Legislature(2005 - 2006)BUTROVICH 205
05/01/2006 01:30 PM Senate HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| HB426 | |
| HB467 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 426 | TELECONFERENCED | |
| + | HB 467 | TELECONFERENCED | |
| + | HB 482 | TELECONFERENCED | |
| + | TELECONFERENCED |
CSHB 426(FIN)(title am)-MEDICAL ASSISTANCE/INS COOPERATION
1:33:47 PM
CHAIR DYSON announced CSHB 426(FIN)(title am) to be up for
consideration.
SENATOR ELTON arrived at 1:34:36 PM.
1:34:44 PM
RYNNIEVA MOSS, Legislative Aide to Representative John Coghill,
presented the bill on behalf of the sponsor, noting that it
started out very different from the current version. Its
original purpose was to find ways to ensure that Medicaid
dollars spent in Alaska are spent on people who really need
medical services. She reported finding that, under state and
federal law, if the income of a stepparent or unmarried parent
would disqualify a child for Denali KidCare, it was excluded.
Thus some families in Alaska have household incomes over
$100,000, yet have children who receive medical services through
Medicaid. Ms. Moss said that, because of federal law,
Representative Coghill has had difficulty ensuring that Medicaid
goes only to those who really need it.
What remains of Representative Coghill's original bill on page
9, Section 11, is a request of the department to prepare a
report to look at recommendations for statutory, regulatory and
systematic changes that will help the department reduce medical
assistance expenditures for both residential psychiatric
treatment centers and community mental health facilities.
Under current practice, a child is sent outside for residential
treatment. The child has private insurance for the first 30
days, but if he does not require Level 4 or higher treatment,
the insurance company discontinues payment and he becomes
eligible under Medicaid. Representative Coghill requested that
Medicaid make the same assessment and use the same basic good-
business practices that the private insurance companies use, and
that they enhance and clarify parental financial responsibility
for medical coverage.
This bill also requires Medicaid to maximize all third party
resources available. Under current law, Medicaid can waive the
right to subrogate on a third-party claim. This bill eliminates
that legislation and requires the department to do everything
possible to recover Medicaid expenditures under a subrogated
issue.
SENATOR GREEN arrived at 1:36:23 PM.
MS. MOSS deferred to the Department of Health and Social
Services to explain the bill section by section and said she
would be happy to explain the amendments.
1:38:47 PM
CHAIR DYSON asked which families do not have to count both
adults' incomes when deciding whether the children qualify for
Medicaid.
MS. MOSS answered that if the couple is not married, the
mother's income is counted, then the father or stepfather's
income is counted, but if that income causes the household to be
disqualified for Denali KidCare, it is subtracted from the
equation.
CHAIR DYSON asked if that is under state or federal law.
MS. MOSS responded that it is true under both state and federal
law.
CHAIR DYSON commented on the inconsistency of the practice.
MS. MOSS said they are trying to find a way around it.
CHAIR DYSON asked if there is anything in federal law to prevent
Alaska from saying that the recognition of individuals as a
"couple" for the purpose of obtaining any benefits must be
consistent with regard to obligations as well.
MS. MOSS replied that is already the case in every other element
of public assistance except for Denali KidCare, which has a
special federal exemption.
1:40:49 PM
CHAIR DYSON asked whether this bill will fix the exemption.
MS. MOSS said no, that is one of the reasons it requires them to
study the matter in depth and come back with recommendations for
a statutory fix. She pointed out that this might require the
state to enter into a new agreement with the federal government,
but that Representative Coghill believes it can be done.
CHAIR DYSON commented that this is an inadvertent disincentive
for people to formalize relationships.
1:41:37 PM
SENATOR OLSON asked how many other states have the same type of
consideration for stepparent care.
MS. MOSS replied that Oregon and three or four other states have
found a way around it.
1:42:32 PM
DWAYNE PEEPLES, Director, Division of Health Care Services,
Department of Health and Social Services (DHSS), introduced
himself.
STACIE KRALY, Department of Law (DOL), introduced herself.
MR. PEEPLES explained that HB 426 incorporates several elements
that the department has been working on for cost containment.
Section 1 delineates the responsibilities for health insurance
companies and pharmacy benefit managers, to coordinate and
cooperate with the department for cost recovery. It enables the
department to go back three years from the date of service to
claim reimbursement. The three years is mandated by federal
legislation.
1:44:06 PM
SENATOR GREEN asked how the insurer becomes part of the loop,
whether the department relies upon the insured to provide that
information.
MR. PEEPLES answered that the department has several mechanisms
to obtain insurance information. First, individuals are required
to declare any existing coverages when applying for Medicaid.
Second, the department contracts with Public Corporation Group
(PCG) to perform third-party liability investigations, and
third, it has databases available to research insurance and
eligibility information.
1:45:03 PM
MR. PEEPLES continued to page 2, Section 2, which identifies the
department's more aggressive stance on pursuing subjugated
rights of individuals who were covered by Medicaid at the time
of an injury. He said that the department developed a
Reimbursable Services Agreement (RSA) with the Department of
Law, which allows it to use Assistant Attorneys General to
pursue the liabilities in court and through other actions.
1:45:55 PM
CHAIR DYSON expressed appreciation for the intent, and said that
he is sure some people covered by Medicaid are not diligent
about making repayment when another insurer pays.
1:46:18 PM
SENATOR GREEN asked whether Medicaid is the first payor.
MR. PEEPLES answered not necessarily. If the department
identifies another company as the primary insurer, it picks up
only the portion remaining after the primary insurer has paid.
1:46:42 PM
MR. PEEPLES explained that Section 3, at the bottom of page 2,
further enhances the department's definition of the
responsibility of Medicaid recipients to identify their other
third-party payors, the rights of the department in subjugation
lawsuits, and the responsibilities of attorneys representing
Medicaid recipients in lawsuits and other subjugation cases.
1:47:25 PM
SENATOR ELTON noted that on page 5, line 7, it provides that "a
judgment, award, or settlement that requires or results in
compromise of a lien under AS 47.05.075 may not be entered into
or granted by a court without the express written consent of the
attorney general." He said it seems that the legislature is
saying the court cannot do anything until the attorney general
has "blessed it." He questioned whether there is a separation-
of-powers issue and whether it would require a court rule
change.
MS. KRALY replied that she hadn't thought of it in those terms,
but the premise behind the section deals with the ability of the
DOL to have information and to assure that their subrogation and
lien rights have been adequately addressed in any settlement.
The idea is to interfere with the court's ability to adjudicate
a proceeding without DOL's involvement. She said that DOL looked
at Texas, California and other states with similar provisions,
to ensure that the state's subrogation and lien interests are
adequately protected, but admitted that Senator Elton raised an
interesting question, and said she would look into it and get
back to the committee with an answer.
SENATOR ELTON also asked for clarification of the language
beginning on line 15 that says "no payment can be placed in a
trust for the purpose of maintaining public assistance or
medical assistance eligibility". He asked how that affects the
Qualified Income Trust (QIT), or Miller Trust arrangements under
the federal rules.
MS. KRALY replied that it is a condition precedent that allows
the department to obtain its subrogation and lien interests
prior to a Miller Trust being set up. It does not preclude or
discourage the use of a Miller Trust for maintaining Medicaid
eligibility, but would prevent an individual from turning a
judgment into a trust immediately, without the state's
knowledge, in an effort to avoid paying the state's third-party
subrogation interests.
1:51:17 PM
MR. PEEPLES said that page 6, Section 4, defines the state's
lien priority over settlements and other liens, except tax liens
and those arising from legal fees.
CHAIR DYSON asked who other lienholders might be.
MS. KRALY responded that this section clarifies the state's lien
priority over hospital, nurses', and physicians' liens, but she
did not believe that it would have priority over child support
enforcement or tax liens.
CHAIR DYSON asked if attorneys get their fees before the state
does, based on a court order or decision.
MS. KRALY said that is correct.
1:53:08 PM
CHAIR DYSON asked whether there is a circumstance in which a
claim might be paid by the state, yet leave doctors, nurses or
hospitals unpaid.
MR. PEEPLES answered that in most cases, if Medicaid is paying
and the state is in a subjugation lien position, those medical
services have already been paid based on the state's Medicaid
rates.
CHAIR DYSON asked whether the Medicaid rate paid could be less
than is normally charged, leaving the patient responsible for
the balance.
MR. PEEPLES said no, that Medicaid pays 80 to 85 percent of the
normal rate, but our statutes and the rules laid down by the
Centers for Medicare and Medicaid Services (CMS) stipulate that
hospitals and health-care practitioners cannot collect any
amount above and beyond that.
CHAIR DYSON asked Mr. Peeples to confirm that this section
refers to collecting money from the patient's insurance company
and not the patient.
MR. PEEPLES answered yes, these liens are against other third-
party payors.
1:54:56 PM
MR. PEEPLES said that Section 5 gives the Division of Health
Care Services and medical assistance programs rights to go after
a Permanent Fund Dividend (PFD) in lieu of other sources of
income when there are issues revolving around waste, fraud, and
abuse.
1:55:40 PM
KEVIN D. HENDERSON, Medical Assistance Administrator, Department
of Health and Social Services, addressed Sections 6 and 7. He
said that the department reviews the finances of any person
eligible for long-term care services for three years prior to
the application, and imposes penalties if it finds transfers
made for the purpose of qualifying for the benefit. Section 6
brings the state in line with a recent federal initiative
involving the Deficit Reduction Act of 2005, which precludes
someone from using an annuity to hide assets from Medicaid for
the purpose of eligibility for long-term care services.
1:59:04 PM
MR. HENDERSON said Section 7, subsections (j) and (k), requires
that a person applying on behalf of an unemancipated child under
18 have a responsible relationship to that child.
CHAIR DYSON asked for an example of how someone other than the
responsible individual could apply for a child.
MR. HENDERSON suggested that a teenager estranged from parents
might enlist the aid of friends to help him apply.
CHAIR DYSON asked whether this might sometimes relate to
pregnancy services.
MR. HENDERSON replied that pregnancy services are not
specifically addressed, but could be a reason for seeking
medical services.
Subsection (k) states that the department has a responsibility
to make contact to ensure the involvement of parents or
guardians. The primary reason for this is to find out whether
the parents have insurance and whether they are financially
eligible.
2:01:46 PM
MR. HENDERSON explained that subsection (l) provides the state
with the new ability, due to recent changes in federal policy,
to require an individual who is Medicare eligible to apply for
that coverage as a condition of Medicaid eligibility. Medicare
is 100 percent federally funded, so this is an important step
for cost-containment.
CHAIR DYSON asked Mr. Henderson to repeat his explanation about
section l.
MR. HENDERSON said that historically the state has not been
allowed to require elderly or certain disabled individuals to
apply for Medicare as a condition for Medicaid. This would allow
the state to require that as a condition for eligibility for
Medicaid.
2:03:55 PM
SENATOR OLSON asked why some people don't want to sign up for
Medicare coverage.
MR. HENDERSON said that he has not spoken to anyone who refused
to apply for Medicare, but surmised that some people might want
to avoid government interference.
SENATOR OLSON asked whether the Medicare application process is
long and complicated?
MR. HENDERSON said no.
2:04:38 PM
MR. HENDERSON explained that Section 7, subsection (m) falls in
line with Representative Coghill's intent and with the Deficit
Reduction Act of 2005 that became effective in February of 2006.
It focuses on individuals eligible for long-term care, extending
the length of time to research transfers from 36 to 60 months
and starting the penalty period for hiding assets at the time
the individual applies for Medicaid, making it more difficult
for a person to avoid the transfer-of-asset penalty.
CHAIR DYSON asked Ms. Kraly under what circumstances the state
could prosecute a person for criminal fraud.
MS. KRALY responded that the Alaska Medicaid Fraud Control Unit
(MFCU) can seek criminal indictments for persons who improperly
apply or fraudulently hide assets, but the penalties under these
provisions are generally civil and result in ineligibility for a
"look-back period" and a commensurate time forward.
2:07:03 PM
CHAIR DYSON asked if there is a prohibition against publishing
cases in which individuals paid penalties for improper transfer
of assets in order to enhance Medicaid eligibility.
MS. KRALY replied that she is not sure, but believes the state
would run into privacy issues without due process prior to
public notification.
CHAIR DYSON said that he wishes the department were tracking the
number of cases of fraud and could publish a press release every
few days with the number of people it had caught.
MR. HENDERSON added that these are not criminal activities and
the department handles them by simply not approving Medicaid. He
said people commonly transfer assets to their children, but the
intent of Medicaid policy is to ensure that those who can pay,
do pay for their health care.
2:09:29 PM
MR. HENDERSON explained that subsection (n) also addresses a
provision in the Deficit Reduction Act that says an individual's
primary residence generally is not counted as an asset when
calculating eligibility, even though the home might be quite
valuable. The Federal bill now allows the DHSS to place a cap of
$500,000 on equity in a home for the purpose of Medicaid
eligibility. This bill goes further and applies that standard to
all eligibility categories, not just long-term care.
2:11:10 PM
MR. HENDERSON then addressed Ms. Moss's earlier remarks about
stepparents and eligibility. He said that when the department
considers eligibility for a family unit, it includes the incomes
of both parents in its determinations, regardless of whether the
parents are married; but when determining eligibility for the
child only (Denali KidCare) they are only allowed to include the
income of the person who is financially responsible for the
child. There is no legal provision that makes a stepparent
financially responsible for the stepchild, and the department
would need that rule of general applicability in order for
Medicaid to adopt a rule including both incomes.
CHAIR DYSON asked what happens if the stepparent adopts the
child.
MR. HENDERSON replied that the individual is then considered a
parent and both incomes are counted. He turned the floor over to
Ms. Kraly to explain Section 8.
2:13:36 PM
MS. KRALY said that Section 8 is an amendment proposed to
address some ongoing litigation related to the Home and
Community Based Waiver (HCBW) programs. In two class-action
lawsuits and one individual lawsuit under way in Anchorage, the
plaintiffs allege that the state cannot terminate anyone from
the waiver programs without a showing of material improvement,
but "material improvement" is not defined in state or federal
law, or in any case law that DOL could find. In an effort to
expedite these cases, Section 8 identifies and defines what the
state considers to be material improvement for each of the four
waiver programs.
CHAIR DYSON asked for an explanation of the waiver programs.
MS. KRALY explained that a specific exemption from the federal
government allows the state to provide long-term care services
for disabled persons, specifically: children with complex
medical conditions, persons with mental retardation and
developmental disabilities, older Alaskans, and adults with a
physical disability. This allows recipients to remain in a
community setting, which costs less than a nursing home
facility.
CHAIR DYSON asked under what circumstances the state would want
to remove someone from eligibility for a waiver program.
MS. KRALY said that a person's need for health care might
change. Under the older Alaskans waiver, for example, a person
hospitalized for a broken hip might experience a significant
recovery time and qualify for the waiver during that time; but a
year later, when the individual has healed and is back at home,
he would no longer qualify.
CHAIR DYSON asked for clarification that the court requires the
state to prove, by some undefined criteria, that the individual
has improved to the point that he can live with less state
support.
MS. KRALY said generally, yes. The court issued a preliminary
injunction stating that the state cannot terminate anyone from
the programs without showing material improvement.
2:18:06 PM
MS. KRALY said that the provisions set forth in Section 8 allow
for different standards of improvement for each of the four
waivers and specify that an independent, qualified, health care
professional make the determination.
2:19:00 PM
SENATOR ELTON agreed that the definition of "material
improvement" is important and questioned whether the change in
equity in a home over time is considered material improvement
for purposes of qualification.
MS. KRALY responded that eligibility for waiver services is
different from regular eligibility for Medicaid, which is
addressed in subsection (n). She explained that there has to be
a qualifying diagnosis for eligibility for waiver services, and
the determination of material improvement is likewise medically-
based, more of a physical well-being analysis.
SENATOR ELTON asked Ms. Kraly to confirm that one is financial
the other is physical.
MS. KRALY responded yes.
2:20:36 PM
MR. PEEPLES addressed page 9, Section 9, which repeals the DHSS
ability to do waivers of subjugation in part or in full, and
places the emphasis on settlement of medical claims in their
entirety.
CHAIR DYSON asked if the department agrees with the change.
MR. PEEPLES said yes.
2:22:09 PM
MS. MOSS explained that Section 10 is just an applicability
clause stating that Sections 2 through 4 will be applied to
"causes of action related to subrogation on or after the
effective date".
Section 11 is what remains of Representative Coghill's original
bill.
Sections 12 and 13 relate to the fact that, if the bill passes,
certain sections may require the department to go to the federal
government and change its state plan. If the new state plan is
not approved by the effective date, then the effective date
reverts to the date that it is agreed to by the federal
government.
2:23:59 PM
CHAIR DYSON called for questions, and remarked that this is an
amazing piece of work.
MS. MOSS commended the department. She said that, with the
amendments, they have tried to address the concerns of the
insurance companies as well.
CHAIR DYSON asked in what order Ms. Moss would like to take the
amendments.
2:24:37 PM
MS. MOSS suggested they deal with the simple ones first. She
began with Amendment 1(24-LS1602\XA.4) page 9, line 16, which asks
the department to look at community mental health facilities
that provide services at Levels 2 through 4, as well as
residential psychiatric treatment centers and substance abuse
treatment centers that provide services at Level 5 and Level 6.
2:25:28 PM
CHAIR DYSON moved to adopt Amendment 1, and objected for
discussion purposes.
24-LS1602\XA.4
Mischel
A M E N D M E N T 1
OFFERED IN THE SENATE
TO: CSHB 426(FIN) (title am)
Page 9, line 16:
Following "in":
Insert "mental health treatment facilities located in
the state and outside the state, including community mental
health facilities,"
Following "centers":
Insert ","
Page 9, line 18, following "receiving":
Insert "services provided by mental health treatment
facilities located in the state and outside the state, including
community mental health facilities,"
Page 9, line 19:
Delete "center"
Insert "centers,"
Delete "services"
Page 9, line 20, following "of":
Insert "services provided by mental health treatment
facilities located in the state and outside the state, including
community mental health facilities,"
Page 9, line 21:
Delete "center"
Insert "centers,"
Delete "services"
Insert ","
MS. MOSS reiterated that they are expanding the original
language to include community mental health facilities as well
as residential psychiatric treatment centers and substance abuse
treatment centers.
2:26:31 PM
CHAIR DYSON observed that the rest of the amendment appears to
be simply formatting.
SENATOR ELTON asked for the department's position on the
amendment.
2:26:56 PM
MR. HENDERSON responded that the department does not have any
problem with this provision of the bill. It just broadens the
scope of the study required by Section 11.
SENATOR ELTON asked if they could complete the study within the
scope of the fiscal notes already attached.
MR. HENDERSON said yes.
CHAIR DYSON noted for the record that Janet Clark was nodding.
2:27:40 PM
CHAIR DYSON removed his objection. Without objection, Amendment
1 was adopted.
2:27:59 PM
MS. KRALY explained that Amendment 2 comprises technical
corrections for dealing with worker's compensation claims and
the subrogation and lien provisions in Section 3 of the bill.
She noted that these changes were drafted in conjunction with
the Department of Labor and Workforce Development, Worker's
Compensation Division.
2:29:21 PM
CHAIR DYSON moved to adopt Amendment 2, and objected for
purposes of discussion.
24-LS1602\XA.3
Mischel
A M E N D M E N T 2
OFFERED IN THE SENATE BY SENATOR DYSON
TO: CSHB 426(FIN) (title am)
Page 3, lines 26 - 28:
Delete "Before pursuing an action or claim on behalf of a
medical assistance recipient for care or services for an injury
or illness for which medical assistance was received, an"
Insert "An"
Page 3, line 29, following "representing":
Delete "the"
Insert "a"
Page 4, line 17:
Delete "An"
Insert "Except for payments under AS 23.30, an"
Page 4, line 19:
Delete "all proceeds"
Insert "any lump sum settlement or judgment"
Page 4, lines 23 - 29:
Delete all material and insert:
"(e) An attorney who fails to comply with this
section is not entitled to the pro rata reduction under
AS 47.05.070(c). If the attorney has already received
payment for the attorney's services through the pro rata
reduction as provided in AS 47.05.070(c), the attorney is
civilly liable to the department for the amount of that
payment."
Page 6, following line 1:
Insert a new subsection to read:
"(h) Notwithstanding (a) - (g) of this section, a
third-party payor shall be held harmless if it settles or
compromises a dispute in good faith and without knowledge
that the individual is a recipient of medical assistance."
2:29:35 PM
MS. MOSS suggested amending Amendment 2 as follows: On page 2 of
the amendment, after the words "notwithstanding (a) - (g) of
this section, a third-party payor shall", delete the words "..be
held harmless" and insert "..have no further liability".
2:29:54 PM
CHAIR DYSON moved to adopt the foregoing as an amendment to
Amendment 2. Without objection, it was so ordered.
SENATOR ELTON said his interpretation of Amendment 2, line 18,
is that an attorney representing the recipient, "who fails to
comply with this section", loses out on his fee and asked if
that is correct.
MS. KRALY answered yes, that it is a penalty provision to
encourage the plaintiff's attorney to participate in the
process. An attorney representing a Medicaid recipient must
fulfill the obligations and duties under the statutory
provision, to cooperate with the Department of Law, to provide
notice, and to keep DOL involved in any negotiations once it has
established a subrogation and lien interest. If he fails to do
so, under this provision he loses his pro rata reduction, (his
attorney's fees) in a lien situation.
SENATOR ELTON said he assumed it was the recipient's
responsibility, rather than the attorney's, and asked if this
shift in responsibility is common in law, and whether it has
been done in other states.
MS. KRALY said that DOL looked at a number of different states
when drafting this bill, and found that this is a prevailing
theme. It also tracked the Deficit Reduction Act language, where
there is increased responsibility on the part of insurance
companies to participate and provide information to state
Medicaid agencies for third-party recovery. She said that in
response to Senator Elton's specific question, she did not see
it as a shift in the burden of responsibility.
2:33:13 PM
SENATOR ELTON commented that the attorney's responsibility is to
his client, and the client's interest may be subverted because
of an additional requirement placed on the attorney. It seems to
put the attorney in the position of serving two clients, the
fiduciary best interest of Alaska, as well as the best interests
of the client.
MS. KRALY responded that it is not a bifurcation of the duty of
the attorney, because the requirement of the attorney to
represent and advocate for his client includes his requirements
and his understanding of the subrogation and lien interests as
set forth by statute. These provisions are additional
clarifications of what are existing duties in state and federal
law. She argued that the attorney would not be acting in his
client's best interest if he did not engage with the state.
SENATOR ELTON asked Ms. Kraly whether it would be unusual for an
attorney not to know about a lien placed by the state.
MS. KRALY responded that it would be highly unlikely that an
attorney representing a Medicaid client would not have knowledge
of the existence of a lien.
2:36:37 PM
CHAIR DYSON removed his objection to Amendment 2 as amended, and
asked whether there was further objection. Without objection,
Amendment 2 was adopted as amended.
SENATOR ELTON said he had no objection, but asked whether there
would be a further referral.
MS. MOSS replied yes, to Senate Finance.
SENATOR ELTON said that another committee of referral would give
him the opportunity to check with the legal community for
additional clarification.
CHAIR DYSON asked if Ms. Moss would like the last amendment to
go forward today.
2:37:39 PM
MS. MOSS said yes. She explained that Section 1 is federally
mandated. Amendment 3 is more cooperative, and was worked out
with the insurance industry, Department of Law, and Health and
Social Services, as a compromise to the language in the original
bill.
24-LS1602\XA.2
Mischel
A M E N D M E N T 3
OFFERED IN THE SENATE BY SENATOR DYSON
TO: CSHB 426(FIN) (title am)
Page 1, line 10, through page 2, line 9:
Delete all material and insert:
"* Section 1. AS 21.09 is amended by adding a new section to
read:
Sec. 21.09.240. Cooperation with the Department of
Health and Social Services. An insurer, including a
pharmacy benefits manager, with respect to medical
assistance programs under AS 47.07, shall cooperate with
the Department of Health and Social Services to
(1) provide, with respect to an individual who
is eligible for or is provided medical assistance under
AS 47.07, on the request of the department, information to
determine during what period the individual or the
individual's spouse or dependents may be or may have been
covered by the insurer and the nature of the coverage that
is or was provided by the insurer, including the name and
address of the insurer and the identifying number of the
health care insurance plan;
(2) accept the department's right of recovery
and the assignment to the department of any right of an
individual or other entity to payment from the party for an
item or service for which payment has been made under
AS 47.07;
(3) respond to any inquiry by the department
regarding a claim for payment for any health care item or
service that is submitted not later than three years after
the date of the provision of the health care item or
service; and
(4) agree not to deny a claim submitted by the
department solely on the basis of the date of submission of
the claim, the type or format of the claim form, or a
failure to present proper documentation at the point-of-
sale that is the basis of the claim if
(A) the claim is submitted by the
department within the three-year period beginning on
the date on which the item or service was furnished;
and
(B) any action by the department to enforce
its rights with respect to the claim is commenced
within six years after the department's submission of
the claim."
Page 10, following line 6:
Insert a new bill section to read:
"* Sec. 15. Section 1 of this Act takes effect July 1, 2007."
Renumber the following bill section accordingly.
Page 10, line 7:
Delete "sec. 14"
Insert "secs. 14 and 15"
MS. KRALY affirmed Ms. Moss's statements and said that the
language in Section 1 is basically a recitation of the language
from the Deficit Reduction Act, so the language, in and of
itself, is not problematic. She said that there is a request to
amend Section 13 to provide for an effective date of July 1,
2007. As she interprets the Deficit Reduction Act however, the
effective date of this provision is actually January 1, 2006, so
she doesn't know where the delayed effective date came from.
DOL's position is that the state is 6 months past the effective
date and to delay another year would put it out of compliance
with the federal rules. She said she would continue to look for
confirmation of the effective date in the Deficit Reduction Act.
MS. MOSS said that she asked the insurance industry to provide
documentation of the effective date today.
CHAIR DYSON commented that if the insurance industry provides
supporting documentation, they would leave the effective date at
July 1, 2007 as in Section 15.
MS. MOSS said she would leave that to the call of committee.
CHAIR DYSON asked Ms. Kraly whether she recommends that they
make the date January 1 or July 1, 2006, if the insurance
industry cannot provide support for the delayed date.
MS. KRALY said that the effective date of the bill is July 1,
2006 but it is to the call of committee, as she could not find
it in the federal legislation.
2:41:06 PM
SENATOR ELTON said that he has read the amendment and looked at
the language in the bill, but still does not see what is being
described as a compromise.
MS. MOSS presented an example: "prompt verification of an
assignment and right to recovery" versus "accept the
department's right of recovery and the assignment of the
department of any right of an individual". The amended language
is not so direct or intimidating.
SENATOR ELTON restated that the language is "softer", less of a
mandate to the insurer to cooperate.
MS. MOSS said yes.
SENATOR ELTON commented that he finds it troubling that, on one
hand the state is telling attorneys that if they don't
cooperate, they stand to lose money; while on the other it is
adopting an amendment to soften the language for another party.
2:43:23 PM
CHAIR DYSON asked if the DOL is OK with the softer language.
MS. KRALY replied yes.
SENATOR ELTON asked if DHSS is OK with it.
MR. PEEPLES replied yes.
2:43:58 PM
CHAIR DYSON announced that he was removing his objection to
Amendment 3 and asked whether there was further objection.
SENATOR ELTON objected. He said that he wouldn't speak to the
objection, but thinks they are going in two different
directions.
The roll was called. Voting to adopt Amendment 3 were Senators
Wilken, Green, Olson and Dyson; voting against it was Senator
Elton. Amendment 3 was adopted 4-1.
CHAIR DYSON announced that they would take public testimony.
2:45:19 PM
JIM DAVIS, Attorney at Law, Northern Justice Project, Anchorage,
testified via teleconference against Section 8 of CSHB 426,
stating that it would be a bad policy for the state. He said
that the waiver programs allow disabled senior Alaskans, for
example, who would otherwise be institutionalized, to stay in
their homes, and saves the state a lot of money.
Mr. Davis was representing a group of senior Alaskans who were
notified that their services were terminated due to
ineligibility after the state contracted the assessment process
to a private firm in 2005. The lead plaintiff in the case was a
90-year-old Alaskan who had Alzheimer's for years, and whose
doctors did not expect her to improve. A judge in Anchorage said
the action was so unfair as to violate due process, and another
judge said the same in a similar case. Mr. Davis said that
Section 8 of this bill attempts to ratify that which two courts
have already found to be manifestly unfair. He also said that it
is not true that the state has no way to define material
improvement, the issue has come up time and again in the social
security system and the courts have had to articulate that
definition. He recommended the state look at what other
jurisdictions have done.
CHAIR DYSON thanked Mr. Davis for his testimony and called Tom
Johnson from Liberty Northwest Insurance.
2:51:14 PM
TOM JOHNSON, General Counsel, Liberty Northwest Insurance
Corporation (LNW) testified in favor of Amendment 2 and the
amendment to Amendment 2. He said Section 3 of the bill goes
beyond the federal requirements addressed in Section 1 and tries
to give the department tools to deal with the "double-dipping"
problem that was described earlier.
MR. JOHNSON said that the problem with Section 3 as written, is
that it would make it illegal to settle a case with a Medicaid
recipient without the Attorney General's involvement. The
insurer has no way of knowing whether the insured is a Medicaid
recipient, or whether he and his attorney have met the
requirements of Section 3. To avoid paying money for an illegal
and probably voidable settlement, the insurer would have to
notify the Attorney General in every case, which would increase
adjustment costs and delay claims. The Amendment is very
important because it allows the insurer that is acting in good
faith, to settle without further liability in the settlement.
CHAIR DYSON thanked Mr. Johnson for his testimony and called
Kenton Brine of Property Casualty Insurers.
2:53:57 PM
KENTON BRINE, Northwest Regional Manager, Property Casualty
Insurers Association of America, a trade association
representing about 1,000 member companies across the United
States, testified in favor of Amendment 2 as amended. He echoed
the comments of Mr. Johnson, and said that they are also
concerned about the impact of this legislation, and that the
amendments adopted by the committee are a substantial
improvement upon the original language. All of problems he saw
with the bill centered on the previous version of Section 1, and
the original versions of Sections 2 and 3. He had no objection
to the remainder of the bill, and said that he would like the
opportunity to send the amended version to the association's
members.
2:56:28 PM
CHAIR DYSON said he believed the amended bill would be available
at the sponsor's office later today, and that if the committee
did act on it, it would come up next in Senate Finance, where
the committee members would be happy to hear any additional
comment.
2:57:18 PM
CHAIR DYSON asked whether anyone else in the room wanted to
testify.
2:57:29 PM
SENATOR ELTON suggested that it was premature to move the bill
forward.
CHAIR DYSON called an at-ease from 2:58:10 PM to 2:58:42 PM.
CHAIR DYSON said that this is a significant piece of
legislation, and that it appears to represent a great
collaboration between several departments and the industry.
2:59:05 PM
SENATOR GREEN moved to report CSHB 426(FIN)(title am), as
amended, from committee with individual recommendations and
accompanying fiscal notes.
SENATOR ELTON objected. He said he understands the time
constraints, but the sponsor did not explain everything
adequately, and the committee made substantial amendments. He
felt that they should have a greater level of comfort with the
bill before moving it on and pointed out that, although the rest
of the committee members are on the next committee of referral,
he is not.
SENATOR ELTON removed his objection.
3:00:24 PM
CHAIR DYSON committed to bring Senator Elton's concerns to the
Senate Finance Committee.
SENATOR ELTON noted that Ms. Kraly agreed to check into the
language that would preclude the court from entering into a
judgment without the Attorney General's approval.
CHAIR DYSON added that they also expect guidance from Ms. Kraly
on the effective date.
CHAIR DYSON announced SCS CSHB 426(HES) was reported from the
Senate Health, Education and Social Services Standing Committee.
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