Legislature(2015 - 2016)SENATE FINANCE 532
03/04/2016 08:30 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB74 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 74 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 74
"An Act relating to permanent fund dividends; relating
to a medical assistance reform program; establishing a
personal health savings account program for medical
assistance recipients; relating to the duties of the
Department of Health and Social Services; establishing
medical assistance demonstration projects; and
relating to a study by the Department of Health and
Social Services."
8:44:58 AM
Co-Chair MacKinnon stated that the purpose of the day's
meeting was to discuss the fiscal notes. She indicated that
the bill would be set aside, as the committee was waiting
for a committee substitute reflecting the work done the
previous day. Some of the fiscal notes were still in draft
form but were being finalized. She asked if there was
anything to come before the committee before reviewing the
fiscal notes.
Co-Chair MacKinnon specified that in the previous day
twenty-seven amendments were offered of which twenty-six of
them were passed and one was withdrawn. She relayed that
with the committee's support she and her staff had divided
the fiscal notes into departments so that one person could
testify at a time. She invited Ms. Hovenden from the
Department of Commerce, Community and Economic Development
(DCCED) to come to the table to testify.
8:46:41 AM
JANEY HOVENDEN, DIRECTOR, DIVISION OF CORPORATIONS,
BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, indicated
that with her was Sarah Chambers, the Division's operations
manager.
SARAH CHAMBERS, ADMINISTRATIVE OPERATIONS MANAGER, DIVISION
OF CORPORATIONS, BUSINESS AND PROFESSIONAL LICENSING,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
introduced herself.
Senator MacKinnon clarified that there were two fiscal
notes that the team would discuss. The fiscal notes were
from DCCED. She corrected herself reporting there was only
one fiscal note from the department.
8:47:45 AM
AT EASE
8:49:24 AM
RECONVENED
Co-Chair MacKinnon asked Vice-Chair Micciche to cover the
financial portion of the fiscal note with an Office of
Management and Budget (OMB) component number 2360.
8:49:49 AM
AT EASE
8:50:08 AM
RECONVENED
Vice-Chair Micciche discussed the draft fiscal note, OMB
component number 2360. He reported appropriations for FY 17
in the amount of $443.6 [thousand] for personal services,
$3 thousand for travel, $89.2 thousand for services, and
$25 thousand for commodities. The FY 17 total was $560.8
thousand. He reported that nearly the same split minus
commodities each year totaled $607.4 thousand from FY 18
through FY 22.
8:50:56 AM
Ms. Hovenden relayed that SB 74 encompassed the
Prescription Drug Monitoring Program (PDMP) portion that
affected the division. She explained that SB 98, the
telemedicine bill, was imported into SB 74.
Senator MacKinnon asked Ms. Hovenden to avoid the use of
acronyms.
Ms. Hovenden continued that the bill would incorporate $443
thousand for one full-time permanent program coordinator I
to manage the PDMP, two full-time permanent occupational
licensing examiners, and two full-time permanent
investigator III's who would help with the telemedicine
portion. The cost of travel was $3 thousand for the program
coordinator to attend two board meetings and to engage with
communities and stake holders in the state opioid control
program. The cost of services was $25 thousand for legal
costs to amend the regulations, printing, and postage in
the first year. Other services equaled $12 thousand for
printing and postage to notify prescribers who would be
required to register. The cost of contracts was $2.2
thousand to expand the periodic data matching (PDM)
database from monthly to weekly. The amount of $108.6
thousand was for legal costs of investigations and appeals
beginning in the second year. There was also a cost of $50
thousand for department-wide services support for five new
positions.
8:53:11 AM
Ms. Hovenden discussed commodities. The cost equaled $5
thousand in the first year for computers, office panels,
office furniture and other one-time needs for the five new
positions. The division was a receipt supported service,
therefore any fees that were not covered by any grants
would be covered by licensees.
8:53:38 AM
Senator Bishop wondered if the committee was ready for
comments on the fiscal notes.
Co-Chair MacKinnon directed attention to the analysis on
the second page of the fiscal note, remarking that there
was a specific summary of the function of the program. She
highlighted that the program was covered by receipts rather
than from general fund (GF) dollars in an effort to monitor
and make Alaskans safe as they utilized different opioids
that were prescribed by pharmacists.
8:54:07 AM
Senator Bishop was curious if there was surplus commodities
that could be repurposed to save money such as furniture
and computers.
8:54:42 AM
Senator Olson remarked that the amount accounted for travel
did not seem adequate to cover the costs for an
investigator to be able to go in the field to perform
investigations.
Ms. Hovenden asked the senator to restate his question.
Senator Olson pointed to the second line down on the fiscal
note after personal services. Travel was funded at $3
thousand. She had talked about the number of people that
would be hired, investigators that would have to travel to
do an adequate job. He did not think $3 thousand was a
sufficient amount of funds.
Ms. Hovenden commented that the investigations section used
other state investigations whenever possible in order to
avoid traveling. An exceptional case could require an
investigator to travel across state lines or for
investigative purposes.
8:56:04 AM
Senator Olson had a question pertaining to the increase for
medical licensing in the State of Alaska because of
telemedicine. He asked if the fee for a person practicing
telemedicine that might not be in Alaska was the same as
for a practitioner that resided in-state.
Ms. Hovenden responded that out-of-state practitioners
would be required to pay the same fee as an in-state
medical licensee.
8:56:42 AM
Co-Chair Kelly shared that he knew Ms. Hovenden from
outside of the legislature and welcomed her to Senate
Finance.
8:57:06 AM
Co-Chair MacKinnon referred to page 2 of the fiscal note.
The department was suggesting that the division had seen a
400 percent increase in medical license applications since
telemedicine was expanded through legislation effective
November 2014. She asked if the percentage number was
representative of 1 application, 10 applications, or 100
applications.
Ms. Hovenden deferred to Ms. Chambers.
Ms. Chambers stated that the increase that the division had
seen over the previous year and half made up the sum total
of all of the physician and other licenses regulated by the
medical board which were in the 100s currently for new
applications. An example of how the division was able to
identify the increase with telemedicine was that since the
effectiveness of HB 281 [Legislation passed in 2014 - Short
Title: Prescription without Physical Examination]
telemedicine companies were sending in stacks of 20-30
applications at a time. The division was obliged to license
them if they were qualified. She was uncertain at present
if they were all planning to practice under current law and
come to Alaska to perform telemedicine services or were
anticipating the passage of SB 74.
8:59:01 AM
Co-Chair MacKinnon asked in a normal application period,
prior to the bill HB 281 that allowed telemedicine practice
in Alaska, how many doctors sought licensure in the state.
Ms. Chambers did not have immediate access, but agreed to
provide the committee with the information. She thought
that typically the division saw about 10-20 new
applications per month. The exponential growth exploded
after HB 281 became law.
8:59:59 AM
Co-Chair MacKinnon asked how long it took the licensing
board to approve those applications, and how it was
different currently. She wondered if it took the same
amount of time.
Ms. Chambers responded that typically it took two to three
months to process a physician's application, due to the
amount of documentation that needed to come from hospitals
with privileges and other licensing jurisdictions. Once the
information was received the division's staff took about
twenty days on average to process the license. Processing
time was outside the division's administrative process.
However, in the previous summer the division saw delays
increase because of the additional workload. The division
had taken several steps administratively to mitigate the
delays. The division was currently back to the twenty day
processing window. Any applications that needed
investigative review or additional board review due to
malpractice claims or other professional fitness might take
a little longer. She summarized that the division went from
eight to twelve weeks to the previous summer taking up to
six months. The division had been able to remedy the issue
administratively, however, there was no additional margin
without expansion in staff.
9:01:38 AM
Vice-Chair Micciche wondered if the division went from five
to twenty applications. He wondered if the division was
close to licensing several of the providers wanting to
participate in the telehealth industry in Alaska that were
anticipating the passage of the bill. He asked if she
thought the workload would be dramatically reduced once the
companies had their physicians licensed.
Ms. Chambers thought that any forecasting of numbers of
telemedicine providers would be conjecture. Based on the
interest and the growth in the telehealth business model
across the US, she did not believe the division had come
close to exhausting the number of telemedicine companies
that would be seeking licensure in all fifty states. She
had seen an increase in the number of providers that wanted
to practice in Alaska and did not think telemedicine would
be diminishing as an American healthcare model any time
soon.
9:03:30 AM
Vice-Chair Micciche reminded the committee that the costs
were covered by the licensees. He wondered if it would be
helpful for there to be an out-of-state fee adjustment for
providers if the costs continued to be a larger proportion
of the burden. He would be supportive of charging out-of-
state physicians a greater license fee.
9:04:15 AM
Co-Chair Kelly agreed with Ms. Chambers' comment about
telemedicine not diminishing as a healthcare model well
into the future.
9:04:29 AM
Senator Olson commented on the 400 percent increase in
applications. He wondered if it was accurate that the
division thought there would be roughly 8 thousand to 9
thousand physicians licensed in the State of Alaska.
Ms. Chambers reported that there were 4.1 thousand
physicians licensed in the state regardless of their
location. The department could only see the amount
expanding. However, she did not know if the amount would
increase by 20 thousand or 50 thousand - it would be
difficult to determine. The division was evaluating the
numbers as well as its experience being as conservative as
possible with the goal of still meeting service level needs
that the facilities demanded.
Senator Olson commented that a potential investigator would
have to travel. He reiterated his point that the proposed
$3 thousand for travel related to investigation seemed
insufficient.
9:06:22 AM
Vice-Chair Micciche stated that the department's
expectation was that the investigations would take place
within the state, and the state would make a license no
longer valid until an investigator was able to do an
evaluation. Further, if it appeared that additional funding
was needed he would support the idea. He encouraged the
department to think about it.
9:07:10 AM
AT EASE
9:07:33 AM
RECONVENED
Co-Chair MacKinnon set aside DCCED's fiscal note. She
directed the committee to the Department of Law's (DOL)
fiscal note component 2203. She invited Mr. Skidmore to the
table. She directed Senator Micciche to walk through the
highlighted financials on the front of the fiscal note.
Vice-Chair Micciche indicated the fiscal note was from DOL,
the appropriation was for the Criminal Division, OMB
component number 2203. The allocation was for the criminal
appeals and special litigation. He detailed the FY 17
requested appropriation: $316.6 thousand for personal
services, $1.5 thousand for travel, $39.8 for services,
$6.1 for commodities, and $1.5 for capital outlay. The
total FY 17 appropriation request was $365.0 thousand. He
noted that in the out years the numbers were consistent at
$365 thousand. He relayed that the fund sources included
primarily federal receipts of $273.7 thousand, and GF
dollars in the amount of $91.3 thousand.
9:09:00 AM
Co-Chair MacKinnon explained that the funding source would
be an issue for her. She thought the money should be
matching funds from receipts received from the program. The
committee would review her concern prior to moving the bill
from committee. She invited Mr. Skidmore to walk members
through the details of the fiscal note.
9:09:22 AM
JOHN SKIDMORE, DIRECTOR, CRIMINAL DIVISION, DEPARTMENT OF
LAW, addressed the fiscal note. He explained that the
fiscal note talked about adding a program for the False
Claims Act. He explained the False Claims Act encouraged
citizens to file claims when they believed there had been
fraud within a Medicaid application either by a recipient
or a provider. It encouraged citizens to make claims
because they could benefit from bringing it to the
attention of state government. He furthered that the law
would require the department to review the claims, because
any claim brought forward was actually brought forward on
behalf of the state. Additionally, when claims were
reviewed there was one of four outcomes. First, the
department could decline the claim from going forward if it
was already the subject of a criminal investigation.
Second, the department could dismiss the claim because the
department believed it to be frivolous. The third potential
outcome was that after reviewing a case the department
could determine that the citizen should move forward with a
complaint on their own. The department would not be
prosecuting a civil action, but a citizen would likely have
a lawyer that would be acting on their behalf. He noted
that the third option would be the opportunity that would
have the greatest amount of benefit to the citizen. The
forth possibility was that the state would look at the
claim, decide it was appropriate, and that the state's
lawyers would pursue the claim. In such a circumstance
there was a greater recovery for the state than for the
citizen.
Mr. Skidmore referenced one attorney and one paralegal
requested on the fiscal note that were originally intended
to be on the civil side of the Department of Law. However,
it was determine that the more appropriate place for them
was in the Medicaid Fraud Control Unit (MFCU) for the
Criminal Division. He thought the benefit for placing the
positions in MFCU was that 75 percent of the unit's cost
was paid for with federal funds. Only 25 percent of the
costs were paid with state funds. He also mentioned that
instead of having just one attorney and one paralegal
assigned there were already two other attorneys that were
within MFCU as well as 10 investigators to allow for more
resources to apply to the review of cases. Conversely, the
other benefit that existed was that the MFCU had seen in
the previous several years an uptick in the number of cases
the unit took and the number of recoveries received as well
as saving the state in the neighborhood of $30 million.
Even if there was not a significant number of false claims,
initially, he suggested the additional resources placed
within MFCU could also be used to further prosecute other
cases within the unit that the department hoped would
increase the types of recoveries that they were already
seeing on the criminal side.
9:12:48 AM
Mr. Skidmore concluded that the option in front of the
committee was that if the fiscal note was fully funded it
would be the most robust scenario for Department of Law and
for the state in the pursuit of false claims. He understood
there had been some questions and concerns about whether
the state and the criminal division could absorb the costs
without adding any additional personnel. His response was
that there was the possibility that the state could attempt
to absorb them. However, in that case, it would not be
possible for the department to exercise the forth option of
pursuing any claims civilly. The current attorneys would
not have the capacity to do so. The other three options
would remain available. He explained that the difficulty in
making an assessment would be the number of referrals
brought to the Criminal Division of the Department of Law.
He asserted that the department could not predict the
number of referrals that would be brought to the criminal
Division. If there were only a few false claims brought to
the department spread out proportionately over time it
would not have a dramatic impact on the division. However,
if there were several claims initiated, without the
additional resources, a policy decision would have to be
made as to whether the savings would be worth having to cut
back the funding for criminal prosecutions or provide the
funding to be more robust. He made himself available to the
committee for questions.
9:14:22 AM
Senator Olson asked about the department's position on
using funds to pursue Medicaid fraud cases in lieu of other
criminal cases. Mr. Skidmore thought that when talking
about Medicaid fraud, MFCU was devoted strictly to these
types of cases. The department's ability to talk about
other white collar cases. He suggested that because it was
within Medicaid fraud the state had resources to try to go
after those types of cases. As to whether it was criminal
or civil, he explained that criminal cases had a higher
burden of proof and civil cases had a lower burden of
proof. Having the civil option would allow the state to
pursue additional fraud claims that it would otherwise have
not been able to pursue civilly.
9:15:43 AM
Senator Olson asked if it included being able to recoup
some of the money. Mr. Skidmore answered in the
affirmative. Senator Olson clarified that it applied to the
civil portion. Mr. Skidmore responded affirmatively.
9:15:54 AM
Co-Chair MacKinnon asked how many attorneys the state had
on the civil side and on the criminal side.
Mr. Skidmore provided an approximation of 120 attorneys on
the criminal side. The criminal attorneys were spread
across the state in 13 different offices and were
responsible for the prosecution of "street crimes"
(robbery, murder, rape, assaults, and thefts). The same 120
attorneys included a division that handled the appeals of
the criminal cases as well as a special prosecutions unit.
The attorneys in that unit handled various types of cases
including child support cases and fish and wildlife cases.
Most of those attorneys were paid for with reciprocal
service agreements (RSA's). He did not have the numbers for
the Civil Division close at hand but would provide them.
Co-Chair MacKinnon would reach out herself.
9:17:30 AM
Co-Chair MacKinnon directed attention to fiscal note
component 2665 and invited Deputy Commissioner Sherwood to
the table. She indicated that the remaining fiscal notes
were from the Department of Health and Social Services
(DHSS).
Vice-Chair Micciche indicated the fiscal note pertained to
the Division of Behavioral Health. He reviewed the FY 17
appropriation request:
Personal Services: $115.9 Thousand
Travel: $ 2.0 Thousand
Services: $ 9.4 Thousand
Commodities: $ 8.1 Thousand
Total Operating: $135.4 Thousand
Senator Micciche pointed out that there was a 50/50 match
between federal and GF dollars. He highlighted that in
looking at FY 18 and into the future the only reduction was
in commodities for a total of $127.8 thousand offset 50/50
between the federal and GF match.
9:19:01 AM
JON SHERWOOD, DEPUTY COMMISSIONER, MEDICAID AND HEALTH CARE
POLICY, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, gave a
brief overview of some common information to avoid some
questions while going through the fiscal notes. He detailed
that DHSS had 13 fiscal notes, many of which were
interconnected and addressed multiple provisions of the
bill. He would do his best to provide an overview of each
note. He had many people available for questions on the
phone and in the room. He informed committee members that
the department had not had time to update the fiscal notes
to reflect the 26 amendments that had been adopted the
previous day. The fiscal notes did not include estimates of
the financial participation from the Alaska Mental Health
Trust Authority (AMHTA), noting that the Trust had
indicated its willingness to provide support in Medicaid
reform. He emphasized the department's deep appreciation of
the support of the Trust and its partnership. The amount
and the specifics of the Trust's participation would be
decided on later in the month. The department wanted to
respect the Trust's process.
9:20:54 AM
Mr. Sherwood addressed fiscal note 2665, stating that the
bill called upon the department to coordinate with the
AMHTA to manage a comprehensive integrated behavioral
health system. The department planned on implementing
significant behavioral health performance and would apply
for an 1115 waiver. The fiscal note reflected the cost of
one position in the Division of Behavioral Health to work
on the division's redesign and the 1115 waiver. The
position would also support the contracting efforts with an
administrative services organization once the waiver was
operating. There was an extra cost in the first year in
order to get new equipment for the new employee.
9:21:39 AM
Co-Chair MacKinnon asked if it was fair to say that there
would be a fiscal note in the group that contained a
negative number.
Mr. Sherwood confirmed that several of the fiscal notes had
negative numbers, but added there would be some costs in
some components.
Co-Chair MacKinnon pointed out that all that had been
discussed were additional state employees that required
additional investment versus the fiscal notes with cost
saving measures. She wanted to clarify that the purpose of
SB 74 was to reform the system to provide quality services
to Alaskans but to also reduce or redirect some of the
funds. The cost saving fiscal notes would come before the
committee.
9:22:29 AM
Vice-Chair Micciche assumed that with the letter from the
Centers for Medicare and Medicaid Services (CMS) the level
of coverage would be much higher for some behavioral health
services. He asked if the number was conservative. He also
asked if some of the matches would be higher than 50/50.
Mr. Sherwood confirmed it was the administrative component.
He specified that the higher matches had to do with
Medicaid services and certain specialized administrative
functions. The one being addressed was the general
administrative match of 50/50.
9:23:15 AM
Co-Chair MacKinnon directed attention to fiscal note OMB
component number 242.
Vice-Chair Micciche reviewed the fiscal note applicable to
the Division of Health Care Services medical assistance
administration costs. He relayed the FY 17 appropriation
request:
Personal Services: $355.9 Thousand
Services: $107.9 Thousand
Commodities: $ 37.4 Thousand
Total Operating: $501.2 Thousand
Vice-Chair Micciche noted a similar 50/50 fund source match
of federal receipts and GF monies. On outgoing years there
was a slight increase for personal services and services
and a reduction of commodities bringing the value to
$529.00 in FY 18. The total would decrease to $412.1
thousand in FY 20 and remain the same through FY 22.
9:24:34 AM
Mr. Sherwood explained that the fiscal note was for the
department's medical assistance administration component
where many of the administrative and support components for
the Medicaid program were located. Many parts of the bill
impacted the support components including fraud and abuse
prevention, primary care case management, health homes, the
emergency room reduction project, the coordinated care
demonstrations, and the tribal claiming policy change. The
largest part of the fiscal note is personnel costs. On
position would be added to develop regulations, policy, and
work on appeals for fraud provisions. He reported that
typically, the department saw an increase in appeals
activity when changes were made that might adversely impact
providers. He expected that the position would be
eliminated after two years. There were two positions that
would be added to work on primary care case management,
managed care provisions in Section 18, health homes,
telemedicine provisions in Section 19, and the hospital and
emergency room reduction project in Section 20. One
position would be added to implement and support the new
tribal claiming policy. The state needed to track, process,
and oversee the contract provisions for providers required
to get an enhanced federal match. The department increased
its services line by $75 thousand per year to accommodate a
higher appeals volume around fraud and abuse which would go
to the Office of Administrative Hearings. He indicated
Director Brodie was available for questions.
9:26:19 AM
Co-Chair MacKinnon reported that the committee had been
joined by Senator Hoffman. She drew the committee's
attention to the fiscal note, OMB component number 2696
from DHSS.
Senator Hoffman reported being at a committee closeout
meeting.
Vice-Chair Micciche reported that the fiscal note pertained
to rate review within the Division of Health Care Services.
He reviewed the FY 17 appropriation request:
Personal Services: $112.3 Thousand
Services: $509.4 Thousand
Commodities: $ 9.6 Thousand
Total Operating: $631.3 Thousand
Vice-Chair Micciche pointed out there was a 50/50 match
with federal receipts and GF dollars which included one
full-time position. He reported that from FY 18 into the
future there was a reduction in services down to 209.4
thousand and a reduction in commodities down to $2.0
thousand. The total was $323.7 thousand each year through
FY 22.
9:28:08 AM
Mr. Sherwood addressed the fiscal note, pointing out that
sections 17, 19, and 20 all contained provisions that would
require payment reform or innovative payment methods. Under
Section 19 the department would need to apply for an 1115
demonstration waiver focused on innovative payment models.
The department had assumed it would issue a one-time
contract for $500 thousand in FY 17 to analyze and
implement the payment models and have an ongoing $100
thousand in subsequent years for actuary work for updating
and maintaining the rates. The department estimated that it
needed one additional position to work on the payment
reform projects. Section 20 of the bill required that there
would be an annual actuarial report on the coordinated care
demonstration projects. The department increased the
ongoing actuarial contract by $100 thousand to reflect the
additional work for a combined ongoing cost for actuarial
services of $200 thousand.
9:29:34 AM
Co-Chair MacKinnon wondered, when Mr. Sherwood was
providing or presenting to the committee a range number on
the salary schedule, if he was giving members a starting
range or a payment method that was somewhere in the middle.
Mr. Sherwood was unsure, and referred Co-Chair Mackinnon's
question to Ms. Efird.
SANA EFIRD, ASSISTANT COMMISSIONER, DEPARTMENT OF HEALTH
AND SOCIAL SERVICES, relayed that, although she would need
confirmation, the department normally budgeted for a step C
allowing for someone that might have some experience, but
not for a high level position.
Co-Chair MacKinnon asked if Ms. Efird could confirm the
information for the committee.
Ms. Efird responded in the affirmative.
9:30:53 AM
Co-Chair MacKinnon directed attention to the next fiscal
note, OMB component number 233.
Vice-Chair Micciche pointed out that the fiscal note
related to the Division of Public Assistance. He reported
that the FY 17 appropriation request of $854.5 thousand was
a 2-year program of contract services. The fund source was
composed of about 10 percent in federal dollars and 90
percent of GF dollars. The only other year of cost was in
FY 18 in the amount of $349 thousand - split similarly with
a little less that 10 percent of funding from federal
dollars and the remainder from GF dollars. There were no
costs for FY 19 through FY 22.
9:31:59 AM
Mr. Sherwood addressed the fiscal note, explaining that two
provisions of the bill affected the Division of Public
Assistance. First, section 13 required the department to
establish an enhanced computerized income asset and
identity verification system to determine fraud and
eliminate duplication of benefits through the use of a
third party vendor. The annual savings to the state
resulting from the system had to exceed the cost of the
system. He pointed out that the department had assumed that
it would incur start-up costs of $250 thousand in FY 17 for
establishing an interface between the department's
eligibility system, ARIES, and the third party system. The
department also expected to incur another $400 thousand in
state implementation costs for user exception testing,
documentation training, increased supports through
implementation, and similar needs. The department estimated
an annual charge for the service to average $349 thousand
per year with it going live on January 1, 2017. If, after
an 18 month period, the third party vendor had not
demonstrated savings, the department would cancel the
contract. Therefore, the department had not shown any costs
beyond FY 18. If there was a demonstration of savings the
department would use the savings to continue to finance the
system.
9:33:30 AM
Mr. Sherwood discussed section 17 of the bill which
directed the department to refer Medicaid recipients to
various resources for education and career opportunities.
The department had included a one-time FY 17 cost of $30
thousand for program notices to be sent to recipients since
it did not have face-to-face encounters with many Medicaid
recipients at the time of application or renewal. Costs
would be shared 50/50 with the federal government. The
majority of the costs for the third party vendor
eligibility verification system was not subject to federal
funding because the department had similar interfaces built
into Alaska's Resource for Integrated Eligibility Services
(ARIES) which had already been funded by the federal
government at a level of 90 percent. Typically, it would
not give the state additional monies that were duplicative
of things it had already paid for.
9:34:44 AM
Co-Chair MacKinnon directed attention to fiscal note OMB
component number 2663.
Vice-Chair Micciche cited the fiscal note appropriation
related to the Division of Senior and Disabilities
Services. He relayed the FY 17 appropriation request:
Personal Services: $ 97.3 Thousand
Travel: $ 2.3 Thousand
Services: $186.8 Thousand
Commodities: $ 2.5 Thousand
Total Operating: $288.9 Thousand
Senator Micciche indicated that the funding source was a
90/10 split with the federal government picking up the 90
percent portion. The numbers increased in FY 18. There was
one position in FY 17 which increased to three positions in
FY 18 costing $318.3 thousand for personal services, $6.9
thousand for travel, $193.8 thousand for services, and $7.5
thousand for commodities. The split in funding was less.
The total cost in FY 18 was $526.5 thousand. In FY 19 the
services costs increased fairly dramatically to $540.7
thousand for what he assumed was systems development. The
total for FY 19 was $873.4 thousand. From FY 20 to FY 22
the numbers stabilized for a total of $343.3 and became a
50/50 with federal receipts and a GF match.
9:36:23 AM
Mr. Sherwood addressed the fiscal note. He referred to
Section 19 of the bill, which required the department to
apply 1915(i) and 1915(k) options which would increase the
federal funds the state received to provide home and
community-based services. The fiscal note reflected the
associated administrative costs. He continued that the
department anticipated having to add positions to plan,
develop, and manage the two options. One position would be
added in FY 19 [FY 17] to begin the work and two more in FY
18 as the department began to bring up the programs. The
department believed it was important to get the design and
implementation of the program right, as they would generate
considerable GF savings. The department had to ensure that
the eligibility requirements and service limits were well
designed and strictly enforced in order to achieve the
savings. In addition to the costs of the positions, the
department would have costs associated with modifying the
automated service plan, which was the management
information system within the division. He estimated that
the $550,000 cost would be spread out over the first three
years and would be 90 percent funded with federal dollars.
He pointed out the one-time cost in FY 19 of $346.9
thousand for assessing individuals for the 1915(i) option.
It would apply for individuals coming from grant programs
to Medicaid where they would not have had an equivalent
assessment out of the programs. The costs would be 50
percent funded with GF dollars.
9:38:24 AM
Co-Chair MacKinnon directed attention to fiscal note, OMB
component number 2875.
Vice-Chair Micciche indicated that the fiscal note was the
second pertaining to the Division of Senior and
Disabilities Services. The allocation was for general
relief/temporary assisted living. He indicated that the
fiscal note demonstrated a savings beginning in FY 19 when
the grants and benefits for operating costs diminished by
$4.689 million from FY 19 through FY 22.
9:39:19 AM
Mr. Sherwood addressed the fiscal note, informing the
committee it was the first of three notes that reflected a
100 percent reduction of GF program funding for home and
community based services resulting from the implementation
of the 1915(i) option. The expenditures would be offset in
a later Medicaid fiscal note where the expenses would be
from 50 percent GF and 50 percent federal funds. The note
was for the general relief and temporary assisted living
home which paid for assisted living home care for
vulnerable adults who did not qualify for Medicaid home and
community-based waiver services. With the implementation of
1915 Medicaid would pay for a substantial amount of the
services covered under the program.
9:40:02 AM
Co-Chair MacKinnon asked if the application had been made
or was in progress. Mr. Sherwood replied that with the help
of AMHTA, they had hired a contractor, Health Management
Associates (HMA), to help the department with the issue.
The department had started having stake holder meetings,
holding committee meetings, planning, and conducting
preliminary analysis in addition to both 1915(i) and
1915(k) options. The work had been started but was a
substantial process to plan and implement.
9:40:47 AM
Co-Chair MacKinnon suggested that the state needed the
department to act efficiently and expeditiously. She
commented that FY 19 seemed like a conservative date to
start showing a savings. She encouraged him to go back and
scrub the numbers again.
Mr. Sherwood stated that for the 1915(k) option which was
not reflected in the fiscal note, the department did plan
to bring up the issue 6 months sooner. Currently, it was in
the process of implementing major changes to the
department's home and community-based waiver program around
care planning and care coordination, as it would impact
many of the same providers. He was cautious of overloading
the system with change, and pointed out that the
implementation needed to be done very carefully in order to
achieve the anticipated savings. He acknowledged the
pressure on the department and would re-assess. He asserted
that there were other things going on in the system that
would limit moving as quickly as in some of the other
areas.
9:42:17 AM
Co-Chair MacKinnon directed attention to fiscal note, OMB
component number 2787.
Vice-Chair Micciche spoke to the third fiscal note related
to the Division of Senior and Disabilities Services. He
reviewed that there was no change in FY 17 and FY 18. In FY
19 there was a savings of $735.2 thousand per year from FY
19 through FY 22.
9:43:01 AM
Mr. Sherwood stated that the fiscal note was the second
showing reductions in 100 percent GF funded programs as a
result of adding the 1915(i) options. The senior grants
paid for adult daycare and in-home services which would be
covered by 1915 (i) for Medicaid eligible individuals.
9:43:24 AM
Co-Chair MacKinnon directed attention to fiscal note, OMB
component number 309.
Vice-Chair Micciche addressed the fiscal note associated
with the Division of Senior and Disabilities Services. The
fiscal note demonstrated a savings from the program. He
reviewed that there was no change in FY 17 and FY 18. In FY
19 there was a savings of $11.635 million per year from FY
19 through FY 22.
9:44:05 AM
Mr. Sherwood mentioned that the fiscal note was the third
of three fiscal notes having to do with 1115(i) [1915(i)]
showing reductions in a grant program. He stated that
community developmental disabilities grants provided home
and community-based services to support individuals with
developmental disabilities who were not served by the
Medicaid Home and Community-Based Waiver Program. He
continued to explain that the 1915 option would allow the
department to cover services for individuals through the
Medicaid program bringing in federal funds.
9:44:44 AM
Senator Hoffman asked where the savings were going to take
place within the state of Alaska. He wondered if they were
primarily in Anchorage, Fairbanks, and Juneau or if they
were throughout the state. Mr. Sherwood explained that the
savings would apply to people with developmental
disabilities living throughout the state. He offered to
provide the committee with the breakout, as services were
available throughout many parts of Alaska.
9:45:26 AM
Co-Chair MacKinnon directed attention to the DHSS fiscal
note, OMB component number 317.
Vice-Chair Micciche moved to the fiscal note pertaining to
departmental support services within the Commissioner's
office. He reviewed that there was a one-time cost for
services in FY 17. It was an expense for contract services
for $575 thousand funded with GF dollars. He reported no
costs from FY 18 through FY 22.
9:46:09 AM
Mr. Sherwood stated that Section 27 of the bill directed
the department to conduct feasibility studies for
privatizing the pioneer homes, certain Division of Juvenile
Justice facilities, and the Alaska Psychiatric Institute
(API). The current fiscal note did not reflect the previous
day's amendment regarding the feasibility studies for API.
The department estimated needing $575 thousand in GF
dollars to conduct feasibility studies for the pioneer
homes and the Juvenile Justice facilities. An additional
$160 thousand in GF in FY 17 was needed to conduct a
feasibility study for privatizing API.
9:47:11 AM
Senator Hoffman asked about the backlog for deferred
maintenance on all of the pioneer homes. Mr. Sherwood did
not have the number readily available, but he could provide
it. He commented that it was not an insignificant number.
9:47:39 AM
Co-Chair MacKinnon asked Mr. Sherwood to provide the
information to the committee.
9:47:52 AM
Co-Chair MacKinnon directed attention to fiscal note, OMB
component number 320.
Vice-Chair Micciche signified that the fiscal note
correlated to departmental support services. He reported
that the total operating cost for FY 17 was $121.5
thousand. The total for FY 18 and into the future was
$111.5 thousand per year. There was a higher GF match in FY
17 and in FY 18 and in the out years the funding was a
50/50 match of federal receipts and GF monies.
9:48:41 AM
Co-Chair MacKinnon asked if there were any full-time
position changes.
Vice-Chair Micciche confirmed that there was a full-time
position hired in FY 17 and continued out through FY 22.
9:48:56 AM
Mr. Sherwood relayed that the fiscal note was for the
department's financial management services. Section 17 of
the bill directed the department to prepare a report by
November 15th of each year with a number of complex metrics
that spanned across programs and data systems. He conveyed
that to plan, develop, and manage the new reporting
requirement the department would add one new position
beginning in FY 17. The cost was 60 percent GF and 40
percent federal funds. He confessed that as he was
reviewing his notes to prepare for the meeting he realized
he had carried a 50/50 match in the out years. He would
revise the fiscal note when the department submitted its
revisions for the amendments. The reason the portion of GF
dollars equaled 60 percent was that a blended match rate
was used for multiple programs.
9:50:12 AM
Co-Chair MacKinnon asked if the department already had new
software with the ability to make blended rate
calculations.
Mr. Sherwood deferred to Ms. Efird.
Co-Chair MacKinnon requested an answer in writing.
9:50:56 AM
Co-Chair MacKinnon directed attention to fiscal note, OMB
component number 2660.
Vice-Chair Micciche reviewed the complex fiscal note
pertaining to Behavioral Health Medicaid Services. He
reported that the FY 17 ask was $315 thousand split evenly
between federal and state GF receipts which included $2.7
million from the governor's FY 17 request and met by
federal receipts. Operating costs increased in FY 18 to
$4.9 million, in FY 19 to $9.9 million, in FY 20 to $14.2
million, in FY 21 to $19.065 million. The operating costs
for FY 22 remained at $19.065 million. He pointed out that
the federal receipt matches would increase in FY 18 through
FY 22: the federal government's portion would be $17
million and the state's GF portion would be $1.2 million.
9:52:18 AM
Co-Chair MacKinnon asked if there was any estimated capital
for the project.
Vice-Chair Micciche stated that the estimated capital for
FY 17 was $3 million.
Co-Chair MacKinnon expressed appreciation for Senator
Micciche reviewing the numbers with the committee.
9:52:54 AM
Mr. Sherwood pointed out that the behavioral health note
was the first of the three fiscal notes to address Medicaid
Services. The fiscal note reflected two different parts of
the bill. The first was the provision to manage a
comprehensive integrated behavioral health program and do
an 1115 demonstration waiver. The second was to implement
the new federal policy on 100 percent federal claiming for
tribal services. He pointed out several different types of
expenses. There were increases to the grants and benefits
line to reflect an increase in Medicaid expenditures
related to reform of the behavioral health system and
eventually to cover larger substance abuse treatment
facilities under the 1115 waivers. The fiscal note
reflected a blended match rate for different Medicaid
populations whose federal match rate varied between 15
percent and 100 percent. The waiver began in FY 18 and grew
over time. There were increases in the services line to
reflect the cost of paying an administrative services
organization to develop and manage a network of providers,
manage utilization, monitor outcomes, and audit for fraud,
waste, and abuse. The fund source was 50 percent federal
and 50 percent GF dollars. The contract would begin in FY
18.
Mr. Sherwood detailed a 2-year cost in FY 17 and FY 18 for
a consulting contract in the services line to assist the
department in designing and implementing the managed
behavioral care system and to develop the 1115 waiver - a
50 percent federal and 50 percent GF funds match. He
discussed ongoing Medicaid Management Information System
(MMIS) operations support in the services line beginning in
FY 17 split 50/50. He noted that the expenses were
summarized on the table of page 3 of the fiscal note.
Mr. Sherwood explained that the fiscal note also addressed
a capital need of $3 million for one-time MMIS system
changes. He noted that the other portion of the fiscal note
reflected the change in federal policy around claiming 100
percent federal funds for services provided to tribal
beneficiaries. The department estimated shifting some of
the behavioral health services, particularly residential
psychiatric treatment services to 100 percent claiming from
the 50 percent federal claiming. Although the shifts did
not affect total expenditures, they did impact the fund
sources for the behavioral health Medicaid. He directed
attention to the bottom of page 3 of the fiscal note that
showed the department's projections of the shift for
behavioral health.
9:55:29 AM
Co-Chair MacKinnon asked the committee members to review
fiscal notes, OMB component number 2077 and OMB component
number 2662, which would be taken up the following Monday.
Co-Chair MacKinnon asked the department to "scrub their
numbers" and commented that it seemed like the department
had several new employees and not many cost savings on the
fiscal notes that had been reviewed. She suggested the
deportment needed to be more conservative with its
expenditures. She thought the department had been a little
aggressive on the personnel side to accomplish a savings.
9:56:30 AM
Co-Chair Kelly commented on Senator MacKinnon's remarks.
The department added a total of 27 people anticipating a
significant savings in the out years due to the adoption of
some of the waivers capturing additional funds. He
suggested that the bill would be back in the senator's
possession as the committee moved the bill out. He was
happy to let the administration "piggy back" on his bill,
but he was concerned that the legislature had not received
estimations on some of the proposed reforms. He listed
savings from telemedicine, eligibility verification, and
care coordination. He expressed interest in learning more
about travel costs. He suspected that there would not be
the anticipated savings he had hope for in FY 17 but would
achieve a long-term savings. He did not want the bill to
move forward without all of the important information. He
noted the more private sector piece that had been
discussed. He wanted better numbers.
9:59:03 AM
Co-Chair MacKinnon thought there would be a committee
substitute coming out and her staff would provide a copy to
committee members. She was unsure if the bill would be
ready to move from committee on the following Monday. She
mentioned scrubbing the numbers, as they were not what the
committee had expected.
SB 74 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 74 Unpublished Fiscal Note Packet 030416.pdf |
SFIN 3/4/2016 8:30:00 AM |
SB 74 |