Legislature(2015 - 2016)BUTROVICH 205
03/23/2015 01:30 PM Senate HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| SB74 | |
| SB23 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 23 | TELECONFERENCED | |
| += | SB 74 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 74-MEDICAID REFORM/PFD/HSAS/ER USE/STUDIES
1:32:10 PM
CHAIR STEDMAN announced the consideration of SB 74.
SENATOR PETE KELLY, sponsor of SB 74, stated that the increases
in Medicaid are eventually going to "eat our budget alive." He
drew attention to a graph that shows the anticipated growth of
Medicaid.
1:33:29 PM
At ease
1:34:11 PM
SENATOR KELLY said the graph shows the need for Medicaid reform.
He highlighted another graph that shows the cost of Medicaid and
education, which take up half of the state's budget. He noted
that Medicaid is the fastest growing cost driver in the state.
Attempts to reform Medicaid have fallen somewhat flat in the
past. SB 74 is about reforming Medicaid, not expansion.
Senator Kelly stated the highlights of the bill. It instills a
medical health care plan which pays like insurance. Recipients
receive a policy and the state pays for it. There are case
managers that walk clients through optimal use of the system.
Clients are given a primary care physician. It is a
comprehensive and integrated health care plan.
He said Denali Kid Care would be carved out as a pilot program
because it is easily identifiable and a high priority. The bill
will mitigate inappropriate ER visits, excessive travel, self-
referring to expensive providers, and expensive drugs. In
addition to the health care plan, waivers will direct patients
to travel facilities. The bill contains emergency room reform,
the use of telemedicine, and payment reform of negotiated
charges. The bill addresses abuses of the current Medicaid
system.
CHAIR STEDMAN noted the arrival of Senator Stoltze.
1:38:39 PM
SENATOR KELLY pointed out that the sponsor statement clearly
explains the bill.
HEATHER SHADDUCK, Staff, Senator Pete Kelly, Alaska State
Legislature, Juneau, Alaska, presented information on SB 74 on
behalf of the sponsor. She read from the sponsor statement:
Senate Bill 74 starts the process of cost containment
and reform needed to slow the growth of the Alaska
Medicaid program. Medicaid has grown to $1.8 Billion
of the annual operating budget, and has accounted for
22% of the total UGF increases over the last ten
years. The current and former administrations have
testified the Medicaid program, as it stands, is not
sustainable. Low oil prices and billions of dollars in
revenue shortfalls have forced us to change how we do
business.
In July 2013, the Medicaid Budget Group of the
Department of Health and Social Services reported the
total spending on Medicaid services will reach $6.3
billion in 2032, including $2.8 billion in state
matching funds. If we don't act now to bend the growth
curve of Medicaid, many of our most venerable Alaskans
will be without critical health care services they
need.
MS. SHADDUCK stated that the bill is about reform. Reform is
about pushing the right care and the right place at the right
time at the right price.
1:40:47 PM
MS. SHADDUCK addressed the sections of SB 74.
She explained that Section 1 allows recipients of medical
assistance to have 10 percent of their annual permanent fund
dividends deposited into a personal health savings account
(HSA). She said the section was modeled after the college
savings plan. The HSA could cover co-pays, the difference
between brand name and generic drugs, replacement eye glasses,
and others.
CHAIR STEDMAN asked why 10 percent was selected and who would
administer the HSA.
MS. SHADDUCK said 10 percent was chosen as a starting place, but
it is optional and could be changed. This is an area that still
needs work. Section 3 addresses setting up the HSA's. Other
states have used health savings accounts. It is a way to have
Medicaid recipients thinking about how much their health care
costs and ways they can help pay for it. She said all ideas are
not flushed out yet.
SENATOR GIESSEL asked if the health savings account is pre-tax
money, but is deductible from federal tax.
MS. SHADDUCK thought so. She said a HSA that she had was pre-tax
deductible.
1:43:32 PM
CHAIR STEDMAN asked if recipients can add other funds to it.
MS. SHADDUCK said yes. In Alaska there is a unique opportunity
with PFD's.
1:44:07 PM
MS. SHADDUCK continued with Section 2 that deals with Medicaid
reform programs. She related that Section 2 requires DHSS to
design and implement a medical assistance (Medicaid) reform
program. There are eleven items the program must include. She
read the subsections one and two in Section 2.
CHAIR STEDMAN asked about rural communities that do not have
community and social support services, such as jobs programs.
SENATOR KELLY said that would be answered at a later date.
SENATOR STOLTZE asked if the assumption is that all 40,000
recipients will remain eligible for the PFD and will fall under
a hold harmless provision.
CHAIR STEDMAN said that is another issue.
SENATOR KELLY clarified that since there is no expansion, there
are not 40,000 recipients.
CHAIR STEDMAN summarized that SB 74 attempts to do cost
containment on Medicaid itself and the Medicaid expansion bill
will be heard next week.
1:46:50 PM
MS. SHADDUCK turned to subsections three through five. She noted
that much has already been done in the area of fraud control.
CHAIR STEDMAN expected the department to pursue subsections four
and five regardless of the bill.
SENATOR KELLY agreed that there are provisions in the bill that
already are in the works.
MS. SHADDUCK highlighted subsections six through eight. She
spoke of innovative programs in home and community-based
services.
She addressed subsection nine and listed examples of redesigning
the payment process. She explained subsections ten and eleven.
She noted the sponsor expects a choice waiver.
1:52:39 PM
CHAIR STEDMAN asked if a federal waiver is needed for subsection
eight.
MS. SHADDUCK said yes; that request is in Section 7.
CHAIR STEDMAN asked if the request for the department to design
and implement the reform program will show savings and not
departmental expansion with increased funding needs.
SENATOR KELLY replied that they are looking at programs in other
states that have produced savings.
CHAIR STEDMAN requested detailed information about savings. He
voiced concern about a larger GF draw for the department due to
the design and implementation of the reforms.
MS. SHADDUCK said they received the fiscal notes late, but it
looks like a net savings for the department. However, the
department did request additional positions. She said the
sponsor shares those concerns.
CHAIR STEDMAN noted that he requested his staff to list the 14
fiscal notes in order to see the total GF and federal funds,
operating costs, and staff positions. He said the fiscal notes
may change over time.
1:55:02 PM
MS. SHADDUCK continued with subsection (b) which requires DHSS
to annually report to the legislature regarding realized cost
savings and whether annual targets have been met.
CHAIR STEDMAN asked how the targets for quality and cost-
effectiveness are set.
MS. SHADDUCK said the stakeholders are involved in setting the
targets.
She highlighted Section 3 which provides that the department
must develop a personal health savings account that would
require consumer education strategies, recipient cost-sharing
and copayment structures, a procedure for deposits and payments,
and education on the application process through the Department
of Revenue.
CHAIR STEDMAN asked whether the structure is within a state
department.
MS. SHADDUCK said yes; it's within Department of Health and
Social Services.
CHAIR STEDMAN asked who would administer the program and track
the funds.
SENATOR KELLY said it would be the Department of Revenue.
CHAIR STEDMAN inquired how loss in the account is handled and
what kind of investment options would be available. He asked if
that is that state's role and if it should take on the exposure.
1:58:02 PM
MS. SHADDUCK clarified that the account stays with the
individual, similar to other health savings accounts. If the
individual leaves Medicaid, the money in the account stays with
them.
CHAIR STEDMAN did not want to add more layers on the state.
MS. SHADDUCK said the department said it could require a lot
more work up front.
She continued to say that Section 4 sunsets the personal health
savings accounts in Sections 1 and 3 and the Medicaid reform
program in Section 2 on October 1, 2022. This will bring the
program back in front of the legislature to evaluate.
CHAIR STEDMAN asked why 2022 was chosen.
MS. SHADDUCK said it was just a starting point.
2:00:03 PM
MS. SHADDUCK turned to Section 5, the Medicaid managed care
demonstration program for Denali Kid Care and an option for
other Medicaid recipients. She shared some of the project
components that may be included in the program. She said
subsection (d) must include cost-savings measures to reduce
travel and simplify administrative procedures. This program also
sunsets on October 1, 2022.
CHAIR STEDMAN asked if the program could be set up by the
initiation date of October 1, 2015.
MS. SHADDUCK deferred to the department to answer. She said the
sponsor's goal was to include hard deadlines in order to see
savings.
CHAIR STEDMAN inquired if the managed care program was modeled
after a particular state's plan.
SENATOR KELLY said it is a pre-packaged service provided by
companies such as AETNA and Moda.
CHAIR STEDMAN requested a comparative analysis of states that
have done this.
SENATOR KELLY offered to provide that information.
2:04:55 PM
MS. SHADDUCK described Section 6 which would require DEED to
design and implement a demonstration project that would reduce
non-urgent use of the emergency room by Medicaid recipients. It
would built on what the department has already done with the
super-utilizer program. She described what the program would
contain.
CHAIR STEDMAN asked what it means on line 15, "to the extent of
federal law" and the system of electronic exchange of patient
information.
MS. SHADDUCK explained it refers to the federal Health Insurance
Portability and Accountability Act (HIPPA).
CHAIR STEDMAN asked about line 17 - the process for defining and
identifying frequent users of emergency departments.
MS. SHADDUCK thought the department already had a way of
identifying those patients.
SENATOR GIESSEL related that a hospital in Anchorage is
proposing to offer a regional emergency room, and other states
also use this method. The result is a significant reduction in
ER use.
CHAIR STEDMAN requested that the department describe what they
already are doing and what the bill asks them to do that is new.
MS. SHADDUCK commented on the need to expand the program that is
in Anchorage.
2:08:16 PM
CHAIR STEDMAN inquired if there is any data on frequent users,
such as "20 percent of the people use 80 percent of the assets."
SENATOR KELLY said he has heard the number but does not recall
it.
MS. SHADDUCK thought a lot of the users were behavioral health
users. She offered to provide that information.
2:09:17 PM
MS. SHADDUCK highlighted Section 7 which requires the department
to apply for a Medicaid Choice Waiver listed in Section 2.
She said Section 8 relates to the feasibility studies that are
required before privatization of services can occur at the
Alaska Pioneers' Homes, Alaska Psychiatric Institute, and select
facilities in the Division of Juvenile Justice.
CHAIR STEDMAN inquired what the selected facilities of Juvenile
Justice are.
SENATOR KELLY said the Nome and Ketchikan facilities could be
turned over to regional health corporations.
CHAIR STEDMAN asked why they were not specified in the bill.
MS. SHADDUCK said the sponsor wanted the wording to be general
at first. She noted the Nome facility could be turned into a
residential psychiatric treatment center and then be eligible
for Medicaid billing.
CHAIR STEDMAN pointed out that it is the first hearing of the
bill and the committee is hearing concepts today.
2:12:09 PM
SENATOR KELLY said the Ketchikan facility qualifies less and
Nome meets more criteria.
CHAIR STEDMAN asked if there was any discussion of privatizing
state prisons.
MS. SHADDUCK said it is not a part of SB 74, but the
administration has discussed it. Governor Walker mentioned it in
his state of the state address and the OMB director is exploring
options. She pointed out that the feasibility studies are the
first step toward privatization.
CHAIR STEDMAN noted the report is required ten days after next
session starts. He suggested there is not enough time to go
through it then and the report should be given to legislators
before the session begins.
MS. SHADDUCK said the sponsor is not opposed to the suggestion.
She thought the fiscal notes show that the department will
contract out the reports.
She related that Section 9 requires DEED to amend the state
Medicaid plan and apply for waivers. Section 10 sunsets Section
11 on October 1, 2022. Section 11 provides that Sections 1 - 3
take effect only if the department certifies to the revisor of
statutes, on or before October 1, 2017, that all of the
provisions enacted by Sections 2 and 3, 5 - 7, and 9 of the bill
have been approved by the U.S. Department of Health and Human
Services.
2:14:48 PM
CHAIR STEDMAN addressed the graph on Medicaid appropriations and
noted that the red bars designate general funds. However,
historically, the general funds were under reported and look
backs comparing general funds makes this analysis meaningless.
He said he is going to request Legislative Finance reconstitute
the funds and add inflation and population percentages in order
to see growth and to figure out costs in real dollars.
He addressed the historical and projected Medicaid growth line
graph. He requested information from Legislative Finance to
explain what happened in 2012 to cause a $200,000 increase in
GF.
MS. SHADDUCK said that in years previous to 2012 there was an
enhanced FMAP as part of the stimulus program. She said she
would forward the information the department provided to the
committee.
CHAIR STEDMAN said he also wanted to check out the general funds
in 2006 and 2007 so that the data is meaningful.
2:18:39 PM
AMANDA RYDER, Fiscal Analyst, Legislative Finance Division,
Legislative Affairs Agency, answered questions related to SB 74.
She said the GF data on the charts is apples to apples and the
fund codes were reclassified. She explained that the dip is
primarily to the American Recover and Reinvestment Act (ARRA).
It was the enhanced FMAP when ARRA passed and, as a result, less
GF was needed - federal funds filled that gap. That occurred in
FY 2012.
CHAIR STEDMAN asked about the growth analysis beginning in FY
2012 and going forward. He questioned the dip in FY 2015 - FY
2016.
MS. RYDER explained that it is the $20 million decrease in
Medicaid services that the Governor included in his amended
budget.
CHAIR STEDMAN summarized that the last hard numbers are the peak
of the blue line.
MS. RYDER clarified that that is the FY 2015 management plan and
the Governor's request is at the junction of the red and yellow
lines.
CHAIR STEDMAN requested more data on real numbers and the rate
of growth from FY 2012 to FY 2015. He emphasized that we have to
figure out where we've been, where we're at, and where we want
to go. He stated he does not want to accelerate growth rates.
MS. RYDER cautioned that the growth rates are historical. The FY
2012 to FY 2016 rates are strictly a numerical calculations. The
department will have better data for projections and impacts
from the bill.
2:24:10 PM
CHAIR STEDMAN asked for definitions of growth rates shown in the
chart.
SENATOR KELLY said something happened in 2012 to make the
Medicaid growth line flatten out. The yellow line shows that
curve continuing, and the red line shows historic growth.
MS. RYDER said that is correct. She noted she was uncomfortable
providing the FY 2006 to FY 2016 growth rate considering that it
would have distorted the growth due to the enhanced FMAP.
However, using FY 2012 to FY 2016 is also problematic, so she
included both.
CHAIR STEDMAN asked for help with population and inflation
figures. He stated that the committee needs a benchmark with
real growth rates.
MS. RYDER agreed to provide that.
CHAIR STEDMAN noted it is a huge component at 22 percent.
2:26:50 PM
MS. SHADDUCK commented that the 22 percent was specific to the
total UGF increase from FY 2006 to FY 2015.
CHAIR STEDMAN requested the department's input regarding SB 74.
2:28:00 PM
VALERIE DAVIDSON, Commissioner, Department of Education and
Early Development (DEED), provided information regarding SB 74.
She listed the items of Medicaid reform in SB 74 that have also
been recognized by the administration and are included in the
Governor's bill, continuing efforts of DEED. The first item
already in place or in progress in the department is reducing
the cost for Alaskans with behavioral health needs and those in
need of senior and disability service through the 1915(i) and
(k) options that allow the state to be able to enhance the
federal match. Another item in place is the enhancing of other
federal match opportunities, such as the 100 percent federal
match where possible, including enhancing the tribal providers
ability to provide care. She said the department is also
committed to actively pursue reform opportunities wherever they
can be found.
COMMISSIONER DAVIDSON explained that there are several areas in
the bill that need clarification and time for the department to
realize savings. They included the health savings account
program, which is not an area of departmental expertise and
would require additional help at the start to implement. Also,
two demonstration projects, the Medicaid managed care and the
reduction of non-urgent emergency department use require more
discussion. For the latter, the department estimated that there
were over 5,000 super-utilizers of emergency departments and a
number of them have already been matched with a care manager.
She reported that the Medicaid beneficiaries love the extra
supervision and care.
2:31:17 PM
SENATOR GIESSEL asked what number of the 5,000 super-utilizers
have been targeted for implementation.
COMMISSIONER DAVIDSON said 2,000 have been targeted initially,
but there is opportunity for more. This is reflected in SB 74,
as well as in the department's on-going reform effort.
SENATOR GIESSEL asked when that effort began.
JOHN SHERWOOD, Deputy Commission, Department of Health and
Social Service, provided information regarding SB 74. He said
efforts began in December and January. Today the number of
contacts are in the hundreds and it is a voluntary program.
SENATOR GIESSEL asked if a particular community is being
targeted or if it is random.
MR. SHERWOOD thought most of the targeting was in Anchorage.
CHAIR STEDMAN requested that the department provide that
information in more detail.
2:33:04 PM
COMMISSIONER DAVIDSON turned to the Medicaid managed care
demonstration project. She explained the difference between
managing the care of patients and a managed care organization,
which is a separate legal structure. A legal managed care
structure, such as several other states have, involves a labor-
intensive process and getting permission from the Centers for
Medicare and Medicaid Services. There are also federal
requirements under the Affordable Care Act that ensure if
individuals are enrolled in managed care organizations for
certain kinds of eligibility, that they are allowed to opt out,
or there are requirements for them to access services. For
example, there was a time when managed care organizations were
paid to manage the care if beneficiaries, including IHS
beneficiaries who are mandatorily enrolled in programs who
weren't receiving their care from their preferred providers.
Instead, the care was through the tribal health organization in
that state. However, the managed care organizations were not
paying for the care through the tribal organizations. A change
in federal law resulted. This type of managed care requires a
very structured format.
She said if the bill is addressing managing the care of
beneficiaries, there is a lot more flexibility in terms of
negotiating a waiver with the Centers for Medicare and Medicaid
Services that will allow the state to achieve the same results.
It is challenging, but not as cumbersome.
2:35:51 PM
SENATOR STOLTZE requested the department provide a comparative
list for the committee.
CHAIR STEDMAN said the department would be working on that over
the next week.
COMMISSIONER DAVIDSON requested clarification from the sponsor
on community and social support services. She said the
department supports the concept, but the Centers for Medicare
and Medicaid Services have, so far, not approved a waiver from
any state requiring employment services. They have allowed
states to do so on a voluntary basis. Those services can be made
available, but not mandated.
COMMISSIONER DAVIDSON emphasized that the biggest gap in SB 74
is the omission of Medicaid expansion. The department believes
expansion and reform go hand in hand.
2:38:04 PM
CHAIR STEDMAN said that position is included in a different bill
the committee will hear next week.
COMMISSIONER DAVIDSON said the department has provided 13 fiscal
notes because some provisions in the bill affect a variety of
budget components; some provisions are aligned with current
departmental reform efforts and others are speculative. She
agreed to work through those and refine them. She noted the
department currently anticipates undesignated GF savings of $1.1
million in FY 2016, increasing to $17.9 million by 2021, based
on their best understanding of the bill.
She concluded that reform is a process and is not necessarily a
point in time. She voiced excitement about the opportunity to
reform Medicaid and looks forward to working with the sponsor
and legislature to continue reform efforts. She requested that
the efforts be done on a timeline and with a work schedule that
is doable for Alaska and the department.
2:40:25 PM
CHAIR STEDMAN assumed the fiscal notes contained aggregate
numbers and would be revised. He requested to know the total
number of employees included in the fiscal notes.
MR. SHERWOOD related that there would be 9 employees in the
initial year, 12 in the second and third years, and 11 thereon.
CHAIR STEDMAN said the committee would be working on that issue
and the department would be working with the sponsor on
alignment.
2:41:40 PM
SENATOR KELLY asked if managing care means taking current
department resources and managing patient care or hiring a
provider such as Aetna.
COMMISSIONER DAVIDSON clarified that setting up a managed care
organization would be setting up a separate legal structure that
would contract to provide that service. Or, it can be simply, as
described in the bill, setting up a managed care demonstration
project. One of the big differences is risk; a capitated payment
pool system versus providing an administrative fee for the
contractor or insurance company to provide an additional service
and share savings opportunities. A demonstration project entails
a number of possibilities and needs to be defined.
CHAIR STEDMAN thanked the department and the sponsor's staff.
CHAIR STEDMAN held SB 74 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 74 Bill Hearing Request SHSS.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Sponsor Statement.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Sectional Analysis.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Supporting Documents - Legislative Finance Graphs.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Supporting Documents - LRS Report 15.284.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Supporting Documents - NPR HSAs for Medicaid.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Ver H.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| Fiscal Note SB 23.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 23 |
| SB 74 Fiscal Notes 233.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 242.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 309.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 317.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 354.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 2077.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 2660.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 2662.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 2663.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 2696.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 2787.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 2880.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Fiscal Notes 3099.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Congregation Sukkat Shalom.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |
| SB 74 Supporting Document - Aetna Letter 3.27.15.pdf |
SHSS 3/23/2015 1:30:00 PM SHSS 4/1/2015 1:30:00 PM |
SB 74 |