Legislature(2015 - 2016)BUTROVICH 205
04/16/2015 09:00 AM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB135 | |
| SB74 | |
| HJR22 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 74 | TELECONFERENCED | |
| + | HB 135 | TELECONFERENCED | |
| + | HJR 22 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 74-MEDICAID REFORM/PFD/HSAS/ER USE/STUDIES
9:44:08 AM
CHAIR STOLTZE announced the consideration of SB 74.
9:44:24 AM
HEATHER SHADDUCK, Staff, Senator Pete Kelly, Alaska State
Legislature, Juneau, Alaska, stated that the concept of SB 74 is
to slow the growth of Alaska's Medicaid program. She said
Alaska's Medicaid program is growing at a very unsustainable
rate which puts the entire program in jeopardy for the state's
most vulnerable Alaskans. SB 74 is an attempt to make sure that
the state has safeguards in place for a Medicaid program which
Alaska is federally obligated to provide. She set forth that the
bill gets payment reforms in place while trying new concepts
like managed care. She summarized that the bill starts Alaska
down the reform process.
CHAIR STOLTZE remarked that irrespective of whether an expansion
bill passes, SB 74 is a good policy measure.
MS. SHADDUCK added that SB 74 is a good policy call. She noted
that the current administration testified in yesterday's
committee meeting that Alaska's current Medicaid program is
unsustainable without reform.
CHAIR STOLTZE noted that the Department of Health and Social
Services (DHSS) responded to his request for Medicaid cost
projections. He said his intent was to point out Medicaid's
growth and sustainability without expansion. He voiced his
frustration that DHSS has not taken ownership of its Medicaid
cost forecasts.
9:46:58 AM
MS. SHADDUCK revealed that DHSS has been very open with Senator
Kelly's office. She disclosed that there was an exchange on
provisions that were agreed and disagreed upon. She pointed out
that DHSS paid for the Evergreen Economics Report. She added
that the Office of Management and Budget (OMB) and the Alaska
Division of Legislative Finance were excellent in providing
fiscal note and forecasting assistance.
CHAIR STOLTZE stated that perhaps Mr. Sherwood could explain why
DHSS does not want to take ownership of just a simple economic
fact on the fiscal realities of sustainability. He said DHSS has
been given ample opportunity to say what they expect to save;
however, their averting of the discussion of what current growth
is, causes suspicion and puts a little kink in the strong bond
of trust.
9:49:05 AM
JON SHERWOOD, Deputy Commissioner, Medicaid and Health Care
Policy Division, Alaska Department of Health and Social
Services, Juneau, Alaska, stated that DHSS never intended to
hide the numbers.
CHAIR STOLTZE declared that Mr. Sherwood is obligated to
audibilize projected year-by-year growth for the public record.
He reiterated that DHSS did not take ownership on providing
Medicaid growth projections.
9:50:10 AM
At ease.
9:51:51 AM
CHAIR STOLTZE called the committee back to order.
MR. SHERWOOD provided Medicaid spending projections from 2014
out to 2034 as follows:
· 2014: $1.5 billion,
· 2016: $1.7 billion,
· 2018: $2 billion,
· 2022: $2.5 billion,
· 2024: $3 billion,
· 2026: $3 billion,
· 2028: $3.5 billion,
· 2030: $4 billion,
· 2032: $4.2 billion,
· 2034: $4.5 billion.
He added that the general funds component is just over $1.5
billion by 2034.
9:53:13 AM
CHAIR STOLTZE asked to verify that DHSS's projections assume
that the federal government keeps all of its obligations.
MR. SHERWOOD answered that the forecast assumes that the match
rates stay approximately the same.
CHAIR STOLTZE noted that the forecast is absent of any
expansion.
MR. SHERWOOD confirmed that the DHSS forecast is absent of any
expansion or changes to the Medicaid program.
CHAIR STOLTZE appreciated that Mr. Sherwood put DHSS's Medicaid
spending forecast on the record. He asked that Mr. Sherwood
address areas that DHSS supports and does not support. He added
that the Senate Finance Committee will continue to deliberate
the bill and allow public input.
MR. SHERWOOD noted that Commissioner Davidson previously
testified about areas of particular concern about the bill. He
explained that DHSS wants to make sure it understands the
intention of Section 2 requiring a computerized income, asset,
and identity eligibility verification system. He divulged that
DHSS has moved forward on the assumption that the section would
be a separate component that would be an adjunct to the
department's existing computerized eligibility verification
system. He stated that the department has developed cost
estimates for adding components to the current system.
9:55:22 AM
MR. SHERWOOD pointed out that on line 4, the department is
instructed to pursue new payment processes. He said the
department recommends using "or" rather than "and" in the
section because potential conflicts between some of the methods
may occur. He reiterated that DHSS does not support Section 5
which requires Legislative approval prior to adding any
mandatory Medicaid coverage groups. He asserted that the bill
contains a number of beneficial reforms and the department
welcomes an opportunity to pursue those reforms.
CHAIR STOLTZE explained that the department's noted concerns
allows any member in the next committee to make an amendment. He
asked that Mr. Sherwood address the issue of privatization. He
asked if the department and the administration will allow
outsourcing in looking at finding fraud. He noted that Illinois
has been very aggressive in allowing a "different set of eyes"
outside of the institutions. He remarked that outsourcing may
allow the most analytical sets of eyes with a proven track
record to find savings and ferret out inherent abuse that
sometimes is not seen.
9:58:34 AM
MR. SHERWOOD replied that DHSS is always willing to consider
outsourcing when permissible under federal law. He noted that
restrictions exist; for example, eligibility determinations need
to be made by a civil servant. He revealed that DHSS currently
outsources a substantial amount of Medicaid audits and third
party recovery efforts. He disclosed that DHSS has been
instructed by the administration to consider cost effective
opportunities for outsourcing. He summarized that there is no
general philosophical opposition to outsourcing as long as the
department can ensure that programs are operated appropriately,
effectively, and desired outcomes are achieved.
CHAIR STOLTZE pointed out that technology exists to simply use
the internet for finding fraud. He asked if Mr. Sherwood found
internet searches as intrusive.
10:01:03 AM
MR. SHERWOOD replied that DHSS does an extensive amount of
verification; for example, cause for additional investigation
occurs when no income is reported when income generating assets
are noted. He asserted that taking advantage of new technology
must be done in a thoughtful and equitable manner that takes
into consideration privacy issues where people are not singled
out for the wrong sorts of reasons.
CHAIR STOLTZE remarked that the real substantive fraud abuse
cases have been brought on against large providers and
institutions rather than an individual making a bad decision. He
added that the real systematic fraud often occurs at the higher
levels.
10:04:05 AM
SENATOR WIELECHOWSKI noted that legislative staff members are
not permitted to use Facebook. He asked if DHSS employees are
allowed to use Facebook.
MR. SHERWOOD explained that state employees have to get
permission to use Facebook. He noted that an individual must
have a legitimate business purpose to access Facebook through
state resources.
SENATOR COGHILL addressed uncompensated care and noted that
based upon population, the federal government gives
disproportionate share payments to hospitals. He asked how the
disproportionate share payments are calculated.
MR. SHERWOOD answered that there are two kinds of
disproportionate share payments: Medicare and Medicaid. He
specified that the state does not have any direct involvement in
Medicare, but the state's Office of Rate Review calculates how
much an institution is eligible to receive.
SENATOR COGHILL asked to verify that disproportionate means
higher than the regular Medicaid payment. He inquired what
formulation is used.
10:06:45 AM
MR. SHERWOOD answered that he did not know formulation
specifics. He revealed that Alaska has historically not
allocated all of its federal Disproportionate Share Hospital
(DSH) allotment because the state did not have the matching
general funds to go along with it. He specified that the state's
current DSH payments are targeted toward the Alaska Psychiatric
Institute to the maximum extent allowed by federal law. He noted
that there are three other hospitals that provide psychiatric
services as well.
SENATOR COGHILL assumed that calculations are based upon a
hospital's billing volume which includes uncompensated care
flow. He advised that additional uncompensated care details be
provided to the Senate Finance Committee. He stated that
hospitals are probably paid fairly well by Medicaid, but smaller
payers are the ones that have felt the heat due to a payment
system lag. He pointed out that hospitals are able to shift
costs within hospitals and noted that imaging centers pay for
things like uncompensated care.
10:09:50 AM
CHAIR STOLTZE pointed out that hospitals in the Mat-Su region
are very competitive in retaining their profitable imaging
centers.
SENATOR WIELECHOWSKI asked how much the $100 million in
uncompensated care costs the average family in Alaska and how
much an average family would save if Medicaid was expanded.
MR. SHERWOOD answered that he did not have any cost estimates.
10:12:01 AM
SENATOR WIELECHOWSKI noted that 65 to 70 percent of Alaskans
receive government healthcare: state workers, federal workers,
military members, veterans, and Medicare recipients. He asked if
Mr. Sherwood had an estimate of what percentage of the total
state population is already on government healthcare.
MR. SHERWOOD answered that he does not have the information.
SENATOR WIELECHOWSKI replied that he would like to receive
information with a breakdown.
CHAIR STOLTZE asserted that a system that wants to add people on
requires some type of mechanism that is watching out for
institutional fraud before it gets too far and racks up real
numbers. He reiterated that privatization involves organizations
that specialize in ferreting out fraud. He asked if there is a
commitment to outside eyes that have total objectivity solely on
cost containment. He noted that are not always the most savory
during times of budgetary deficits.
10:14:42 AM
MR. SHERWOOOD answered that the department and the
administration are in complete agreement that limited resources
should go to meet the real needs of individuals and not go to
support fraud or abuse. He remarked that a role exists for
external entities in assisting the department in staying
appropriately focused on program integrity
SENATOR HUGGINS asked to confirm that Mr. Sherwood projected
Medicaid costs to increase by 300 percent from 2014 to 2034.
10:18:30 AM
MR. SHERWOOD answered correct.
SENATOR HUGGINS noted that Mr. Sherwood worked off of
assumptions that lower projected growth is due to cost
containment. He admitted that Mr. Sherwood's growth forecast's
big number frightens him if the calculations are incorrect. He
asked of the state's overall healthcare picture is under control
and sustainable.
10:20:10 AM
MR. SHERWOOD revealed that he has worked with the Medicaid
program for 25 years and during the entire time the department
has actively tried to manage and control costs. He remarked that
managing costs has not been the department's only objective and
noted the creation of the Denali KidCare program, expanded
coverage, and added services where needed. He detailed that the
20 year Medicaid cost forecast is based on historical spending
patterns and does not include program changes. He concurred that
the forecast is concerning, but admitted that he has lived with
the concern for 25 years. He said there are always ways to "bend
the curve" and noted that the 2012 forecast's 20 year projection
would have been $6 billion instead of $4.5 billion. He remarked
that Medicaid is not unique and noted that healthcare in general
has seen its expenses rise where its share of the economy
increases due to inflation. He said DHSS will work vigorously to
manage the Medicaid program.
10:22:34 AM
SENATOR HUGGINS asked to verify that Mr. Sherwood has been
involved with Medicaid for 25 years.
MR. SHERWOOD answered yes.
SENATOR HUGGINS asked what the state has done with Denali
KidCare over time.
MR. SHERWOOD explained that Denali KidCare was started in 1999.
CHAIR STOLTZE added that Denali KidCare was part of "Smart
Start."
MR. SHERWOOD explained that the Children's Health Insurance
Program (CHIP) was an option that was added to expand Medicaid
for children. He detailed that existing coverage for low income
children and pregnant women was rolled into a package and called
Denali KidCare. He specified that income limits were set at 200
percent of the poverty level.
CHAIR STOLTZE asked what the program's starting cost was and
what the current costs are.
MR. SHERWOOD answered that he could not provide specific
numbers.
CHAIR STOLTZE asked that Mr. Sherwood provide legislators with
Denali KidCare's growth analysis.
10:24:39 AM
SENATOR COGHILL moved to report CSSB 74(STA) from committee with
individual recommendations and attached fiscal note(s).
10:24:58 AM
CHAIR STOLTZE announced that without objection, CSSB 74(STA),
[version: 29-LS0692\F], moves out of the Senate State Affairs
Standing Committee.