03/25/2014 03:00 PM House HEALTH & SOCIAL SERVICES

          HB 376-EXTEND ALASKA HEALTH CARE COMMISSION                                                                       
                                                                                                                                
3:04:53 PM                                                                                                                    
                                                                                                                                
CHAIR HIGGINS  announced that the  first order of  business would                                                               
be HOUSE BILL NO. 376, "An  Act extending the termination date of                                                               
the  Alaska   Health  Care  Commission;  and   providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
3:05:22 PM                                                                                                                    
                                                                                                                                
THOMAS STUDLER, Staff, Representative  Pete Higgins, Alaska State                                                               
Legislature, paraphrased from the sponsor statement, which read:                                                                
                                                                                                                                
     HB 376 extends the sunset of the Alaska Health Care                                                                        
     Commission until June 30, 2017.  The Legislative                                                                           
     Auditor has concluded that the Alaska Health Care                                                                          
     Commission is serving the public's interest and should                                                                     
     continue its statutory obligation.                                                                                         
                                                                                                                                
     The legislature established the Commission under AS                                                                        
     18.09.010 in 2010 to recommend policies to improve                                                                         
     quality, affordability and access to health care, and                                                                      
     to identify strategies for improving the health of all                                                                     
     Alaskans.  Seats representative of various health care                                                                     
     stakeholders are designated in statute, and voting                                                                         
     members are appointed by the Governor.  Sen. Coghill                                                                       
     and Rep. Keller currently represent the legislature as                                                                     
     ex-officio members of the Commission.                                                                                      
                                                                                                                                
     The Commission's approach has been to study current                                                                        
     conditions of Alaska's health care market, and design                                                                      
     market-based strategies and policy recommendations                                                                         
     that enhance the consumer's role in health and health                                                                      
     care.  The Commission submits an annual report                                                                             
     including policy recommendations to the Governor and                                                                       
     the legislature on January 15 each year.  A summary of                                                                     
     the core strategies and policies recommended by the                                                                        
     Commission to-date is attached.                                                                                            
                                                                                                                                
     In its short tenure the Commission has developed a                                                                         
     strategic framework including a time-specific vision                                                                       
     with measurable objectives; conducted numerous studies                                                                     
     to increase knowledge and understanding of current                                                                         
     problems in the health care system, designed a                                                                             
     comprehensive body of specific, relevant and                                                                               
     measurable market-based policy recommendations for                                                                         
     improving health care cost and quality; and created a                                                                      
     template for and is facilitating development of an                                                                         
     executive branch action plan for implementing                                                                              
     Commission policy recommendations.  The Commission has                                                                     
     also coordinated with and provided consultation to                                                                         
     private sector employer groups on health care system                                                                       
     concerns.                                                                                                                  
                                                                                                                                
     Excessive health  care costs  and medical  inflation in                                                                    
     Alaska threaten  the sustainability of the  health care                                                                    
     system and create  a burden on families  and public and                                                                    
     private  employers.    Continuation of  the  Commission                                                                    
     would promote  accountability and evaluation  of public                                                                    
     program implementation through  finalization of a state                                                                    
     agency   plan   to  implement   recommended   policies,                                                                    
     increase transparency  in the  health care  system, and                                                                    
     provide continuing  consultation and  coordination with                                                                    
     private  sector employers  in support  of their  health                                                                    
     care value improvement strategies.                                                                                         
                                                                                                                                
     The Commission has consistently  proven to be efficient                                                                    
     and effective  in its progress  to develop  a strategic                                                                    
     framework  for improving  statewide health  care and  I                                                                    
     ask for your support in the passage of this bill.                                                                          
                                                                                                                                
3:07:02 PM                                                                                                                    
                                                                                                                                
WARD HURLBURT,  MD, Chief  Medical Officer/Director,  Division of                                                               
Public Health,  Central Office, Department  of Health  and Social                                                               
Services, said  that the Alaska  Health Care Commission  had been                                                               
initially established  by then Governor Sarah  Palin by executive                                                               
order,  and  later  established  in   law  by  the  Alaska  State                                                               
Legislature.  The Commission was  "charged with looking at health                                                               
care delivery in Alaska  related to accessibility, affordability,                                                               
quality, prevention,  and so on."   He stated that  the committee                                                               
had  reviewed the  various aspects  of the  health care  delivery                                                               
system; however,  the dominant focus  was for the cost  of health                                                               
care,  and what  opportunities there  were to  mitigate the  high                                                               
cost.   He  reported  that  about 18  percent  of gross  domestic                                                               
product was  spent for health  care in the United  States, almost                                                               
$3  trillion annually,  whereas  the rest  of the  industrialized                                                               
world spends about half to two-thirds  of this amount in terms of                                                               
both gross domestic  product and dollar equivalents.   He pointed                                                               
out  that Norway  and Switzerland  were the  next most  expensive                                                               
countries,  spending about  two thirds  the amount  of the  U.S.,                                                               
even with  longer life expectancies  and lower  infant mortality.                                                               
In the past twenty years,  comparable health care spending by the                                                               
U.S. to  Norway and Switzerland  in percentage of  gross domestic                                                               
product would have  saved the U.S. about $15  trillion, an amount                                                               
equivalent  to  the current  national  debt.   He  reported  that                                                               
Alaska  spends  about 20  -  21  percent  of its  gross  domestic                                                               
product for health  care.  He relayed that the  average salary of                                                               
teachers in the  Anchorage School District had  increased about 1                                                               
percent annually, over  inflation, in the last  30 years, whereas                                                               
the cost of health care  insurance had increased about 15 percent                                                               
each year above  inflation.  This was a challenge  for the Alaska                                                               
State  Legislature.   He  noted  that  the Milliman  Company  had                                                               
compared the  charges for medical  services by various  payers in                                                               
Alaska  with those  charges in  Washington, Oregon,  Idaho, North                                                               
Dakota,  Wyoming, and  Hawaii, and  that Alaska  was much  higher                                                               
than the  other states.   He said that  an all payer  claims data                                                               
base had been studied by  another contractor, which would provide                                                               
information  for  health service  charges  and  quality data  for                                                               
outcomes.   He noted  that 12  states had  this process,  with 18                                                               
others  considering it.   He  pointed  out that  the Health  Care                                                               
Commission  was working  with other  health  care entities,  both                                                               
public and  private sectors.  He  offered as an example  that the                                                               
Human  Resources directors  from the  large for-profit  companies                                                               
had  included  the  cost  of health  care  during  discussion  of                                                               
expansion plans.   He  noted that  the Legislative  Audit process                                                               
had focused on DHSS developing  a health plan, and the department                                                               
had  taken those  policy recommendations  to the  Legislature and                                                               
the governor for guidelines to the  formation of a health plan to                                                               
benefit Alaskans.  He offered his  belief that all the members of                                                               
the Health Commission believed that  its work benefited the state                                                               
and its  citizens.   He requested a  determination of  value from                                                               
the Alaska State Legislature.                                                                                                   
                                                                                                                                
CHAIR HIGGINS asked if there  had been implementation and savings                                                               
for the state from the  recommendations of the Alaska Health Care                                                               
Commission.                                                                                                                     
                                                                                                                                
DR.  HURLBURT  offered  his  belief   that  there  were  results;                                                               
however,  if  the Alaska  State  Legislature  did not  see  those                                                               
results, he would question his  own assessment.  He declared that                                                               
this was  a critical decision  for the  legislature, particularly                                                               
in light  of the  necessity for fiscal  conservation.   He opined                                                               
that, in terms  of value, the response from  larger employers was                                                               
that the  information had  helped to  contain health  care costs.                                                               
He said  that anecdotal reports  indicated that  this information                                                               
was helpful in negotiating rates  to ensure a level playing field                                                               
between payers and  providers for fair levels  of compensation to                                                               
support  a  health  care  industry which  was  sensitive  to  the                                                               
adverse effects of  high costs.  He compared these  high costs to                                                               
a tax.                                                                                                                          
                                                                                                                                
CHAIR HIGGINS questioned  whether the work of  the commission was                                                               
saving the state money and providing the necessary services.                                                                    
                                                                                                                                
3:18:24 PM                                                                                                                    
                                                                                                                                
DEBORAH   ERICKSON,  Executive   Director,  Alaska   Health  Care                                                               
Commission, Office of the Commissioner,  Department of Health and                                                               
Social Services,  addressed the  $500,000 fiscal  note, [Included                                                               
in members'  packets] which had  been proposed in  the governor's                                                               
budget,  as it  reflected  the  ongoing costs  for  the next  few                                                               
years.   She explained  that $335,000 was  paid from  the general                                                               
fund  and  the  remaining  $165,000 from  federal  funds  to  the                                                               
department.  She  reported that this budget  supported two staff,                                                               
travel  for  the  14  commission   members,  and  the  occasional                                                               
facility cost  to host a  meeting with  the private sector.   She                                                               
noted  that  some of  the  budget  was for  professional  service                                                               
contracts for  special studies  on which  the commission  did not                                                               
have  expertise or  capacity.    She offered  an  example of  the                                                               
actuarial  study  comparing   pricing  and  reimbursement  levels                                                               
between  payers in  Alaska, to  better  understand cost  shifting                                                               
between  private  insurance  and  Medicaid, as  well  as  a  cost                                                               
comparison between  Alaska and other  states in our region.   She                                                               
reported that currently  there was a contract  with the Institute                                                               
for Social and  Economic Research (ISER) and  Department of Labor                                                               
&  Workforce   Development  to   survey  private   sector  health                                                               
insurance,  concerns,  and  employee   wellness  programs.    She                                                               
pointed out that there had been  studies related to the impact of                                                               
the  Affordable Care  and Patient  Protection  Act, including  an                                                               
employer survey  to capture information regarding  the actions of                                                               
Alaska  employers both  before and  after  implementation of  the                                                               
individual   mandate,  for   use  as   a  baseline   with  future                                                               
assessments.                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON referred to  the report on "Core Strategies                                                               
for Health  Care Transformation"  [Included in  members' packets]                                                               
and asked how  the commission reached its first  goal of ensuring                                                               
that the best available evidence was used for making decisions.                                                                 
                                                                                                                                
MS.  ERICKSON  replied that  a  series  of more  specific  policy                                                               
recommendations related to  that strategy was an  appendix to the                                                               
commission's 2013  report.   She relayed  that ensuring  the best                                                               
available evidence  was used  for making  decisions was  the most                                                               
important, although  it was more  difficult to implement  and had                                                               
longer  term  implications.    She  offered  an  example  of  the                                                               
learning sessions with the private  medical community in order to                                                               
critically  appraise  medical  literature for  identification  of                                                               
biases  during  reporting  of  studies.    She  said  there  were                                                               
additional techniques  for incorporating evidence  into insurance                                                               
designs,  which were  being discussed  for  employee and  retiree                                                               
health plans.   She noted that the commission  had also presented                                                               
a specific recommendation to the Workers' Compensation Board.                                                                   
                                                                                                                                
REPRESENTATIVE  SEATON asked  that the  upcoming report  show the                                                               
strategy and what was being done to accomplish the strategy.                                                                    
                                                                                                                                
MS.  ERICKSON  directed  attention   to  the  recommendations  by                                                               
Division of  Legislative Audit, which stated  that the commission                                                               
was meeting its  intent, although it was necessary  for an actual                                                               
plan  for implementation  of  the strategies.    She stated  that                                                               
there had  been meetings with  the directors from  state agencies                                                               
that had  a lead role in  health care services.   She referred to                                                               
an appendix  in the 2013 report  that detailed the plan  for each                                                               
agency to implement the recommendations by the commission.                                                                      
                                                                                                                                
3:26:44 PM                                                                                                                    
                                                                                                                                
KRISTIN  CURTIS,  Legislative  Auditor, Division  of  Legislative                                                               
Audit, Alaska State Legislature,  explained that her division had                                                               
conducted a sunset audit of  the commission to decide whether the                                                               
commission   served  the   public   interest   and  whether   its                                                               
termination date should  be extended.  She referred  to the audit                                                               
report  [Included  in  members'   packets].    She  offered  some                                                               
background  on  the  commission and  the  expectations  from  the                                                               
legislature.  The commission had  been started by executive order                                                               
in 2008,  with the  legislature intending  for the  commission to                                                               
achieve  health  reforms  through development  of  the  statewide                                                               
health plan;  however, the original  commission did  not consider                                                               
itself responsible  for the  development of a  plan, and  the new                                                               
commission,  established  in  statute  in  2010,  had  agreed  to                                                               
continue  the  approach  by  the   prior  commission.    The  new                                                               
commission collected  information from  various cost  studies and                                                               
developed high  level policy recommendations,  while establishing                                                               
general  priorities which  evolved  into  a strategic  framework.                                                               
She  directed  attention  to  Appendix  A  of  the  audit  report                                                               
[Included in members' packets].   She declared that the audit had                                                               
concluded that  the commission  was serving  the interest  of the                                                               
public, but  improvements in  the development  of a  state health                                                               
plan  were necessary  to justify  its continued  existence.   She                                                               
stated that the  legislature had intended the  commission to work                                                               
in  conjunction with  Department  of Health  and Social  Services                                                               
(DHSS) to  create a  comprehensive health  plan; however,  as the                                                               
commission   had  not   collaborated  with   DHSS,  Division   of                                                               
Legislative  Audit recommended  only  a three  year extension  in                                                               
order  to  develop  a  plan.     The  audit  concluded  that  the                                                               
commission  was  active,  although   there  was  concern  by  the                                                               
division that the framework lacked  any actionable components for                                                               
effective implementation  and did  not identify  specific actions                                                               
to be taken,  a timeframe for completion,  the person responsible                                                               
for taking  action, a definition  for a successful outcome,  or a                                                               
means to  specifically monitor and  measure progress.   Without a                                                               
statewide  health plan,  the actions  of the  commission may  not                                                               
effectively  impact  health  care  in Alaska.    She  recommended                                                               
coordination with the DHSS commissioner  to identify the role and                                                               
responsibility of each agency and  then pursue development of the                                                               
health  plan.   The audit  also recommended  improvement for  the                                                               
public  noticing of  meetings and  assurance that  annual reports                                                               
include all statutorily required elements.                                                                                      
                                                                                                                                
REPRESENTATIVE  KELLER clarified  that  he was  a  member of  the                                                               
commission,  although  he  did   not  perceive  any  conflict  of                                                               
interest  and he  had no  economic connection.   He  acknowledged                                                               
that he  was biased and  very positive  in general terms  for the                                                               
commission.  He  declared that there was a challenge  to keep the                                                               
health care  system in  Alaska from entering  a crisis,  and that                                                               
everyone on  the commission  had agreed on  the necessity  to cut                                                               
the  costs.    He  opined  that  it  would  get  better,  as  the                                                               
commission had  identified significant issues, including  a focus                                                               
on preventive care.                                                                                                             
                                                                                                                                
3:31:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON referenced the  plan mentioned in the audit                                                               
report, and asked  if the commission agreed with  the findings by                                                               
the  Division   of  Legislative  Audit  to   develop  a  specific                                                               
actionable plan as a primary goal of the commission.                                                                            
                                                                                                                                
REPRESENTATIVE KELLER  replied that  this had  been the  focus of                                                               
the previous commission meeting.                                                                                                
                                                                                                                                
CHAIR HIGGINS offered  his agreement that the  commission had the                                                               
potential to be  really beneficial to Alaska,  and he recommended                                                               
that it be allowed more time.                                                                                                   
                                                                                                                                
3:33:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KELLER  moved  to  report  HB  376,  version  28-                                                               
LS1604\A, out  of committee  with individual  recommendations and                                                               
the accompanying fiscal notes.   There being no objection, HB 376                                                               
was  moved from  the House  Health and  Social Services  Standing                                                               
Committee.