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
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= bill was previously heard/scheduled
SENATE BILL NO. 109
"An Act repealing the statute that sets priorities for the
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."
This was the first hearing for this bill in the Senate Finance
Committee.
Commissioner Gilbertson explained that this bill would allow the
Department of Health and Social Services to eliminate the optional
Medicaid services priority list regulation that the Department must
abide by when budgeted Medicaid funds are insufficient to meet the
fiscal year's demands. He continued that the optional services list
would be replaced with language authorizing the Department to
undertake cost containment strategies for the Medicaid program
based on three principles: 1) that the Department pursue all
reasonable cost containment measures before eliminating any
eligibility groups or services; 2) that the Department pursue
strategies to maximize federal financial participation in the
Medicaid program; and 3) that the Department make cost containment
decisions that best reflect the needs and interests of eligible
Medicaid recipients.
Commissioner Gilbertson shared that the Medicaid Options list is
viewed by Governor Murkowski and the Department as an inefficient
method to contain costs as, he explained, no annual review of the
options list is conducted, and the items on the list are
inappropriately ordered in that the most expensive procedures would
be disallowed last. He explained that the listing, in effect,
forces the Department "to eliminate broad categories" such as
prosthetics, wheelchairs, prescription drugs, and other valuable
services "before any real savings are incurred." He stated that
this legislation proposes that the same level of savings could be
obtained without impacting services to beneficiaries in a negative
manner. He continued that this change would allow the program to be
operated within its appropriated budget without eliminating such
things as pharmaceutical products that might incur more costs in
the long run.
Commissioner Gilbertson assured "that individual decisions on
individual procedures or individual cases" would not be allowed,
but rather that decisions would be determined on a broad category
of eligibility groups or services. He summarized that this
legislation would allow the Department to make decisions on an
annual basis as technology and medical industry changes occur.
In response to a question from Senator Taylor, Co-Chair Wilken
clarified that the Members' packets contain information detailing
the optional Medicaid services list in regulations "Sec. 47.07.035
Priority of medical assistance" [copy on file] that would be
repealed.
Commissioner Gilbertson affirmed that the statute would be repealed
and replaced with language that provides the Department with the
discretion "to engage in the same level of cost containment but
with greater flexibility" through the implementation of the three
aforementioned guidelines.
Senator Taylor voiced appreciation that the Administration is
addressing the Medicaid situation in this manner.
Co-Chair Wilken expressed that were the Committee's action on this
bill to incur criticism, the three aforementioned objectives would
assist in defending Committee action. He continued that the intent
of the action is clearly identified by the Governor and in the bill
on pages two, 24, and 31. He joined Senator Taylor in applauding
the Administration's efforts to control the increasing expenses of
the Medicaid program.
Co-Chair Green expressed that the zero fiscal note further supports
the Department's effort to contain program costs without further
"cuts or general fund money being withdrawn from the program."
Commissioner Gilbertson stated that the accompanying zero fiscal
note is based on Governor Murkowski's efforts to offset projected
Medicaid program growth by implementing other "sizable general fund
reductions" in FY 04. He informed that continuing the Medicaid
program in FY 04, as it is currently designed, would result in
"well over $60 million in general fund growth" over the FY 03
budget. He stated that the Administration has exerted substantial
effort to contain general fund growth in the Medicaid program and
to limit impacts to beneficiaries and providers. He stated that the
zero fiscal note is based on the assumption that the FY 04 Medicaid
funding would be approved at the Governor's proposed budget level,
which contains numerous cost containment strategies. He declared
that, were the Governor's funding level approved, additional cost
containment measures would not be required.
Senator Olson agreed that the more expensive procedures are at the
bottom of the thirty-one items on the optional priority list;
however, he voiced concern that the proposed change would eliminate
the long established list that was developed "by a fair amount of
thought and effort." He questioned whether the Department's
decision-making process would allow the same level of input and
consideration from such people as medical personnel.
Commissioner Gilbertson stated that this legislation would provide
the Department "the discretion and the authority to make and weigh
decisions" and the subsequent impact of those decisions. He
reiterated that the current optional priority list is inadequate
and is not a good cost containment method in that it does not allow
for annual review or current circumstances to be considered. He
avowed that the issue is complex and that the Department would be
presenting cost containment strategies and their impact, on an
annual basis, to the Legislature. He expressed that the Department
anticipates a "very interactive process" with clear directives as
to how the Department would "engage in cost containment" measures.
Senator Olson voiced that the mission of the Medicaid program is to
provide a health care delivery system "to people in need" as
determined by the eligibility standards defined in State statute,
rather than "driving the program" from a cost containment position
as proposed in this legislation.
Co-Chair Wilken reiterated that the sponsor statement and the three
aforementioned guidelines indicate that this bill would provide
benefits in addition to cost containment.
Commissioner Gilbertson agreed that "the Medicaid program is about
providing care," and he specified that approximately $900 million
of health care services is projected to be spent in FY 04 to
support those services and to protect service for low income
individuals at a time when State revenue resources are limited. He
specified that cost containment efforts should be enacted in an
effort "to protect the program and allow for good reimbursement
rate." He continued that, were the program allowed to be "stretched
so thin," such things as good reimbursement rates and the ability
to "take care of our neediest seniors and disabled individuals"
would be jeopardized. Therefore, he continued, cost containment is
required in order to continue adequate level of care. He alerted
that the Department has experienced tremendous growth that could
jeopardize the Medicaid program.
Senator Bunde asked whether the Department would increase delivery
of Medicaid services were the Legislature to increase funding to
the program.
Commissioner Gilbertson responded that the Department would manage
the program within the parameters of the budget provided. He stated
that program expansions or increases in services would be
determined through the Legislative process.
SFC 03 # 40, Side B 09:48 AM
Senator Bunde summarized the Department's position to be that there
is "the very great likelihood that the Medicaid program would have
less money or would grow beyond" available funding; however, he
questioned whether the Department would further "these options of
limitation" efforts, were an increased amount of funding made
available to the Medicaid program.
Commissioner Gilbertson responded that regardless of the funding,
cost containment measures would be implemented, as he asserted, the
program must be administered efficiently. He stated that were
additional funding provided, the Department could not expand
programs or services without Legislative approval. He stated that
the program would be managed as efficiently as possible and that
any remaining funds would be returned to the general fund at the
end of the fiscal year.
Senator Bunde commented that, were the program to continue to grow
beyond the State's funding ability, cost containment measures must
be implemented. He asked whether it could be anticipated that the
Department might produce "its own list of thirty-one" services
guideline.
Commissioner Gilbertson anticipated this would occur. He voiced the
hope that "a dialogue with the Legislature" would take place during
the development of the forthcoming fiscal year's budget.
Co-Chair Green informed the Committee that the options list, to her
knowledge, has not been reviewed since its original development;
however, she opined, it has been expanded in response to requests
from "special interest groups," without "proof" regarding the need
or ranking of the item on the list. She summarized the process as
"inconsistent" and "troublesome." In contrast, she stated that the
Department's approach to the program is "consistent with their
message that they are engaging in cost containment measures in the
right way."
Co-chair Wilken ordered the bill HELD in Committee.
[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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