Legislature(2003 - 2004)
04/14/2003 01:01 PM Senate JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SSSB 41-MEDICAL CARE: CRIMES,COSTS,AUDITS
CHAIR SEEKINS announced SB 41 to be up for consideration.
SENATOR LYDA GREEN, sponsor of SB 41, said the cost of the
Medicaid program has risen at an average rate of 11 percent per
year since 1999. Alaska's Medicaid Program has averaged annual
increases of 20 percent, which is more than $100 million per
year and brings the total projected FY 04 program costs to just
under $1 billion in federal and state funds. Factors such as
increased enrollments, increased use of health services and the
increasing cost of pharmaceuticals and long term care are the
greatest contributors to the rise in Medicaid Program costs. The
state has limited ability to contain those costs, but they can
help the program integrity by targeting waste and fraud.
Nationally, the error rate of overpayments in the Medicare
Program is seven percent. There is also the commonly held
perception that fraud committed against the Medicaid Program
nationwide amounts to ten percent. Whether those numbers are
inclusive or not, it accounts for spending of $70 to $170
million. She asked for rigorous controls and frequent scrutiny.
She said that Alaska has no specific health care criminal theft
statutes. Currently, in order to prosecute those who commit
Medicaid fraud, prosecutors must use criminal statutes related
to actions coincidental to the misconduct. You must prove the
conduct was intentional, which is a very high standard to meet
for a crime where there is no crime scene or physical evidence.
Consequently, there have been few prosecutions.
SB 41 provides the legal tools for the fiduciaries of the
Medicaid Program to establish program integrity and maintain
maximum fiscal control. It establishes a crime of medical
assistance fraud; defines the elements that constitute the
fraud; and classifies the crime committed as either a felony or
misdemeanor. It requires independent financial audits to
identify errors, overpayments and criminal violations made to or
by Medicaid providers and requires administrative action within
90 days of each audit. It completes the loop between the
Department of Health and Social Services (DHSS) and the
Department of Law (DOL) by requiring copies of all audits to be
provided to the attorney general and directing him or her to
notify DHESS of any charges of misconduct filed against a
Medicaid provider. Such notice requires the department to
undertake a complete review of any outstanding claims of that
provider. Finally, SB 41 provides that financing of the audits
may be made from the recovery due to the audits of misspent
funds.
SENATOR GREEN said that recommendation 12 from the Division of
Legislative Audit states, "The Legislature should consider
adopting a specific criminal statute related to Medicaid fraud
to enhance the Medicaid Fraud Control Unit's effectiveness."
Recommendation 7 of the same audit states, "DMA's director
should provide for a full-time on-going service provider audit
function."
It's vital that the State of Alaska administer its
Medicaid Program in a manner that insures effective
long-term cost containment while providing needed
medical care to its intended recipients.
She said they must operate honestly, responsibly and in
accordance with the law.
SENATOR OGAN asked why there "shall" be annual audits instead of
"may".
SENATOR THERRIAULT motioned to adopt CSSSSB 41, version \S.
SENATOR ELLIS objected for an explanation of the CS.
MS. TRACI CARPENTER, staff to Senator Green, explained that
version S has the same elements as version Q, but changes the
title, defines medical purpose in section 1 to provide a
prosecutor the tools to use in court and adds a definition of
practitioner, which is already in statute.
SENATOR ELLIS asked why it's necessary to define medical
purpose.
MR. DON KITCHEN, Assistant Attorney General and director of
Medicaid Fraud in Alaska, answered that he did not write that
section, but he understands that it was written during a court
trial when the jury needed a definition. He thought Mr.
Branchflower was the author.
MR. STEVE BRANCHFLOWER, Director, Office of Victims' Rights,
explained that there is no definition of medical purpose in
statute right now and when someone writes a prescription there
is a requirement that it be based on the existence of medical
necessity. Absent the medical necessity, the person that
prescribes is subject to criminal prosecution. If it is found
that the doctor lacks the requisite medical necessity, he or she
can be prosecuted under our drug laws. The problem he had when
he prosecuted doctors for violating drug laws is that the
defense would always assert that there was a medical purpose and
much of the trial would be spent on "a battle of the experts"
trying to define it.
1:45 p.m.
SENATOR ELLIS said he is concerned with over-prescribing drugs
in Alaska and asked if anything else in the CS helps with this
problem.
MR. BRANCHFLOWER explained that the language on page 3 is
probably the most important part of the statute dealing with
prescription fraud from a theft standpoint. Previously he was
commenting on cases where practitioners are prosecuted for
violations of the drug laws of the state, but it's also possible
to prosecute the same practitioners for a theft related offense.
That would be two counts.
TAPE 03-21, SIDE B
MR. BRANCHFLOWER said the medical necessity definition is key as
well as the medical assistance fraud section. Alaska is the only
state that has no criminal statutes specific to the prosecution
of health care practitioners.
SENATOR ELLIS asked if other states had done other things that
could fit within this legislation in terms of prescription pads
and tracking that could help with what he believes is a fairly
significant ongoing criminal activity.
MR. BRANCHFLOWER said it is a problem and this bill is a very
good start. There are employees within the Division of Medical
Assistance who could assist prosecutors in identifying
prescribing practitioners and it would be a matter of permitting
the investigators to sit during Drug Utilization Review
Subsystem (DURS) meetings, which he thought the audit suggested
doing.
SENATOR ELLIS removed his objection and the CS was adopted.
SENATOR OGAN reiterated his question about using "shall" and not
"may" for annually contracting independent audits.
SENATOR GREEN replied the audit function is incredibly important
and has to be repeated although it is cumbersome. The "shall"
language means it is required and they will continue and there
will be follow up.
SENATOR OGAN asked why there is a fiscal note since the recovery
is indicated to be more than the cost of the program. He also
questioned whether it would go into the general fund.
SENATOR GREEN replied the language in the bill says that enough
money could be appropriated to do the next year's audit. She
thought it would be better than a wash.
SENATOR ELLIS asked if there was anything in the bill that went
beyond the effort to contain medical fraud, because his reading
of section 4 on page 7 gives him pause. He wanted to know what
she wanted to accomplish with that section by using the word
"seek" rather than "receive."
SENATOR GREEN replied the department couldn't be held to be
responsible for an individual to receive a service they have not
sought.
SENATOR ELLIS asked if that was a problem in the past.
MR. JACK NEILSON, Assistant Attorney General, said that language
means that the recipient is supposed to seek only the medical
care they need under the Medicaid Program. Some recipients might
want a free trip to Seattle or something like that.
SENATOR ELLIS said he feels the intent language is pretty
subjective. He asked what would happen to a person who was dying
of cancer and was looking for other drugs or something beyond
chemotherapy. Would they be more likely to be accused or
convicted of Medicaid fraud if they were more aggressive in
their concern about their personal care?
MR. NEILSON replied, "Most certainly not."
SENATOR OGAN asked if this language targeted people who used the
emergency room to get Tylenol.
MR. NEILSON said this could be used in that instance.
SENATOR OGAN asked if this was aimed at providers mostly.
MR. NEILSON replied his understanding is that the Legislature
felt recipients should be clear about what medical assistance
they are seeking.
SENATOR ELLIS asked if the fiscal note anticipated any increase
in Medicaid fraud investigators.
SENATOR GREEN replied they would contract with an outside
attorney to do part of the legwork.
SENATOR ELLIS said he feels they will find a lot of new cases
and if there aren't new investigators he questioned whether they
wouldn't fall behind.
SENATOR GREEN said she didn't really know since the division was
in the middle of reorganization. Many of the audits would be
paper audits, which would require backup and substantiation of
services, etc.
MR. BRANCHFLOWER added the Medicaid Fraud Control Unit currently
has three investigator positions and two of those are filled.
The third position is funded, but it is vacant. The unit has 75
percent federal funding and a 25 percent state match. So, the
increased leads these audits are expected to find will result in
the filling of the third position.
SENATOR THERRIAULT motioned to pass CSSSSB 41(JUD), version \S,
from committee with individual recommendations. Senator Ellis
objected to establish that the language in the purpose section
is not intended and wouldn't lessen someone's ability if they
meet the federal and state requirements to participate in the
Medicaid plan and that they are just trying to establish that
people should seek appropriate care.
SENATOR GREEN said that was correct.
SENATOR ELLIS asked if the medical groups in the state expressed
support of the bill.
SENATOR GREEN said she received very little response.
SENATOR ELLIS said he was a little concerned about that as he
would hate to see this effort undercut at some point, because
they weren't aware of this.
SENATOR ELLIS removed his objection and CSSSSB 41(JUD) moved
from committee.
| Document Name | Date/Time | Subjects |
|---|