Legislature(2003 - 2004)
04/02/2003 09:00 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 108
"An Act relating to payment rates under the Medicaid program
for health facilities and to budgeting, accounting, and
reporting requirements for those facilities; abolishing the
Medicaid Rate Advisory Commission; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that this bill, which is being presented
at the request of Governor Murkowski, would eliminate the Medicaid
Rate Advisory Commission and, thereby, specify that the Department
of Health and Social Services would be responsible "for calculating
and setting Medicaid payment rates for health care facilities."
JOEL GILBERTSON, Commissioner, Department of Health and Social
Services, distributed, at the request of Co-chair Wilken, Medicaid
program charts [copies on file] titled: "Medicaid Total Average
Eligibles and Costs;" "Medicaid Eligible Children and Costs;"
"Medicaid Eligible Adults and Costs;" "Medicaid Elderly Eligibles
and Costs;" "Medicaid Disabled Eligibles and Costs" to Committee
members.
Co-chair Wilken explained that these charts are being distributed
because, "the width and breadth and the growth" of the program's
history would be beneficial for the Senate Finance Committee
members.
[NOTE: Further discussion regarding these charts occurs later in
the meeting.]
Commissioner Gilbertson informed the Committee that SB 108
eliminates the Medicaid Rate Advisory Commission that was
established in 1984 to determine Medicaid payment rates that must,
by federal law, guarantee that a fair rate for reasonable costs be
paid to acute care facilities. He continued that "in 1989, by
Executive Order," the Commission's role changed from a rate-setting
entity to that of advisor to the Commissioner of the Department of
Health and Social Services, who was, thereby, responsible for
establishing the Medicaid payment rates.
Commissioner Gilbertson continued that the federal law was repealed
in 1997 and replaced with public process requirements. Therefore,
he continued, this legislation would: eliminate the Medicaid Rate
Advisory Commission; acknowledge that the rate setting function is
a responsibility of the Department; and provide for a single public
process within the Department. Additionally, he furthered, these
changes would allow the Department to align with current federal
law and develop a variety of payment methodologies that would be
more efficient and responsive to the needs of differing size
facilities.
Commissioner Gilbertson elaborated that this legislation would
allow the Department to establish an Office of Rate Review within
the Commissioner's Office and to centralize the Department's rate
setting operations for care facilities as well as for other
services such as physician services, subsidized adoptions and
foster care. He summarized that this legislation would allow
"Alaska law to mirror federal law which requires simply a public
process."
Commissioner Gilbertson informed that the elimination of the
Medicaid Rate Advisory Commission would result in a small fiscal
note savings resulting from associated travel and per diem
expenses.
Senator Taylor clarified that the Medicaid Rate Advisory
Commission's current role is advisory.
Commissioner Gilbertson concurred.
Senator Taylor furthered that the Commissioner must approve
payments to facilities.
Commissioner Gilbertson concurred.
Senator Taylor asked whether additional benefits would be afforded
by the elimination of the advisory Commission.
Commissioner Gilbertson reiterated that, in addition to the savings
resulting from the elimination of the Commission's travel expenses,
this legislation would allow the Department's policies to align
with current federal regulations that would permit the Department
to develop, through the public process, separate payment policy
methodologies for facilities rather than being restricted to the
current single methodology.
Senator Taylor asked how this new system would differ from the
current system in addressing a Certificate of Need request, as, he
revealed, Bartlett Regional Hospital in Juneau underwent five
hearings over a six-year period in order to be granted a
Certificate of Need for the purchase of a Magnetic Resonance
Imaging (MRI) machine, and he declared that it is unknown as to
whether Bartlett ever received the Certificate of Need that was
required for the hospital to receive reimbursement. He opined that
the Commissioner was responsible for the delay in this situation;
and he questioned whether the elimination of the Advisory
Commission would improve the situation.
Commissioner Gilbertson clarified that the legislation would not
affect the Certificate of Need regulation.
JACK NIELSON, Executive Director, Medicaid Rate Advisory
Commission, Division of Medical Assistance, Department of Health
and Social Services testified via teleconference from Anchorage to
respond to Senator Taylor's question. He reiterated that this bill
would provide the Department with "rate setting flexibility and
regulatory relief." He noted that the State settled the
aforementioned situation with Bartlett Regional Hospital, and he
stressed that the flexibility afforded by this legislation would
help the Department "avoid those situations in the future."
Co-Chair Green shared her surprise at having received letters from
Commission members lobbying legislators to increase Medicaid
funding. She stated that Commission members should advise the
Department rather than lobby, and she voiced support for this
legislation.
Senator Olson voiced discomfort regarding language in Section 2 of
the bill that reads as follows.
Sec. 2(a) The department by regulation shall require a uniform
system of accounting, budgeting, and [FINANCIAL] reporting for
health facilities receiving [PROSPECTIVE] payments under this
chapter. The regulations must provide for reporting revenues,
expenses, assets, liabilities, [AND} units of service, and
other items considered necessary by the department to
implement this chapter. [THE DEPARTMENT SHALL SPECIFY THE DATE
THE SYSTEM BECOMES EFFECTIVE FOR EACH HEALTH FACILITY.]
New Text Underlined [DELETED TEXT BRACKETED]
Senator Olson stated that this language indicates that, "the
determination regarding what the rates would be is at the
discretion of the Department." He continued that, "there appears to
be no oversight."
Mr. Nielsen responded that were the Department to implement a
reporting requirement on a facility, the Department would be
required to abide by the public process and regulation adoption
process procedures before the requirements could be imposed.
Senator Olson reiterated that the Department would still make the
determination.
Mr. Nielson specified that, while the Department makes the
decision, the regulatory process is required.
Senator Olson asked the composition of Commission members.
Mr. Nielson reported that four of the five Commission member
positions have representation; however, he noted that the physician
allocation on the Commission has been vacant for approximately one
year.
Senator Olson asked whether Commission members support the bill.
Mr. Nielson affirmed that three of the four members "generally"
support the bill. He specified that he has not had contact with the
fourth member.
Senator Olson asked whether hospitals support the legislation.
Mr. Nielson replied that hospital administrators have not
communicated a position regarding the bill; however, he believed
that hospital administrators testified on the bill in earlier
committee hearings.
Commissioner Gilbertson interjected that the Alaska State Hospital
Nursing Home Association does not oppose the bill.
Commissioner Gilbertson responded to Senator Olson's concern
regarding Section 2 by specifying that the section would allow the
Department to gather information from facilities necessary for
establishing rates. He stated that this information would provide
for a uniform accounting and budgeting system for the rate setting
function, and he verified that the public process is a requirement
for gathering the information.
Senator Taylor voiced that he does not object to the bill as he has
questioned the value of the Commission for some time. However, he
opined, "rate setting has always been very contentious between the
State and our hospital and medical facilities." He professed that
the rates often determine whether a facility would survive, and he
voiced concern that language in the bill would provide broader
authority to the Department to audit and review facilities.
Senator Taylor voiced appreciation for language in the bill that
would allow differing rates for facilities; however, he noted that
federal and State auditors place "great, and duplicate," demands on
medical facilities. He urged the Commissioner to determine measures
to reduce the burden that auditing places on a facility.
Commissioner Gilbertson replied that, while the costs associated
with the auditing function are high, the need for good data is
important. He stated that the Department would endeavor to reduce
the administrative burden of the reporting requirement.
Co-Chair Wilken asked whether the Department's negative fiscal note
is included in the Governor's budget proposal.
Commissioner Gilbertson replied that it should be.
Co-Chair Wilken ordered the bill HELD in Committee.
[Note: Further discussion concerning SB 108 continues later in the
meeting.]
[Note: the following Committee discussion regards the Medicaid
program discussed in SB 108 and SB 109.]
Senator B. Stevens, referring to the Medicaid charts provided by
the Department of Health and Social Services during the hearing on
SB 108, generalized that the Medicaid program is experiencing "a
two-pronged" containment problem: the first being the cost of
providing services; and the second being "the eligibility of your
monthly recipients." He noted that, according to the chart on page
one, titled "Medicaid Total Average Monthly Eligibles and Costs,"
there has been a 47 percent increase in eligible monthly
participants between FY 99 and projected FY 04. He continued that
the chart on page two titled "Medicaid Eligible Children and Costs"
indicates that, during the same time frame, there has been an
increase of 73 percent in monthly eligible children, while, he
noted, the page three chart titled "Medicaid Eligible Adults and
Costs" reflects a decrease of approximately one half of one
percent. He continued that other charts in the packet indicate an
approximate 18-percent increase in senior recipients and a 33-
percent increase in disabled recipients. He asserted that, "no
sector of our population is growing at that rate." He asked for an
explanation to justify the increases in eligible participants.
Senator B. Stevens stated that SB 108 and SB 109 focus on cost
containment, and he specified that, "the average cost per month per
member" is identified on the charts. However, he identified the
containment of program eligibility as the primary focus. He
expressed that between FY 99 and FY 04, the total number of program
recipients has increased by 30,691, with 27,734 of that total
number being children.
Commissioner Gilbertson acknowledged Senator B. Stevens's concern,
and stated that the growth in the Medicaid program "is a national
trend." However, he clarified that on the national level, 71
percent of Medicaid cost increases result from seniors and disabled
individuals; whereas, he attested, these groups account for
approximately 50-percent of the cost increase in Alaska. He
furthered that the costs for these groups are projected to align
with the national average as "the graying of Alaska" results in
more demand for long-term care and as people with disabilities
"live longer." He specified that the most rapid population growth
in the Medicaid program has been in children services, which is
reflected by the growth of the Denali KidCare program while the
only program that reflects a reduction is the adult program. He
attributed this reduction to the success of such efforts as the
State's welfare reform and welfare to work programs. However, the
program has experienced an increase in costs associated with the
number of pregnant women in the program. He noted that separate
legislation is being considered to address eligibility standards
for the various programs.
Co-Chair Green interjected that the increase in costs is associated
with pregnant women who qualify for services through the Denali
KidCare program.
Commissioner Gilbertson concurred, and he commented that "the vast
majority" of growth in terms of children is associated with the
Denali KidCare program. He professed that the State would
eventually incur the majority of its cost increases from the
overall growth in services to seniors and the disabled.
BOB LABBE, Deputy Commissioner, Department of Health and Social
Services informed that prior to the "expansion" of the Denali
KidCare program in 1999, the child population growth in the
Medicaid program "was flat," and the family being on temporary
assistance determined the edibility for a child. With the
implementation of welfare reform measures, he continued, the number
of child participants in the Medicaid program decreased "as the
parents went to work." He noted that when the eligibility policy
expanded to 200-percent of the poverty level, the caseloads started
to increase.
Mr. Labbe stated that while the elderly Medicaid population growth
has been "very predictable and very constant," the level does not
correspond to the overall number of seniors in the State. He
informed that to qualify for Medicaid funding, seniors must be
receiving public assistance. However, he stated, the high incomes
of many seniors excludes them from the program.
Mr. Labbe opined that these seniors might not qualify for the
program until the age of 85 or older when long-term care services
might be required.
Mr. Labbe noted that the State is experiencing a growth of
individuals with disabilities as "baby boomers" are aging and as
adults and children with disabilities live longer lives. He
expressed that the population growth in the number of children in
the Medicaid program is the result of a State "policy choice" to
expand the State services through the Denali KidCare program.
Senator B. Stevens asked whether the eligibility specifications are
located in Section B(13) of the Denali KidCare program.
Mr. Labbe was unsure of the specific section.
Commissioner Gilbertson interjected that the 200 percent of poverty
level eligibility guideline is the standard for children and
pregnant women through the Denali KidCare program.
Senator B. Stevens asked the level of the current federal poverty
guidelines.
Commissioner Gilbertson replied that it is determined by the size
of the family.
Co-Chair Wilken interjected that discussion relating to eligibility
for the Denali KidCare program would be more appropriately
addressed through forthcoming legislation.
Senator Bunde commented that, antidotally, people move to Alaska in
order to qualify for the Permanent Fund Dividend and other State
benefits. He asked whether the Department "tracks" the length of
residency of new individuals to the Medicaid program.
Mr. Labbe responded that the Department does not track length of
residency; however, he noted, Medicaid recipients are required to
be a resident of the State. He mentioned that the Department had,
several years previously, conducted studies in which a length of
residency question was included and, he commented, that information
could be provided.
Senator Bunde suggested that a length of residency question would
be beneficial. He asserted that the minimum length of residency to
qualify for Medicaid benefits should be at least 30 days.
Commissioner Gilbertson responded that the Medicaid program is an
entitlement program whereby if an individual meets the program's
criteria, they must be enrolled in the program. However, he agreed
that the length of residency information could be beneficial.
Senator Taylor asked the penalty that might be incurred were a
state to deny benefits to individuals, contrary to federal
standards.
Commissioner Gilbertson responded that were the State to disregard
federal guideline standards for the Medicaid program, the State
would be denied access to federal Medicaid funds. However, he noted
that a state's participation in "the Medicaid program is optional;
it is voluntary for States," and he continued, although "it is
rare," states have the option to submit and manage their own plans
through a wavier process.
Co-Chair Wilken asked whether a bill that passed in an earlier
Legislative session included a study being conducted regarding the
Medicaid program and the Permanent Fund.
Co-Chair Green reminded the Committee that the bill in question had
been vetoed.
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