04/24/2003 02:18 PM House FIN

SENATE BILL NO. 109                                                                                                           
                                                                                                                                
     Department  of Health  and Social  Services to  apply to                                                                   
     administration  of the medical  assistance program  when                                                                   
     there  are insufficient  funds  allocated  in the  state                                                                   
     budget for  that program; authorizing the  department to                                                                   
     make  cost   containment  decisions  that   may  include                                                                   
     decisions about eligibility  of persons and availability                                                                   
     of services  under the  medical assistance  program; and                                                                   
     providing for an effective date.                                                                                           
                                                                                                                                
JOEL GILBERTSON, COMMISSIONER,  DEPARTMENT OF HEALTH & SOCIAL                                                                   
SERVICES,  explained   that  under  current  law,   if  funds                                                                   
appropriated to  the Medicaid program are insufficient  for a                                                                   
given fiscal  year, the Department  is directed  to eliminate                                                                   
optional Medicaid  services based on a priority  list that is                                                                   
out-of-date.  He maintained that  the existing list is not an                                                                   
effective management  tool and if  used, would result  in the                                                                   
denial of necessary and cost-effective  services to Alaskans.                                                                   
                                                                                                                                
Commissioner  Gilbertson advised that  the bill would  repeal                                                                   
the options  list and replaces  it with a singular  direction                                                                   
for the Department to engage in  cost containment measures to                                                                   
achieve  the  same  level savings  to  operate  the  Medicaid                                                                   
Program within the amount appropriated by the Legislature.                                                                      
                                                                                                                                
The  proposed bill  would  replace the  obsolescent  language                                                                   
with broad general authority for  the Department to undertake                                                                   
cost containment based on three key principles:                                                                                 
                                                                                                                                
     ·    The  Department must  pursue  all other  reasonable                                                                   
          cost containment measures before eliminating any                                                                      
          eligibility groups or services;                                                                                       
     ·    The    Department   should   aggressively    pursue                                                                   
          strategies    to   maximize    federal    financial                                                                   
          participation in the Medicaid program; and                                                                            
     ·    Cost  containment  decisions should  be  made in  a                                                                   
          manner that best reflects the needs and interests                                                                     
          of eligible Medicaid recipients.                                                                                      
                                                                                                                                
Commissioner  Gilbertson  noted  that  the  current  list  in                                                                   
statute   establishes   a   very  rigid   structure.      The                                                                   
Administration  believes that  the Department  can engage  in                                                                   
similar  cost   containment  measures  within   the  Medicaid                                                                   
Program  and conduct  cost containment  in a  manner that  is                                                                   
responsive to the Legislature's  intent and responsive to the                                                                   
needs of the beneficiary population.                                                                                            
                                                                                                                                
He spoke to the fiscal note.   Commissioner Gilbertson stated                                                                   
that next year there would be  a savings.  At this point, the                                                                   
Administration   is  not   proposing   any  additional   cost                                                                   
containment in the Medicaid Program  that is not currently in                                                                   
the Governor's budget mission.                                                                                                  
                                                                                                                                
Co-Chair Harris asked about a deferred drug list.                                                                               
                                                                                                                                
Commissioner   Gilbertson  advised   that  included   in  the                                                                   
Governor's  budget submission  this year  was a proposal  for                                                                   
adopting  a  deferred  drug  list   for  the  Alaska  Medical                                                                   
Assistance  Program.    A  preferred   drug  list  is  not  a                                                                   
formulary.     That   drug  list   is   a  peered   reviewed,                                                                   
professionally  designed  list   that  establishes  preferred                                                                   
drugs within  a drug class.   These drugs would  be purchased                                                                   
at a  similar or  lower cost.   Some  other states use  these                                                                   
drug lists.  He added that at  this stage, the Department has                                                                   
not formulated their  preferred drug list and are  not in the                                                                   
process of developing  one.  Commissioner Gilbertson  did not                                                                   
believe  that the Department  would develop  their own  list.                                                                   
There are  a number  of other lists  adopted by other  states                                                                   
that  have withstood  litigation.    It is  foreseeable  that                                                                   
Alaska would take one from another  state.  That decision has                                                                   
not yet been  made.  He acknowledged that the  preferred drug                                                                   
list is contentious.                                                                                                            
                                                                                                                                
Co-Chair Harris  inquired the success rate that  other states                                                                   
have had in saving money using this system.                                                                                     
                                                                                                                                
Commissioner Gilbertson  offered to provide  that information                                                                   
to the Committee at a later date.   He added that some states                                                                   
have shown  large savings.   There is disagreement  regarding                                                                   
the  net  effect  of Medicaid  expenditures.    Most  of  the                                                                   
Medicaid  growth  now  is within  the  seniors  and  disabled                                                                   
individual  population  area.    Seniors  have  a  high  drug                                                                   
utilization cost.  The preferred  drug list would not prevent                                                                   
access  to  pharmaceutical  products   that  perform  certain                                                                   
benefits.  The  Commission would decide which  there might be                                                                   
two drugs  that serve the same  purpose, which one  should be                                                                   
clinically approved for dispensing.                                                                                             
                                                                                                                                
Co-Chair Harris  requested that Commissioner  Gilbertson work                                                                   
with Representative  Hawker and other interested  parties who                                                                   
have concerns regarding this legislation.                                                                                       
                                                                                                                                
Co-Chair  Williams recommended  that Commissioner  Gilbertson                                                                   
also  work  with  Representative  Croft,  the  maker  of  the                                                                   
proposed amendments.                                                                                                            
                                                                                                                                
Co-Chair  Williams  noted  that  SB  109  would  be  HELD  in                                                                   
Committee for further consideration.