an RFP (request for proposal)
for a contractor had been issued.
MR. SHERWOOD replied there had not been any action just yet.
REPRESENTATIVE VAZQUEZ expressed her assumption that the money
would be distributed through the Office of Rate Review, and was
solely devoted to the 1115 demonstration waiver.
MR. SHERWOOD replied that it was for the global payment
demonstration mentioned in the proposed bill.
REPRESENTATIVE VAZQUEZ asked if the global demonstration was
also the 1115 demonstration waiver.
MR. SHERWOOD offered his belief that the proposed bill specified
the 1115 demonstration waiver.
REPRESENTATIVE VAZQUEZ asked if implementation of this 1115
waiver would add new beneficiaries.
MR. SHERWOOD replied that it was not envisioned for the 1115
waiver for global payment to add new beneficiaries, as it would
simply change the method of payment for services delivered to
current beneficiaries.
CHAIR SEATON pointed out that this was a change from fee for
service for value toward the HMO (health maintenance
organization) model.
4:32:55 PM
REPRESENTATIVE VAZQUEZ asked about the FMAP (federal medical
assistance percentages) for the 1115 waiver if the beneficiary
goes to a non-tribal facility.
COMMISSIONER DAVIDSON explained that U.S. Secretary of Health
and Human Services Burwell had announced a policy change that
would allow Alaska and 34 other states with significant tribal
membership to be reimbursed at 100 percent federal match for
medically necessary accommodations and travel, as well as for
services referred through an IHS (Indian Health Service)
facility to a non-tribal facility. She reported that
negotiation for this was ongoing with CMS, as well as with other
states, as it was a significant national policy change for IHS
beneficiaries.
CHAIR SEATON asked to relate this to the global payment model.
MR. SHERWOOD explained that the 1115 demonstration waiver had to
be cost neutral. He explained that the federal match was
negotiated based on what you intend to do, and "how far afield
it is of regular Medicaid." It would be negotiated to a rate
that kept it cost neutral for the federal government, with
anticipation that the purpose was for savings across the board,
and not to add anything extraordinary that was not typically
covered, so that the match rates would be for services provided
as they applied. He stated that those eligible for tribal match
would be at the 100 percent match rate, family planning would be
90 percent match rate, and the base match rate for services
would be 50 percent. He pointed out that signing the 1115
waiver was technically an agreement for just how much the
federal government would support the project. He clarified that
this was the global payment feature.
REPRESENTATIVE TARR requested further detail on global payment,
asking if this negotiated FMAP with tribal partners was one
component.
MR. SHERWOOD explained that the change in tribal policy was a
separate waiver, and the global payment waiver was not dependent
on that change. He stated that global payment was a move away
from fee for service, looking, instead, for consolidated payment
such as a shared savings agreement to provider groups.
REPRESENTATIVE TARR asked whether provider groups might include
the state health coverage through Aetna rather than individual
fee for service.
MR. SHERWOOD replied that he did not envision this through an
insurance company, although an insurance company could be
involved as a third party administrator managing the money and
cash flow. He stated that typically these were organizations,
and offered an example of a community where the hospital, the
primary care doctors, the clinics, the behavioral health
providers all get together and agree to certain practices and
relationships to deliver care more effectively and share and
distribute the savings or assume the risk. He offered an
example of an innovative hospital project in Ketchikan to better
manage chronic care. Under the previous fee for service system,
the benefits did not accrue directly to the hospital, but this
innovation would allow for some redistribution of those benefits
to offset some of the revenue loss.
REPRESENTATIVE TARR asked if, under this scenario, the state was
not the payment manager.
COMMISSIONER DAVIDSON, in response to Representative Tarr,
shared that a recommendation from the Agnew::Beck Consulting,
LLC report on Medicaid Redesign and Expansion was for an
accountable care organization, for example, an insurance
company, an administrative services company, or a group of
providers who came together. She explained that this was a
demonstration that would move away from fee for service. She
declared that payment reform established disincentives to repeat
occurrences, creating, instead, an incentive for prevention,
wellness activities, and providing more effective care.
4:44:32 PM
REPRESENTATIVE WOOL asked to clarify that global payment was
managed care, a health cost savings measure, and that Alaska was
investigating these programs.
COMMISSIONER DAVIDSON replied that she had described one type of
care management. She pointed out that there was also a legal
entity called a Managed Care Organization, which was its own
special structure. She reported that there were many models for
care management opportunities, and that the Agnew::Beck
Consulting group had spent considerable time discussing the
various options to managing the care for Medicaid beneficiaries,
as well as analysis for which models made sense for Alaska.
REPRESENTATIVE TARR asked if this was a demonstration project
only for Medicaid recipients.
COMMISSIONER DAVIDSON replied that this particular section of
the proposed bill was for Medicaid beneficiaries.
CHAIR SEATON opined that an entity using a global payment model
at the same time with other insurers was a separate question,
but was not part of the state Medicaid population.
REPRESENTATIVE VAZQUEZ asked for a list of the various FMAPs
applicable to this 1115 waiver.
CHAIR SEATON reminded the committee that it was still unknown
whether there would be a tribal component. He surmised that it
would be very difficult to accurately predict all components,
because we could have some FMAP rates but we don't know how big
or small each recipient type will be.
4:49:32 PM
BECKY HULTBERG, President/CEO, Alaska State Hospital and Nursing
Home Association, stated that there was no easy button in health
care reform, and that, although it was really hard work and was
expensive and time consuming, it was worth doing as it concerned
both the fiscal impact to the State of Alaska and to the care to
every patient. She stated that health care was undergoing a
period of rapid transformation. During this time of budget
difficulties, it was necessary to look ahead and create a road
map for how health care would be transformed from its current
system, which needed to change, to something ahead. The
transformation needed to make economic sense for the state and
for patients and communities, and needed to be sustainable,
patient centered, and meet the needs of the communities. She
reported that many pieces needed to be reviewed, including short
term cost containment to better manage cost for the next few
years. She suggested a hospital based emergency room
initiative, which was one of the recommendations from both the
Agnew::Beck report and the hospitals. She shared that this
would almost immediately reduce emergency room utilization,
emergency room costs, and opioid prescriptions from the
emergency room. She suggested the coordination of care among
frequently hospitalized Medicaid recipients. She declared that,
although both of these would reduce hospital revenue, managing
utilization was the right way to approach cost containment and
make the transition from volume based to value based care. She
moved on to discuss the foundational elements of long term
health care reform, what needed to be done now to set the
infrastructure in place. She stated that an enhanced role for
primary care was very important, opining that the concept for
this was embedded in proposed HB 227. She declared that the
Medicaid system needed to focus on primary care as the
gatekeeper for services. She moved on to state that data
analytics, a robust data system, was necessary to understand
where the Medicaid patients were going, how were they using the
services and what patterns were observed, and how this could be
managed based on these observations. She acknowledged that this
could cost money now, but the return was in the long term from
better management with better data. Lastly, she addressed
payment reform, the move from compensation based on volume to
compensation based on outcome. She pointed out that this was a
huge change in health care that would not be made overnight.
She declared support for proposed HB 227, as it offered pilot
programs with provider groups and communities to advance payment
reform. She stated that there was not the infrastructure on a
global scale to "go all in on one type of payment reform or
another." She offered her belief that innovation would emerge
through these pilot programs which could then be broadly
adopted. She encouraged a pilot approach for the payment reform
projects.
4:55:08 PM
REPRESENTATIVE WOOL asked if this move away from fee for service
had to be system wide or just for Medicaid.
MS. HULTBERG replied that her counterparts across the United
States had agreed that the entire system needed to move away
from fee for service, even though it would take a long time.
She stated that, as Medicare was a significant part of a
hospital payer mix, and, as Medicare had stated it would move to
value, this change could happen more quickly in hospitals.
MS. HULTBERG stated that availability of data for decision
making was really important, as was the capacity of the
Department of Health and Social Services to manage the change.
Although this was a time of fiscal challenge, it would still
take time and investment and people to do the work. She
suggested that it was necessary to assess what the department
could realistically accomplish and in what time frame, and then
either resource them to do it, or phase it so it was manageable.
MS. HULTBERG, commenting on Section 9 of the proposed bill,
endorsed the concept of coordinated care for primary case
management, as it was a foundational building block for health
care reform. She expressed concern over the managed care
organization (MCO) model as it was predicated on high volume,
and Alaska was a low volume state. She suggested that this be
an optional aspect, as primary care case management should be
the focus. She referenced the Agnew::Beck report which
indicated that the MCO model would not bring any savings to
Alaska. She declared support for expansion of behavioral health
services, Sections 13 and 14 of the proposed bill. She stated
that behavioral health needs were equally important to address
as medical needs. She pointed to data which supported that
behavioral health needs often included high medical needs. She
said that ASHNA was still reviewing and evaluating the fraud and
abuse sections of the proposed bill. She noted that ASHNA was a
low risk provider group, but she pointed out that audits added
significant administrative time and cost. She expressed concern
with over regulation and applauded the efforts to streamline the
audit function. She shared that a significant complaint about
audits was for the time and cost of compliance to both federal
and state audits.
REPRESENTATIVE TARR relayed that one of her constituents, a
small provider, reported spending tens of thousands on audits,
and she expressed a desire to align the state and federal
audits. She stated that there was already a lot of data, and
asked if the need was for more real time data to better evaluate
the patterns.
MS. HULTBERG said that it was a need for a more advanced
analytics capability, and not for raw data, in order to better
target interventions.
5:01:42 PM
MS. HULTBERG commented that most of the components of the
proposed bill were directionally correct, and that it was
necessary and important work. She declared that overall the
Alaska State Hospital and Nursing Home Association was pleased
with the bill, that it was "a really good next step as we go
down this journey to reform."
[HB 227 was held over.]