Legislature(2015 - 2016)SENATE FINANCE 532
01/27/2016 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB78 | |
| SB74 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 78 | TELECONFERENCED | |
| SB 74 | |||
| + | TELECONFERENCED |
SENATE BILL NO. 78
"An Act relating to medical assistance reform
measures; relating to eligibility for medical
assistance coverage; relating to medical assistance
cost containment measures by the Department of Health
and Social Services; and providing for an effective
date."
9:04:23 AM
Co-Chair MacKinnon explained that the Medicaid reform bill
had been before the committee in the previous session. She
relayed that the CS currently before the committee carried
with it the support of the administration.
VALERIE DAVIDSON, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES (DHSS), concurred.
Co-Chair Kelly MOVED to ADOPT proposed committee substitute
for SB 78(FIN), Work Draft 29-GS1055\H (Glover, 1/25/16).
There being NO OBJECTION, it was so ordered.
9:05:43 AM
Co-Chair MacKinnon referred to a letter dated January 25,
2016, from the Senate Finance Committee to the Department
of Health and Social Services, which contained the
following five questions (copy on file):
1. Is the Medicaid software system certified? If not,
when did we apply for certification and when will it
be certified?
2. In April you had identified 100 defects in the
software system. What defects remain? How many errors
are we still aware of? Who do the errors affect? Are
the defects critical, high, moderate, or low?
3. How quickly are applications being processed?
4. How quickly are providers being paid?
5. What is the legal status of our lawsuit with Xerox?
Have other states in legal challenges with Xerox
systems been certified? Has Xerox completed their
corrective action plan? Is there a financial award? If
so, how much are we requesting as compensation?
Co-Chair MacKinnon said that it was not the intent of the
committee to discuss policy issues contained in the
legislation, but to have a brief discussion about where the
state was in the reform process.
Commissioner Davidson stated that she was prepared to speak
to the 5 questions put forth by the committee.
Co-Chair MacKinnon hoped that the administration could
explain the specific changes in the current version of
legislation, and how each section of the bill would work to
address the issue of Medicaid reform in the state.
Commissioner Davidson testified that the state's Medicaid
program, in its current form, was not sustainable and that
reform was essential. She addressed question 1, submitted
by the committee:
Is the Medicaid software system certified? If not,
when did we apply for certification and when will it
be certified?
Commissioner Davidson explained that in December the
department had met with the Centers for Medicare and
Medicaid Services (CMS) (who provide system certification)
and their contractor. She shared that the next meeting with
CMS, and their contractor, was scheduled for February 1,
2016.
9:08:17 AM
Senator Dunleavy understood that the system was not
currently certified.
Commissioner Davidson replied in the affirmative.
9:08:32 AM
Co-Chair MacKinnon clarified that deeper discussions of the
questions contained in the letter would happen in
subcommittee. She highlighted that there had been a delay
in the certification process, but hoped the present
discussion on the matter would be brief.
Commissioner Davidson admitted that certification had been
delayed, and relayed that the department was working toward
certification.
9:09:32 AM
Commissioner Davidson addressed question 2:
In April you had identified 100 defects in the
software system. What defects remain? How many errors
are we still aware of? Who do the errors affect? Are
the defects critical, high, moderate, or low?
Commissioner Davidson enumerated that there were currently
121 defects in the system. She said that most of the
defects were new; as old defects were fixed, new defects
were created in the coding. She relayed that 1 critical
defect, 6 high defects, 111 moderate defects, and 3 low
defects had been discovered in the system. She said that
the defects were affecting 3 different service categories:
prior authorization for services - behavioral health prior
authorization for approved units of service, prior
authorization units of service for enhanced adult dental
services, and car coordination services for enrollees on
the Tax Equity and Fiscal Responsibility Act (TEFRA)
Waiver.
9:10:57 AM
Co-Chair Kelly queried the definition of "defect" as it
applied to the software system.
Commissioner Davidson explained that the defect
classification was based on the level of impact it had on
the payment system. She noted that there had been defects
in the old legacy system previously used by the state. She
asserted that no software system would be 100 percent
defect-free. She shared that the goal was to minimize the
defect number.
9:12:04 AM
Co-Chair Kelly understood that a defect was essentially a
glitch that misdirected data in the system.
Commissioner Davidson answered in the affirmative. She
reiterated that the defects considered critical, or high,
were those that impacted payments to providers for services
rendered.
9:12:43 AM
Co-Chair Kelly asked for the definition of a "unit of
service".
JON SHERWOOD, DEPUTY COMMISSIONER, MEDICAID AND HEALTH CARE
POLICY, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained
that a unit of service varied according to the type of
service. Typically, professional services were listed under
numerous procedure codes; submitted claims identified the
service provided, and the number of service units provided.
9:14:01 AM
Co-Chair MacKinnon noted that a written hard copy of the
answers to the questions that the committee had submitted
to the department was anticipated.
Commissioner Davidson addressed question 3:
How quickly are applications being processed?
Commissioner Davidson relayed that that the department
processed 8,107 Medicaid application in December 2016, over
20 percent of which were processed within a week of
submission. He furthered that 62 percent were 60 days old,
or less; 38 percent were over 60 days old.
9:14:58 AM
Commissioner Davidson addressed question 4:
How quickly are providers being paid?
Commissioner Davidson responded that provided were paid in
the same week that claims were submitted, or the week
after, with the exception of the 3 defects previously
mentioned. She stated that the department paid an average
of 107,000 claims per week worth approximately $30 million.
She spoke to repayment of advance payments that the
department made to providers when the system was
particularly dysfunctional. She said that providers had
repaid a total of $81.6 million, and the state had
approximately $83.7 million in outstanding payments.
Provider repayments were ongoing.
9:16:25 AM
Co-Chair MacKinnon asserted that the state had extended
advance payments totaling $164 million.
Commissioner Davidson concurred.
9:16:43 AM
Senator Hoffman queried the total dollar amount for the
number of claims that were 60 days overdue.
Commissioner Davidson clarified that it was the
applications for eligibility that had been overdue, not the
payments. She offered to provide the information regarding
the payments.
9:17:11 AM
Commissioner Davidson addressed question 5:
What is the legal status of our lawsuit with Xerox?
Have other states in legal challenges with Xerox
systems been certified? Has Xerox completed their
corrective action plan? Is there a financial award? If
so, how much are we requesting as compensation?
Commissioner Davidson explained that case before the Office
of Administrative Hearings was currently suspended. She
said that a mediation with Xerox was scheduled for February
9, 2016. She stated that compensation would be a topic of
discussion during the mediation. She relayed that some
providers had filed their own class-action suits against
Xerox. She said that the department was unaware of other
states engaged in litigation with Xerox over their MMIS
System. She shared that North Dakota and New Hampshire had
certified systems in 2015, but Alaska's system was
different because Alaska was a fee-for-service state. She
highlighted that Xerox had 5 items remaining on their
corrective action plan that needed to be completed:
· an Edit 8040
· TEFRA care coordination services claim processing
· MRO14 Report (Medicaid cost reporting)
· National Correct Coding Initiative Report
· Mass Adjustment Reprocessing
9:21:30 AM
Vice-Chair Micciche spoke to the assumption how much the
department would be required to run and populate the
system, prior to moving to the Xerox MMIS system. He
queried the level of labor insensitivity prior to going
live.
Commissioner Davidson stated that the early implementation
was much more labor intensive than anticipated. She
contended the new system was more efficient than the old
legacy system, and there had been an increase in the total
amount of total average weekly claims paid.
9:23:02 AM
Co-Chair MacKinnon reminded the committee that the bill
would be moving to subcommittee and that policy inquiries
should presently be limited.
Co-Chair MacKinnon expressed concern that using an
uncertified system put Alaska at risk. She wondered how far
back in time claims could be submitted to the federal
government.
9:24:11 AM
Senator Olson observed that due to systemic defects, the
number of providers available for Medicare patients was
dwindling. He wondered whether Medicaid expansion had
affected the number of providers.
Commissioner Davidson responded that in Alaska, Medicaid
paid more than Medicare; the department had not seen
providers discontinuing their participation in Medicaid.
She said a "refresh" of Medicaid providers had been
conducted by the department in 2015; providers had been
asked to re-enroll as Medicaid providers because there were
Medicaid providers in the old system who were no longer
providing services.
9:25:50 AM
Senator Dunleavy asked what the current version of the bill
was meant to accomplish.
Commissioner Davidson asserted that the department took
reform very seriously, and many of the changes that had
been incorporated into the committee substitute were new
reform opportunities that had been identified over the
interim. She added that research had included looking to
other states for guidance and taking advantage of the best
ideas.
Senator Dunleavy asked what the bill would cost the state,
and did the department hope to recoup monies as a result of
the reforms.
Co-Chair MacKinnon asked Commissioner Davidson to contain
remarks to a high-level overview, and restated that the
policy discussions would occur in subcommittee.
Commissioner Davidson stated that the department would
provide fiscal notes for more detail, but did expect reform
opportunities to provide better services for less cost.
9:27:48 AM
Commissioner Davidson relayed that the department had
identified reform efforts already existing and ongoing in
the department in 2015, including the "over-utilizer" of
emergency services. She furthered that pharmacy reform and
utilization control initiatives had been priorities. She
stated that additional reforms had been included in the
original bill introduced by the governor. Ove the interim,
the department had undertaken an effort to bring national
health policy expertise and actuarial analysis to the
process. She shared that the resulting report of the work
by the department and Agnew Beck Consulting had been
released and could be found at:
dhss.alaska.gov/HealthyAlaska/Pages/Medicaid_
Redesign.aspx.
Commissioner Davidson stated that the bill focused on, and
created, an Alaska Medicaid False Claims Act, which
mirrored the federal statute and provided financial
incentives for individual Alaskans who brought fraud to the
attention of the Attorney General. This would allow the
state to recover losses from fraud and overpayments. She
relayed that the bill proposed a number of reform
opportunities that had not been included in pervious bill
versions, such as, primary care initiatives, and increased
1115 Waiver opportunities. She stressed that not investing
in a decent behavioral health system impacted the state in
three different ways: increased incarceration, increased
child-maltreatment rates, and increased emergency room
overutilization. She continued that the bill would create
the public/private opportunity to address the non-urgent
use of emergency room departments, and the opportunity to
work with the tribal health system in order to maximize 100
percent federal match opportunities. One of those
opportunities included finalizing a national policy change
issued by Secretary Burwell, of the United States
Department of Health and Human Services, in which it had
been proposed to allow states like Alaska to recoup travel
and accommodation services, under certain conditions, at
100 percent federal match. Another opportunity was to
expand referred services from a tribal organization to a
service not provided in the tribal system to be considered
for a 100 percent federal match.
9:32:45 AM
Senator Hoffman asked whether the increased travel
reimbursement included Medivac support in rural Alaska.
Commissioner Davis replied in the affirmative.
9:33:06 AM
Co-Chair MacKinnon asked Mr. Sherwood to address the
sectional analysis.
9:33:52 AM
Mr. Sherwood discussed the sectional analysis for CSSB
78(FIN):
Section 1 Adopts intent language related to the
need to redesign the state's Medicaid program to
provide financial sustainability, and sets out goals
for redesign of the program.
Section 2 Adopts AS 09.10.075, which establishes time
limits in which a person may or may not bring an
action under new sections AS 09.58.010-09.58.950, the
Alaska Medicaid False Claims Act, and a statute of
limitations. An action may be brought within six years
of when the act or omission was committed, or three
years after the date when the act or omission was
known or reasonably should have been known by the
attorney general and department, but no action may be
brought for a violation more than ten years after the
date of violation.
Section 3 Amends AS 09.10.120(a) to include reference
to new subsection AS 09.10.075, creating an exception
for Medicaid fraud action time limits.
Section 4 Adopts AS 09.58, which establishes Alaska
Medicaid False Claim and Reporting Act (AFMCA). This
section includes several subsections related to
liability for certain acts and omissions, civil
actions, rights of participants in such actions,
awards allowed, actions that are not allowed, limits
state liability, and outlines whistleblower
protections. This section identifies the fraudulent or
false acts that can be committed by a Medicaid
provider, a corporation, partnership or individual, or
recipient in effort to defraud the State. This section
also outlines provisions by which a recipient or
provider may reduce the amount of liability from
actual damages.
This section also allows a private citizen to
pursue a false claim action in the superior court,
outlines the provision by which they may file a suit
or an extension of time in which to bring an action,
and the responsibilities and time-line in which the
attorney general must investigate and respond to the
claim. This section also identifies the options
available to private persons, should the attorney
general dismiss the case due to lack of evidence,
including pursuing the suit of their own accord.
Throughout the process, this section states that the
attorney general holds the rights to intervene,
settle, dismiss the case, request investigation
assistance from the department and bring civil action
in superior court.
This section further allows the attorney general to
issue subpoenas to compel records in connection with
an investigation, and outlines the courts' authority
to issue an order to comply and punishments if the
Medicaid provider or recipient(s) fail or refuse to
comply with the courts order. Further, by this section
the attorney general may elect to interview and file
or amend a new complaint based on conduct,
transactions or acts set out in the complaint.
Further, this section provides protections for
the private person acting as a whistleblower and limit
the liability of the state and outlines time limits
for bringing action.
Finally, this section includes department
regulatory authority, identifies the limits of
punitive damages, and provides definitions related to
this section.
Section 5 Amends AS 37.05.146(c) to include a new
paragraph (88) adding monetary recoveries from the
Alaska Medicaid False Claims Act to the program and
non-general fund program receipts definitions.
Section 6 Amends AS 40.25.120, a conforming amendment
to include new AS.09.58.010 to existing public records
statutes.
Section 7 Amends AS 47.05.010 to include a
requirement that DHSS develop a health care delivery
model that encourages wellness and disease prevention.
Section 8 Amends AS 47.05.200, Medicaid Audits
statute, changes the number of program audits to no
less than fifty per year and adding that the state
shall attempt to minimize concurrent state or federal
audits.
Section 9 Adopts AS 47.05.200 that the Department may
assess interest and penalties on overpayments,
calculating interest using existing statutory rates.
Section 10 Adopts AS 47.05.235, which applies
the duty of enrolled Medicaid providers to conduct one
annual review, identify overpayment and report
findings to the department within ten business days,
and create a repayment agreement with the state.
Section 11 Adopts AS 47.05.250, which authorizes
the department to develop regulations to impose civil
fines and sets limits on the amount of the fines.
Adopts AS 47.05.260, which authorizes the
department, after application to the court and a
finding of probable cause, to seize certain real or
personal property of a medical assistance provider who
has committed or is committing medical assistance
fraud, to offset the cost of the alleged fraud. The
court may authorize seizure of real or personal
property to cover the cost of the alleged fraud.
This section provides a list of possible real or
personal properties, including bank accounts,
automobiles, boats, airplanes, stocks and bonds, and
inventory.
This section, upon issuance of the court order of
seizure, prohibits the owners of property from
disposing of the property, with a provision of good
faith in the event property is sold without written
permission of the court.
This section further authorizes the forfeiture of any
seized property if the Medicaid provider is eventually
convicted of medical assistance fraud. This section
provides instructions to the state to sell or return
properties, and depositing funds from disposal of
seized properties.
This section also allows for the action of forfeiture
to be joined with any alternative civil or criminal
action for damages.
9:39:57 AM
Mr. Sherwood continued with the sectional analysis:
Section 12 Amends AS 47.07.036 by adding new
subsections (d) - (f) to outline cost containment and
reform measures DHSS must undertake, including seeking
demonstration waivers related to innovative service
delivery models, applying for other options under the
Social Security Act to obtain or increase federal
match, and improving telemedicine for Medicaid
recipients. This section also requires DHSS to apply
for an 1115 waiver for a demonstration project for one
or more groups of Medicaid recipients in one or more
geographic area. The demonstration project may
include managed care organizations, community care
organizations, patient-centered medical homes, or
other innovative payment models.
Section 13 Amends 47.07.900 (4), Medicaid
Administration definitions, by removing the grantee
status requirement for outpatient community mental
health clinics serving Medicaid patients.
Section 14 Amends AS 47.07.900 (17) by removing
the grantee/contractor status requirement from drug
and alcohol treatment centers and outpatient community
mental health clinics. This change, and the one in the
previous section, allows mental health and drug
treatment service providers who do not receive grants
from the department to become enrolled Medicaid
providers and deliver services to Medicaid recipients.
Section 15 Adds a new section to outline court
rule amendments as a result of enactment of "section
2, 3, and 4 " (AMFCA) of this Act.
Section 16 Requires DHSS to collaborate with
Alaska Tribal health organizations and the U.S. DHHS
to implement new federal policy regarding 100% federal
funding for services provided to Medicaid-eligible
American Indian and Alaska Native individuals.
Section 17 Requires DHSS to implement the primary
care case management system authorized under AS
47.07.030(d). The purpose of this new system is to
increase Medicaid enrollees' use of primary and
preventive care, while decreasing the use of specialty
care and hospital emergency department services.
Section 18 Requires DHSS to develop a plan to
strengthen the health information infrastructure,
including health data analytics capability, to support
transformation of the health system in Alaska.
Section 19 Authorizes DHSS to support one or more
private initiatives designed to reduce nonurgent use
of emergency departments by Medicaid recipients.
Section 20 Authorizes DHSS to contract with one or
more accountable care organizations to demonstrate the
use of local, provider-led coordinated care entities
that agree to monitor care across multiple care
settings, and that will be accountable to DHSS for the
overall cost and quality of care. DHSS is authorized
to participate in public-private partnerships with
other purchasers of health care services, and is
required to implement an evaluation plan to measure
the success of this demonstration project.
Section 21 Instructs DHSS to immediately amend the
Medicaid state plan to be consistent with this Act,
and submit the amendments to the federal government
for approval.
Section 22 Authorizes DHSS to adopt regulations to
implement provisions of this Act.
Section 23 Provides that Section 4 is effective
conditional on Section 15 receiving a two-thirds
majority vote. The new sections of law creating the
civil Medicaid false claims act do not take effect
unless the indirect court rule change sections of the
bill receive the necessary two-thirds vote.
Section 24 Provides that Section 22 is effective
immediately under AS 01.10.070(c).
Section 25 Provides that, except for Section 22,
the provisions of this Act take effect on July 1,
2016.
9:44:08 AM
Senator Hoffman asked about Section 14, and wondered how it
changed the current system and care for individuals on the
FASD spectrum.
Mr. Sherwood explained that the principal effect the
section would bring more substance abuse treatment
providers into the Medicaid system. He suggested that it
would make substance abuse treatment more readily
available, with shorter wait times.
Senator Hoffman asked whether the legislation offered any
other preventative measures.
Mr. Sherwood referred to Section 7 of the bill, which
addressed the duties of the department, which required the
department to develop a health care delivery model and
encourage wellness and disease prevention.
Co-Chair MacKinnon directed attention to Page 13, line 16
of the legislation.
9:47:10 AM
Commissioner Davidson stated that one critical component
included in the Agnew-Beck report was a demonstration
project that would be allowed under the proposed
legislation for accountable care organization demonstration
projects. She said that accountable care organizations were
a way to be able to manage the care of a defined
population.
9:49:08 AM
Senator Olson wondered how many groups provided input in
the crafting of the legislation.
Commissioner Davidson responded that the Agnew-Beck report
listed all of the participants in the Appendix and included
tribal health providers. She added that the webinars that
had been provided were available on the department's
website.
Senator Olson asked why the provider would be penalized for
overpayments as well as an interest payment.
9:51:27 AM
Co-Chair MacKinnon articulated that she was going to send
both Medicaid reform bills to a subcommittee consisting of
the following lawmakers:
Co-Chair MacKinnon, Chair
Co-Chair Kelly
Vice-Chair Micciche
Senator Olson
Senator Cathy Giessel
Co-Chair MacKinnon said that Senator Olson and Senator
Giessel both had expertise in the medical field that would
supply additional insight into the bills. She requested
that Senator Olson submit his previous question to the
department in written form.
9:54:26 AM
Vice-Chair Micciche wanted 2 questions on the record, but
did not need them to be answered.
Co-Chair MacKinnon asserted that the subcommittee was
created with geographic and regional sensitivities in mind.
She added that the subcommittee would meet at 1:30pm on
Monday, Wednesday, and Friday into the future.
9:55:48 AM
Vice-Chair Micciche commented that the department was the
second highest cost-driver in the state, and shared that he
was very focused on false claims. He believed that it was a
fairness issue for all Alaskans. He asked about the statute
of limitations for the reporting of false claims. He asked
for further explanation of Sections 2 and 3. He asked about
the change of the word "relator" to "person", and whether
the definition included state employees.
9:57:37 AM
Co-Chair MacKinnon referred to Section 4, and asked about
the difference between "false" and "fraud". She asked about
Section 8, and wondered if the state would have a
memorandum of understanding (MOU) with the federal
government to receive federal audit finding results. She
spoke to Section 13, and queried the role of the grantee.
9:58:41 AM
Co-Chair MacKinnon directed the public to
www.akleg.gov/BASIS for meeting documents. She referred to
the sectional analysis and a memo from Legislative Legal.
She announced that all legislative staff was welcome to
attend the SB 78 subcommittee meetings.
SB 78 was HEARD and HELD in committee for further
consideration.
9:59:54 AM
AT EASE
10:01:29 AM
RECONVENED