Legislature(2017 - 2018)SENATE FINANCE 532
01/30/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
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| Start | |
| Presentation Department of Health and Social Services Fy 19 Operating Budget | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 144 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE BILL NO. 144
"An Act making appropriations for the operating and loan
program expenses of state government and for certain
programs; capitalizing funds; amending appropriations;
making supplemental appropriations; making appropriations
under art. IX, sec. 17(c), Constitution of the State of
Alaska, from the constitutional budget reserve fund; and
providing for an effective date."
^PRESENTATION DEPARTMENT OF HEALTH AND SOCIAL SERVICES FY
19 OPERATING BUDGET
9:04:16 AM
VALERIE DAVIDSON, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES, introduced her staff.
Commissioner Davidson discussed the presentation
"Department of Health and Social Services - Senate Finance
- FY2019 Department Overview" (copy on file). She informed
that the department would be providing additional
information in the upcoming days, as requested by the
committee.
Commissioner Davidson looked at slide 2, "Health & Social
Services":
The Department of Health and Social Services (DHSS)
was originally established in 1919 as the Alaska
Territorial Health Department. With the formal
proclamation of statehood on January 3, 1959, the
department's responsibilities were expanded to include
the protection and promotion of public health and
welfare. These core duties are reflected in the
mission of the department to promote and protect the
health and well-being of Alaskans and are outlined in
Article 7, Sections 4 and 5 of the Constitution of the
State of Alaska.
Department Home and Resource Links
http://dhss.alaska.gov
Constitutional Authority Article 7, Sections 4 and 5:
http://ltgov.alaska.gov/services/alaskas-constitution/
Duties of the Department
http://www.legis.state.ak.us/basis/statutes.asp#47.05
FY19 Proposed Department Budget
https://www.omb.alaska.gov/html/budget-report/fy2019-
budget/proposed.html
9:07:13 AM
Commissioner Davidson shared that the next four slides were
prepared by the Legislative Finance Division (LFD).
SHAWNDA O'BRIEN, ASSISTANT COMMISSIONER, FINANCE AND
MANAGEMENT SERVICES, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, reviewed slide 3, "Department of Health and
Social Services Share of Total Agency Operations," which
showed a bar graph. She detailed that the graph showed
General Funds (GF) only and included Designated General
Funds (DGF) as well as Undesignated General Funds (UGF).
The graphed compared figures from FY 19 to FY 09. The
figures depicted management plan scenarios, but there were
slight differences with the governor's budget adjustment.
The FY 18 management plan numbers did not represent any of
the supplemental requests that had been submitted in 2018;
and the GF balances were lower than the current budget
request.
Co-Chair Hoffman asked about the supplemental request for
the department.
Ms. O'Brien specified that the department had made a
request for $100 million GF for Medicaid, as well as $18
million in GF for substance abuse disorder treatment.
Senator Micciche asked if the FY 19 budget included the
$118 million supplemental request.
Ms. O'Brien answered in the affirmative.
Ms. O'Brien spoke to slide 4, "Department of Health and
Social Services Line Items," which showed a bar graph
depicting the department's budget broken down by line-item
authority. The department was largely funded in the grants
and benefits line; remaining line items had been consistent
over the previous years. She noted that the detail below
the graph showed reduction in costs the previous four
years, after which there was growth in the grants and
benefits line.
Ms. O'Brien reviewed slide 5, "Appropriations with the
Department of Health and Social Services," which showed a
line graph depicting a breakout of the department's budget
by division. She clarified that the slide showed GF
spending only, including DGF. There was a large increase in
the GF request between FY 18 and FY 19, representative of
$127 million over the FY 18 governor's budget. The numbers
did not include the supplemental request.
9:10:36 AM
Ms. O'Brien discussed slide 6, "Appropriations with the
Department of Health and Social Services," which showed a
line graph with the budget broken out by all fund sources.
It was the last slide in the presentation prepared by LFD.
She pointed out a large increase in the Medicaid Services
component between FY 18 and FY 19, not including the
Revised Program Legislative Notice (RPL) for $525 million
that had been received in federal authority for Medicaid
services.
Co-Chair Hoffman remarked on the substantial increase in
Medicaid services between FY 18 and FY 19. He asked if the
increase had been anticipated.
Ms. O'Brien answered in the affirmative. She stated the
department had anticipated some growth as a result of
enrollments. As the department developed and refined its
projection tools, it had identified some rending items that
would help support better projections for Medicaid in the
future.
Co-Chair Hoffman asked what the department anticipated for
trend lines in FY 20 and the following years for the same
line item.
Ms. O'Brien shared that the department anticipated
enrollment growth for Medicaid services to level out. The
department was projecting enrollment growth to decrease
from 12 percent to 4 percent.
Co-Chair Hoffman referenced slide 5, which showed the
Medicaid program in a steady decline. He asked if the
department found the new upward trend alarming and wondered
if the legislature should anticipate any related
legislation. He wondered if Alaska was providing services
above and beyond the norm in the Lower 48.
Ms. O'Brien stated that the department reviewed current
national legislation and overall spending in GF and total
spending in Medicaid. There were ongoing efforts to review
claims detail to ensure that the state was maximizing its
federal claiming potential. There were specific efforts
from Medicaid expansion legislation that the department
incorporated into its ongoing work.
9:14:11 AM
Co-Chair Hoffman asked if the legislature could anticipate
anything from the administration regarding legislation.
Commissioner Davidson stated that the department was not
proposing any legislative changes. The department was
concerned about the significant growth in Medicaid
expansion. In FY 15, Medicaid covered 160,388 Alaskans. In
2019, she expected more than 225,000 unduplicated Alaskans
to be enrolled in the program. She thought the growth was
attributable to the downturn in the economy. She pointed
out that the department's GF spending was lower in FY 19's
proposed budget than it was in FY 15. She referenced the
work the committee had done via SB 74 [Medicaid reform
legislation that passed in 2016], which would be discussed
in a presentation to the committee the following day.
Commissioner Davidson continued her remarks. She informed
that the department had been very aggressive in its
refinancing efforts through the tribal claiming policy. The
efforts had allowed DHSS to refinance how the services were
provided to Indian Health Service (IHS) beneficiaries who
received care through an IHS facility as required by
national tribal claiming policy. She shared that the
governor had been able to renegotiate the tribal claiming
policy. Previously in order for the state to receive 100
percent federal match, services were required to be
physically within the four walls of the facility, which
created a transportation challenge. The department had
requested a revision of the policy, after which travel for
IHS beneficiaries was viewed as part of the service. The
department also requested that services began in a tribal
facility and referred to a non-tribal facility be
considered a continuation of service and 100 percent
federal reimbursable.
Commissioner Davidson continued that in FY 17 the
department had targeted $32 million in GF savings, and had
been able to save $35 million. In the FY 18 budget, the
department had targeted $42 million in savings and was on
track to achieve the savings. There were more than 700 care
coordination agreements between tribal and non-tribal
providers. One of the benefits of the revised policy was
less duplication of service, and better health-care
planning when services were provided in the beneficiaries'
home community.
9:17:52 AM
Senator von Imhof referenced Commissioner Davidson's
mention of increased Medicaid enrollment due to a downturn
in the economy. She wondered if the uptick in enrollment
could be due to aggressive enrollment efforts. She asked
how many Medicaid recipients were also covered by IHS
insurance. She asked why the department was not utilizing
outside data analysis firms that specialized in statewide
public healthcare and reporting.
Commissioner Davidson spoke to the number of IHS
beneficiaries that were also using Medicaid. She clarified
that the coverage offered by IHSS was not an insurance
plan. She detailed that about 40 percent of the
beneficiaries of Medicaid were also eligible to receive
services in an IHS facility. Federal law required IHS
facilities (including tribally operated facilities in
Alaska) to seek third-party reimbursement including
Medicaid because of the fact the facilities were funded at
about 50 percent of the level of funding needed to provide
basic healthcare for Alaska Natives.
Co-Chair MacKinnon asked how many people qualified for IHS
benefits.
Commissioner Davidson stated that Alaska Natives made up
about 20 percent of the Alaska population, and 40 percent
of the Medicaid beneficiaries were Alaska Native.
Commissioner Davidson stated that of the 225,000 Alaskans
that were covered by Medicaid in 2019, 40 percent (about
90,000) were Alaska Native. There were many Alaska Natives
that were not eligible for Medicaid due to not meeting the
income requirements.
Co-Chair MacKinnon clarified that she was trying to get the
total population for IHS recipients in Alaska.
9:23:50 AM
Senator von Imhof appreciated the explanation. She
referenced her earlier question regarding data analysis.
Commissioner Davidson relayed that upcoming slides would
address the method by which the department arrived at
Medicaid projections. She thought the FY 18 supplemental
and increase in FY 19 was due to more finely-honed
projections.
Co-Chair MacKinnon thanked Commissioner Davidson and the
DHSS team for work done on behalf of the people of the
state. She discussed assessing costs during difficult
financial circumstances. She discussed the growth in the
health industry, and high unemployment rates in the state.
She wondered who was propping up the growth in the health
service.
Commissioner Davidson agreed that the cost of healthcare
had grown throughout the country. She thought that everyone
played a part in the cost. She informed that the largest
payer of healthcare services was private insurance;
including state-covered retirees and active employees,
Medicaid, and private insurance. The department had heard
from the committee and the public that there was concern
about rising medical costs throughout the state, which
mirrored what happened in the rest of the country. The
administration had convened a group (including membership
from the Office of Management and Budget (OMB), the
administration, the Department of Commerce, Community and
Economic Development, and DHSS) to look at potential cost
containment. She recognized that with the state being the
largest purchaser of healthcare services, it was important
to ensure that state savings on healthcare costs did not
unintentionally shift the costs to those with healthcare
not paid by the state.
9:27:53 AM
Co-Chair MacKinnon understood that government entities were
paying more than 50 percent of overall premiums that
provided insurance.
Commissioner Davidson believed Co-Chair MacKinnon was
correct and noted that the Division of Insurance was under
the purview of the Department of Commerce, Community and
Economic Development. She mentioned the work of the
department on stabilizing the marketplace for the
individualized marketplace plans. She continued that DHSS
anticipated one problem with increased Medicaid enrollment
to be the requirement for the individual mandate. Since the
individual mandate was removed, the department expected to
see some individuals not wish to continue insurance
coverage.
Co-Chair MacKinnon thought growth was still projected in
Medicaid numbers, and referenced Commissioner Davidson's
statement that the rising costs in Alaska were mirroring
those in the rest of the country. She thought Alaska
received 30 percent higher reimbursement than any other
state.
Commissioner Davidson conveyed that Alaska was experiencing
growth in the cost in healthcare just as other states were.
The charges in Alaska were generally higher than in other
states.
9:30:40 AM
Co-Chair MacKinnon had heard conversations at the capitol
that indicated the administration was ignoring the
legislature's intent to try and control costs. She thought
there was great consternation around the supplemental
budgets being presented to the legislature during the
current budget cycle. She thought supplemental budget
requests were being used as a way to force the legislature
to pay for things that may have been cut from past budgets.
She asked how the department would deal with a supplemental
budget request that was not funded.
Commissioner Davidson emphasized that she had not been
provided with a directive or suggestion that it was okay to
not control costs. She shared that efficiencies were an
agenda item for every cabinet meeting with the governor.
She highlighted that the department had previously been
clear with the legislature about anticipating the need for
a supplemental the previous year while knowing the budget
would not be sufficient to fund the department's federally
mandated requirements. The department had not anticipated
the size of the FY 18 supplemental. The department believed
that the budget request for FY 19 was a true representation
of the FY 19 need for Medicaid. She acknowledged that there
had been "sticker shock" that reverberated throughout the
department, legislature, and administration. She wanted to
provide a clear picture of what the FY 19 budget request
should be to meet the anticipated need.
9:33:47 AM
Co-Chair MacKinnon reiterated her question about the
department's course of action if the supplemental was not
funded.
Commissioner Davidson informed that the FY 18 supplemental
request of $100 million could be reduced by $7 million that
had been included for the Children's Health Insurance
Program (CHIP). At the time of the budget proposal, the
federal program had not yet been reauthorized. The program
had since been reauthorized. She reminded that federal and
state statute required the department to pay Medicaid
claims. She stated that if the department did not receive
the supplemental to pay for FY 18 expenses, it would have
to suspend Medicaid claims toward the end of the year and
begin to pay the claims with funds from the FY 19 budget.
Co-Chair MacKinnon requested a written update of Medicaid
claims and enrollment numbers. She estimated that in Alaska
there were approximately 112,000 individuals that could
qualify for IHS. She thought it was interesting to point
out that IHS was a fixed pot of money provided to Alaska,
while Medicaid was an unlimited amount of funding. She was
concerned about the state's heavy reliance on federal
funding and spoke to the national deficit.
9:37:59 AM
Senator Micciche considered the proposed budget increase
and the department's supplemental budget request. He
thought it was necessary to discuss Medicaid eligibility
and what was covered. He believed in healthcare
accessibility for all Alaskans. He thought the state could
not manage the recent growth in Medicaid.
9:40:40 AM
Commissioner Davidson appreciated Senator Micciche's
remarks. She thought the downturn in the economy resulted
in more people enrolling in Medicaid than anticipated. She
reiterated that in the FY 19 proposed budget, the
department's UGF spending for Medicaid was less than that
in FY 15. She was happy to work with the legislature to
contain the costs of Medicaid.
Senator Micciche thought Alaska always had the highest
unemployment rate in the nation, partially due to seasonal
employment. He thought it was important to consider the
reasons individuals enrolled in Medicaid. He mentioned
aggressive enrollment. He did not think the change in
spending was reflective of the increase in unemployment.
Co-Chair Hoffman thought the problem in FY 15 was that
there was a $4 billion deficit. He thought the current
budget was not sustainable and did not agree with using FY
15 spending levels for comparison. He emphasized the need
for budget cuts. The committee had considered reductions in
many different programs, including those statutorily
required. He was concerned about hard-fought reductions
being eroded by expanding budgets. He emphasized that FY 15
spending levels were not acceptable. He thought that if the
budget was sustainable the previous year, having $100
million in growth caused consternation. He asked if there
was discussion by the administration to look at the level
of services and eligibility and compare it to that of other
states.
Co-Chair Hoffman continued his remarks. He discussed a
proposed structured draw on the Permanent Fund, and the
deficit.
9:46:58 AM
Vice-Chair Bishop commented that it was known that there
was not a $100 million supplemental since Commissioner
Davidson had shown a $7 million cut. He assumed the $93
million amount was anticipated to be needed by the
department moving forward. He wanted the committee to see
where the anticipated $93 million was going to be expended.
Co-Chair Hoffman thought that the question would be
addressed in committee in the subsequent two days.
Commissioner Davidson offered to provide Vice-Chair Bishop
with a spending breakdown. She informed that upcoming
slides would provide information about the data sources
used to calculate Medicaid spending. The department had
shared the information with LFD, and LFD had recommended
offering a training on the subject.
Commissioner Davidson emphasized that the department shared
the concern about the growth in expenditures. She affirmed
that the department was trying to project expenses
thoroughly and accurately.
9:50:08 AM
Co-Chair MacKinnon clarified that she wanted an update on
Medicaid claims and enrollment. She asked if Medicaid
eligibility was set at 150 percent of the federal poverty
level.
Commissioner Davidson informed that Medicaid eligibility
depended upon the population and the category of
individuals served. She shared that Denali Kid Care had an
effective federal poverty level of 208 percent, and the
program's federal matching funds were at 88 percent. As
part of the Affordable Care Act (ACA), there was a change
to how Medicaid eligibility was determined across all the
eligibility categories. Eligibility was based upon modified
adjusted gross income, with a couple of exceptions. To
qualify for CHIP or Denali Kid Care, eligibility was based
on 208 percent of the federal poverty level. For pregnant
women the eligibility was 205 percent of the federal
poverty level, and the federal match was 50 percent. For
elders and individuals with disabilities, eligibility was
based upon Supplemental Security Income (SSI), and the
federal match was 50 percent. She clarified that the
categories were defined at a federal level.
Co-Chair MacKinnon asked about the poverty rate and
eligibility for persons with disabilities.
Commissioner Davidson stated that individuals with
disabilities were qualified through a medical determination
rather than income level.
9:53:45 AM
Senator Micciche asked if there was any income
consideration for individuals with disabilities and used
the example of a person with a disability that had a steady
income.
Commissioner Davidson stated that under federal law, a
person that meets the disability requirement will qualify
for Medicaid.
Co-Chair Hoffman asked if the disability determination was
a national standard.
Commissioner Davidson answered in the affirmative.
Senator von Imhof wondered if the state had adjusted any of
the guidelines for eligibility determination.
Commissioner Davidson stated that the only eligibility that
had changed was for Denali Kid Care. The federal poverty
level standard in Alaska was 200 percent, then dropped to
175 percent at the direction of the legislature. The
legislature subsequently increased the level to 200
percent. Because of the way the modified gross income
calculation functioned, the effective rate was 208 percent.
Co-Chair Hoffman reminded the committee that two additional
days were dedicated to the consideration of Medicaid cost
drivers and reform updates. He asked members to hold
questions for a later time.
Co-Chair MacKinnon wanted the department to disclose if the
state was allowed to quantify the benefits that individuals
were receiving.
Commissioner Davidson stated that there were additional
ways to qualify for Medicaid that would be covered in
subsequent slides.
9:57:30 AM
Ms. O'Brien spoke to slide 7, "Department of Health and
Social Services All Funding Sources," which depicted a bar
graph comparing the governor's budget scenarios from FY 15
to FY 19, broken out by fund source. She noted that the
largest area of growth in the department's budget was in
the federal funds the state received.
Ms. O'Brien referenced slide 8, "Medicaid Budget FY2015 to
FY 2019," which showed a bar graph. She drew attention to a
black line on the top of each bar that represented DGF and
other state funding in the Medicaid program. The majority
of the funding was federal funds, shown in grey; and the
remaining GF funds were shown in blue.
Ms. O'Brien moved to slide 9, "Medicaid Enrollment and
Population Data," which showed a bar graph using population
data from Department of Labor and Workforce Development.
The slide showed enrollment data going back to 2000. She
drew attention to the green portion of the bar, which
represented regular Medicaid enrollment. The yellow portion
of the bars showed Medicaid expansion enrollment.
9:59:27 AM
Commissioner Davidson looked at slide 10, "Medicaid
Projections":
The DHSS projection tool relies on multiple resources
Agency model is based on actuals as reported in IRIS
or projected for the current year then adjusted for:
?monthly enrollment trends as reported to the Centers
for Medicare and Medicaid Services;
?FMAP blends and participation; and
?Federal and/or State Initiatives
Ms. O'Brien stated that slide 10 and 11 would cover how the
department was doing Medicaid projections. Prior to the
previous year, the department had used different
methodologies with which she was not familiar. She informed
that the department used a contractor for trend analysis.
Th contractor utilized data from the department's system
and offered a long-term and short-term forecast.
Considerations included spending and spending adjustments
from refinancing efforts. The short-term analysis was used
in comparison with an analysis completed by the department.
Ms. O'Brien continued, noting that the department
considered more finite details within its in-house
analysis, such as payments, and FMAP categories. Multiple
Medicaid process factors were considered in projections.
She used the growth of assisted living homes as an example
of a category to consider for projections. Cost drivers
were considered and researched to provide more information
to include in analysis.
Ms. O'Brien discussed slide 11, "Medicaid Projections":
Development of the agency model relies on the STAMP
and the AUTH reports for reasonability:
? Short Term Alaska Medicaid Projection Report (STAMP)
by Evergreen Economics, Dr. Ted Helvoigt, Ph.D.
Forecast uses a Top-Down Modeling Approach and
incorporates
IRIS Actual Monthly Expenditures
MMIS Monthly Enrollment Data
Alaska Dept. of Labor Population data
Information on pending agency initiatives or
program changes that affect spending
? DHSS AUTH report straight line averaging of
current year direct service expenditures
MMIS weekly check runs
Reconciled to IRIS
Projection models are then updated to reflect federal
and/or state Medicaid Initiatives or program changes.
Multiple scenarios are created and evaluated for
reasonability testing.
Ms. O'Brien reiterated that the department was in the
process of setting up an open discussion, during which
interested participants could meet with department staff to
learn details about the projection process.
10:03:31 AM
Co-Chair MacKinnon referenced slide 11 and wondered if
Evergreen Economics was the entity that presented the
original analysis on Medicaid expansion. She recalled
estimates of enrollees and wondered how accurate the
company had been in its predictions.
Ms. O'Brien offered to look at the report and consider the
accuracy. She qualified that the information the department
provided the consultant had heavily influenced the accuracy
of the reporting. She mentioned the state's economy as a
variable. She had realized over the past year that the
department had not been sharing all of the information that
would have made the economist's projections as useful as
they otherwise could have been. The issue had been
addressed internally, and the department had begun sharing
more in-depth, detailed information to inform the
projections.
Co-Chair MacKinnon recalled a slide that looked at
different beneficiaries. She wondered about military
personnel qualifying for Medicaid.
10:05:53 AM
Senator von Imhof looked at slide 11 and referenced 'IRIS
Actual Monthly Expenditures' as listed on the slide. She
wondered if diagnostic codes were also provided to the
contractor.
Ms. O'Brien answered in the affirmative, and confirmed that
coding information was provided, as well as adjustments
that went into the claims processing. The contractor worked
closely with the person responsible for Medicaid reporting.
It took about six weeks for the Medicaid report to be
prepared and finalized for The Centers for Medicare and
Medicaid Services (CMS). The report was approximately 600
pages and was done on a quarterly basis. The staff
responsible for reporting gathered information from other
staff and used fact-checking to enhance accuracy.
Senator von Imhof wanted to know what the consultant was
being paid for the service provided. She wanted to see an
executive summary with graphs and analysis. She wondered
what the department intended to do to address the findings.
She wondered when the Senate might see a report that
indicated what the department might do with the results of
the findings.
10:08:43 AM
Ms. O'Brien informed that the next set of slides from slide
12 to slide 23 would show individual breakouts of budget
changes from FY 15 to FY 19; including detail about
efficiencies, savings and challenges.
Commissioner Davidson displayed slide 12, "Department
Summary of Budget Changes from FY2015 to FY2019":
Total Budget Increased $582,521.6
Decrease UGF ($91,036.2)
Increase DGF $24,254.3
Increase Other $15,096.7
Increase Federal $634,206.8
? Department-wide Fund Source Change with a net zero
change from General Fund and General Fund Match -
$130,519.4
? FY2018 Supplemental Requests
$18.0 million UGF Substance Use Disorders Grant
Funding
$100.0 million UGF Medicaid Services
The slide showed overall changes across the department
between FY 15 and FY 19.
Co-Chair Hoffman thought the slide was interesting.
Ms. O'Brien confirmed that the slide compared FY 15 to FY
19. She pointed out that there was detail on the
supplemental request on the bottom of the slide. She
reiterated that the $100 million in UGF for Medicaid was
anticipated to be reduced for the $7 million CHIP
reauthorization.
Commissioner Davidson clarified that the top of each of the
slides showed the budget change from FY 15 to FY 19, and
the bullet points below showed the change from FY 18 to FY
19.
Ms. O'Brien turned to slide 13, "Alaska Pioneer Home Budget
Changes from FY2015 to FY2019":
Decrease UGF ($3,208.1)
Increase DGF $2,047.5
Increase Other $1,646.6
Increase Federal $531.3
? Increment for FY2019 $525.0 Federal Receipts for
Veteran's Administration rate increase effective
October 1, 2018
Ms. O'Brien stated that the increment of $525,000 in
federal receipt authority was due to an increased rate of
per diem in the Veterans Administration.
10:11:44 AM
Ms. O'Brien spoke to slide 14, "Division of Behavioral
Health Budget Changes from FY2015 to FY2019":
Decrease UGF ($16,996.3)
Increase DGF $7,140.2
Decrease Other ($1,118.5)
Increase Federal $3,875.9
?Alaska Psychiatric Institute currently undergoing
renovations to meet the Joint Commission safety
requirements.
Ms. O'Brien thought it was important to note that costs in
behavioral health had been attributed to the Alaska
Psychiatric Institute (API), which comprised 1.95 percent
of the department's total budget. The institute had the
majority of staffing within the division. In order to
achieve safety in the institution, there were high staff
levels and significant overtime.
Commissioner Davidson added that when API was first opened
in 1963, it had approximately 220 beds and had then
increased capacity to 225 by 1965. Nationally there was an
effort to deinstitutionalize Americans with disabling
conditions and provide more appropriate care. When the
state was planning to build a new facility for API,
consultants' analysis had indicated that a 124-bed facility
was appropriate for the state's population, however only 80
beds were accommodated. She discussed the pressures of API.
She thought everyone could agree that when a business model
was changed in such a way, there would be challenges. She
wanted to underscore that renovation work was putting
additional pressure on the institute and had necessitated a
loss of 10 beds. The second phase of the renovation would
occur in 2018.
Ms. O'Brien reviewed slide 15, "Office of Children's
Services Budget Changes from FY2015 to FY2019":
Decrease UGF ($329.0)
Increase DGF $2,600.0
Increase Other $4,338.1
Increase Federal $15,077.7
? Increment to Front Line Social Workers to fully fund
31 positions added to the FY2018 budget - $1,440.5
Total ($481.8 Federal and $958.7 UGF)
? Increment to Front Line Social Workers for increased
federal claiming - $6,500.0 Federal
Ms. O'Brien informed that the Office of Children's Services
(OCS) budget comprised 5.04 percent of the total department
budget. The office had a total of 565 positions, and since
FY 16 had increased staffing levels by 65 positions. In FY
17, OCS conveyed that child protective services reports
were the highest ever documented. She thought adequate
staffing levels had resulted in more children being
discharged than taken in as the office dealt with
permanency issues.
Vice-Chair Bishop thought numbers related to OCS were
disturbing. He thought there was a correlation with a
report from the Alaska Criminal Justice Commission that
discussed crimes perpetrated against children. He voiced
his concern and thought that the Alaskan people needed to
do something to fix the problem.
10:16:53 AM
Ms. O'Brien discussed slide 16, "Health Care Services
Budget Changes from FY2015 to FY2019":
Decrease UGF ($1,723.0)
Increase DGF $216.9
Decrease Other ($1,570.4)
Increase Federal $583.3
? Increment in Residential Licensing for increased
federal claiming - $418.5 Federal
Ms. O'Brien detailed that the Health Care Services budget
was .67 percent of the department's total budget; and it
had 127 positions. Overall, Health Care Services had
reduced its staffing level by 7. The request for increased
federal claiming for the FY 19 budget was a result of some
increased claiming potential in administrative costs.
Ms. O'Brien displayed slide 17, "Juvenile Justice Budget
Changes from FY2015 to FY2019":
Decrease UGF ($455.6)
Increase Other $27.5
Increase Federal $3.8
? Funding for the Nome Youth Facility is in the base
budget.
? Work underway to implement recommendations of the
privatization feasibility study to transition 4 of the
14 secure beds to long term treatment beds.
Ms. O'Brien specified that the Division of Juvenile Justice
budget comprised 1.8 percent of the department's budget.
The division had 468 positions, and since FY 15 had reduced
staffing levels by 34 positions.
Senator von Imhof observed a pattern in the slides of
increasing DGF in each category. She asked about the source
of the funds and wondered if it was sustainable.
Ms. O'Brien relayed that DGF was from different sources for
each division. The funds could be in the form of program
receipts from fees, or from rebates from the federal
government. There was a great deal of variance depending
upon the collection point of the receipts. She used the
example of OCS, which had DGF that was largely made up of
receipts from Department of Revenue for child support
payments and SSI benefits for children in custody. The fund
sources typically had been sustainable, and OCS had been
able to collect almost the full $5.6 million it had in DGF
over the course of the previous two years. The child
support receipts were not materializing in the current
year, and in most years, there was some fluctuation. She
understood from DOR with regard to OCS that there were less
people working and a smaller Permanent Fund Dividend
inhibited the ability to collect the funds.
Senator von Imhof heard that there was a lot of variance,
and much depended upon federal programs. She concluded that
the department did not know if the DGF was sustainable.
Ms. O'Brien thought the department had a good understanding
of expected funds. The details were particular to each
division and could involve extenuating circumstances. She
commented that OCS was an extreme example. Typically, when
there was excess authority the department decremented it
out of the budget. When longer-term trends occurred, the
department examined whether it was necessary to decrement
the funds or do a fund-source change.
10:21:53 AM
Vice-Chair Bishop thought there was a common theme
throughout the presentation - that was related to the
economy and the ability to make a living wage. He wondered
how many people were working two jobs. He thought it was
important to not stifling economic growth in the state.
Senator Micciche thought that there would be federal
changes. He thought that the state was setting up an
entitlement and a level of service that it could not
provide. He wondered if the department recognized that
there would be changes to the Affordable Care Act (ACA). He
did not support an aggressive income tax. He wondered how
the department planned to react if the federal government
changed its level of support for Medicaid.
Commissioner Davidson affirmed that the department had
spent time considering all the changes contemplated to the
ACA. The department had been in constant contact with the
congressional delegation to provide information on the
impact of ACA changes on Alaska. She discussed recent
changes and had communicated to the delegation about the
impact the first seven years of the changes to the state.
She emphasized that under all the scenarios, the changes
for Alaska and all other Medicaid-participating states
would be significant. She stated that the department was
monitoring the situation very carefully and thought that
there would not be a wholesale repeal of ACA..
Commissioner Davidson thought it seemed like there was
federal funding available for other programs. She noted
that military spending had increased, which was helpful to
the state.
10:26:33 AM
Senator Micciche reiterated that he did not support an
income tax. He mentioned the federal and state deficits. He
thought the focus should be on the economy and getting
people to their full human potential so that a much smaller
proportion of people would need services.
10:28:08 AM
Senator von Imhof wondered how the commissioner would
restructure the department and prioritize programs if there
was a significant change in federal funding. She asked what
the commissioner and staff were doing to meet the challenge
of affordability.
Commissioner Davidson emphasized that Alaska had to meet
the requirements of federal law. As the changes to ACA were
being contemplated the department had done its best to
provide information on potential impacts, such as the
number of Alaskans with disabling conditions and the number
of children that could potentially lose healthcare. She
continued that the same could be said for many of the
state's public assistance programs, most of which were
federal programs implemented by the state. There were
exceptions under public assistance for which there was no
federal requirement. She cited the Senior Benefits Program,
which was fully state-funded and would sunset in 2018. She
mentioned the Alaska Heating Assistance Program, which had
been eliminated in FY 16.
Commissioner Davidson discussed other programs in public
assistance such as the Supplemental Nutrition Assistance
Program (SNAP), and the Alaska Temporary Assistance
Program, federal heating assistance, the Childcare Program
Office, and the Women, Infants, and Children (WIC) program.
She continued that one of the challenges in the DHSS budget
was that the vast majority of the budget was federally
mandated formula-based or entitlement programs.
10:32:10 AM
Ms. O'Brien referenced slide 18, "Division of Public
Assistance Budget Changes from FY2015 to FY2019":
Decrease UGF ($35,700.5)
Increase DGF $650.0
Increase Other $154.7
Increase Federal $3,147.0
? Funding for the Senior Benefits Program was added
into the FY2019 budget - $19,986.1 UGF
Ms. O'Brien informed that the budget for the Public
Assistance Program made up 9.19 percent of the department's
budget. The program had 556 positions and had reduced by 9
positions since FY 19. The funding for the Senior Benefits
Program was added into the FY 19 budget, and the program
was due to sunset in 2018.
Ms. O'Brien moved to slide 19, "Division of Public Health
Budget Changes from FY2015 to FY2019":
Decrease UGF ($16,027.9)
Increase DGF $12,495.1
Increase Other $659.2
Increase Federal $646.4
? Decrement to the Tobacco Use Education and Cessation
Funding as part of the multi-year plan for
sustainability. - $375.0
Ms. O'Brien relayed that the Division of Public Health
budget comprised 3.6 percent of the department's overall
budget. The division had 426 positions and had reduced
staffing by 65 positions overall.
Ms. O'Brien looked at slide 20, "Division of Senior and
Disabilities Services Budget Changes from FY2015 to
FY2019":
Decrease UGF ($5,274.5)
Increase DGF $0
Increase Other $516.8
Increase Federal $3,718.0
? Reorganizational effort to consolidate grant
programs into a single component of the budget for
administrative efficiencies in managing the grants.
The Division of Senior and Disability Services comprised
1.9 percent of the department's budget. The division had
175 staff total and had increased staffing levels by 2
positions. In the current year's budget, the division had
reorganized to reduce administrative costs by reorganizing
several grants components into a single component. The
change allowed for a more fluid process of issuing grants
and increase efficiency.
Commissioner Davidson added that in the budget books it
appeared that there were 166 employees in Senior and
Disability Services in the category of administration. She
clarified that the positions were not actually for
administrative support functions. Due to the size of the
division, many of the positions were consolidated to a
single budget component; which included protective service
specialists, health program managers, medical assistants,
administrators, and nurses. Of the 166 positions in the
administration category, 10 were truly administrative
support staff (including the director).
10:35:05 AM
Ms. O'Brien discussed slide 21, "Department Support
Services Budget Changes from FY2015 to FY2019":
Decrease UGF ($9,036.1)
Increase DGF $0
Increase Other $5,486.5
Decrease Federal ($10,794.2)
? Decrement federal authority in the Performance Bonus
component due to funding no longer available. -
$5,300.0 Federal
? Transfer 16 positions to the Office of Information
Technology in the Department of Administration.
Ms. O'Brien noted that the Support Services budget included
IT, facilities staffing, and capital budgets. She stated
that the GF spending in the had been reduced by $9 million
in the previous five years. Department Support Services
made up 1.3 percent of the overall departmental budget.
There were 222 staff, which had been reduced by 48
positions over the previous several years.
Ms. O'Brien displayed slide 22, "Medicaid Services Budget
Changes from FY2015 to FY2019":
Decrease UGF ($1,867.0)
Decrease DGF ($895.2)
Increase Other $4,596.2
Increase Federal $617,722.3
? FY2018 Supplemental Request
$100,000.0 UGF for increased non Medicaid Expansion
enrollment
$525,000.0 Federal to reflect increases for Indian
Health Services and Medicaid Expansion growth
Ms. O'Brien anticipated that spending would level off as
Medicaid enrollment showed a smaller increase. Current
waiver services were an alternative to institutional
services, which were mandatory. In FY 17 the department
spent $242 million on waiver services, which made up 12
percent of the overall Medicaid budget.
Commissioner Davidson stated that the department was
frequently asked about the category of Medicaid mandatory
versus optional services. She clarified that Medicaid was
federally authorized and state administered. State Medicaid
programs had the option to provide some services for
adults. There were no optional services for children,
because children must receive all optional services under
the Early Periodic Screening Diagnostic and Treatment
Program. The department had 24 optional services available
for Alaskans, provided because they were a more cost-
effective way to deliver another kind of service that might
be considered mandatory. Podiatry services were not
covered, but the state was required to pay the Medicare
cost-share for the service for individuals dually enrolled
in Medicaid and Medicare. She informed that one of the top
four optional services the state paid for were prescription
drugs.
Co-Chair MacKinnon asked how many opioids were included in
pharmaceutical benefits.
Commissioner Davidson offered to provide the information at
a later time. She stated that the department had looked at
the number of opioids being prescribed when associated
legislation was introduced. Providers had new parameters
imposed on the prescription of opioids.
10:40:52 AM
Co-Chair MacKinnon was aware of the new parameters
mentioned by the commissioner. She asked for input on
pharmacy prescriptions filled by Medicaid - she wondered if
there was another way to help intervene in the opioid
crisis in the state. She wondered about individuals on
Medicaid that were suffering from addiction and receiving
opioids paid for by Medicaid.
Commissioner Davidson stated that one of the biggest
increases in spending on prescription drugs was for things
such as Hepatitis-C medication. She confirmed that
previously the cost for treating Hepatitis-C was in the
$60,000 to $80,000 range; there was a new drug on the
market that would cost in the $20,000 range. As expensive
prescriptions became available as generic drugs, there
would be lowered costs.
Commissioner Davidson listed the other optional service of
behavioral health, which included mental health and
substance abuse treatment services. Personal care service
was also an optional treatment. Providing care in a
patient's home was much less costly than providing care as
a mandatory service in a skilled nursing facility.
Senator Micciche asked if there was a reason why the Alaska
Mental Health Trust Authority (AMHTA) was not picking up
the $18 million increment in UGF budget for substance abuse
treatment.
Ms. O'Brien relayed that the department had not discussed
the matter with AMHTA. The trust prepared its budget in
advance that of the department, and the process was
established. Conversations with the trust had not happened
at the time the supplemental budget request was being
prepared.
Co-Chair Hoffman thought Senator Micciche was the chair of
the Senate Finance Subcommittee for DHSS.
Co-Chair MacKinnon pointed out that the state could not
tell AMHTA how to spend its money. Rather, there was a
specific list of options.
10:44:53 AM
Ms. O'Brien turned to slide 23, "Department Capital Budget
Requests":
? Office of Children's Services Safety and Support
Enhancements: $1,239.4 Total ($350.8 Federal/$888.6
UGF)
? Mental Health Essential Program Equipment: $500.0
Total ($250.0 MHTAAR/$250.0 AHFC Dividends)
? Mental Health Home Modification and Upgrades to
Maintain Housing: $1,050.0 Total ($750.0 AHFC
Dividends/$300.0 MHTAAR)
The Governor's "Alaska Economic Recovery Plan"
? Emergency Medical Services Match for Code Blue
Project: $1,000.0 UGF
? Pioneer Home Renovations and Repairs: $2,000.0 UGF
Ms. O'Brien relayed that most of the department's capital
budget requests were for OCS. The funds would be used to
increase safety in some field offices where safety was a
significant issue. The office had seen an increase in
situations where staff had been threatened. She discussed
the request for program equipment. She stated that the
request was common to most years. She discussed the
modifications and upgrades to help individuals maintain
housing. She discussed the Code Blue Project, which
supported community purchases, and essential medical
services. She specified that the 'Pioneer Home Renovations'
listed on the slide were for the Anchorage Pioneer Home and
the Ketchikan Pioneer Home and would provide additional
capacity for individuals with Alzheimer's disease and
related dementia.
10:47:31 AM
Commissioner Davidson spoke to slide 24, "Questions for the
Department":
? Major Cost Drivers
? Cost to Advertise various social programs (State or
Federal Funds)
? How does Alaska's social service programs compare to
other states?
? Money spent per recipient, per capita on social
service programs.
Breakout by community
? Number of programs across the department that seem
like there is duplication in programs.
? How many programs can one person qualify for at any
given time?
? CHIP Program update.
? Update on Efficiency/Cost reduction plans presented
to legislators in 2016 session.
Commissioner Davidson reiterated that the biggest cost
drivers in the department's budget were formula programs
the state was required to comply with such as Medicaid,
OCS, and the Division of Public Assistance. She addressed
the question about the cost of advertising for various
social programs and if certain ads had led to increased
enrollment. She informed that the advertising for the
department were largely paid for with federal funds, and
often were a requirement of the department's federal
partners. She used examples of programs the federal
government paid for advertising including WIC and the Play
every Day Program.
10:49:30 AM
AT EASE
10:50:28 AM
RECONVENED
Commissioner Davidson continued to speak to slide 24 and
using state funding for advertising. She discussed the
legalization of marijuana, and the concerns about informing
youth about the effect of the drug on young brains. The
department did some advertisements that made sure young
people would understand the effects marijuana had on young
brains and provided notice to the public about legalities.
Commissioner Davidson addressed how Alaska's social
services programs compared to other states. She noted the
difficulty in comparing other states, which provided many
services through counties. She stated that the state's
federal programs abided by federal guidelines. Some were
adjusted for the higher cost of living in the state. She
mentioned the Heating Assistance Program, which was unique
to Alaska and had since been discontinued.
Commissioner Davidson addressed the fourth bullet on the
slide and discussed how much money was being spent on
social service programs per capita. She was unsure of the
question that had been asked of the department.
10:53:04 AM
Co-Chair MacKinnon referenced an earlier conversation in
which she asked for data divided by program. She stated
that the information would help to manage where state
assets were being deployed. She asked to see a list
quantifying funds spent on DHSS services broken down by
Senate district or region. She wondered about the
possibility of providing a family a statement of benefits
that enumerated the cost of benefits being received.
Commissioner Davidson referenced a one-page document
entitled "Public Assistance Programs," (copy on file)
detailing how a person may qualify for different programs.
Co-Chair MacKinnon wanted to know where assets were being
deployed. She recognized that there were regional
differences in unemployment and poverty. She thought there
were families that might necessitate care coordination due
to the number of services received. She discussed the
poverty level and thought the state could not continue to
provide the same level of services. She referenced the
Dillingham area, and discussed seasonal employment. She
wanted to quantify the level of services.
Commissioner Davidson appreciated the clarification.
10:57:45 AM
Co-Chair Hoffman reminded that the committee meetings for
the following two days would address Medicaid cost drivers
and reform updates. He requested that members put any
additional comments in writing to provide the department by
the end of the business day. He asked if the members wanted
to make any final comments.
Senator Micciche remarked that DHSS played a very important
role. He discussed the total funding for the department
divided by the number of recipients. He discussed
employment rates in the state and wondered if it was time
for a work or training requirement to help people reach
their potential. He thought the state had increased the
availability of benefits to the degree that it was easier
for people to not pursue dreams. He thought the department
had to be an active partner in reducing costs.
11:00:59 AM
Commissioner Davidson shared the committee's concern about
growth in DHSS programs. She stated that the department
appreciated the value of services it provided to Alaskans.
The department viewed its services as a way to help people
back on their feet. She continued that the department was
required by federal law to have a number of work,
employment, and training opportunities available; and could
provide some examples to the committee. She discussed ways
in which DHSS served individuals that needed assistance to
become self-sufficient.
Co-Chair Hoffman stated that the committee had been doing
things a little differently the past two years and would be
considering the four major cost drivers of the state. He
recalled that the Department of Transportation and Public
Facilities had presented to the committee; and the
University and the Department of Education and Early
Development had yet to present. He stated that the Senate
Finance Subcommittee for DHSS was chaired by Senator
Micciche and included members Senator Coghill, Senator
Giessel, Senator Kelly, and Senator Olson. There would be a
review of subcommittee recommendations before the full
committee. He reiterated that the following two days would
include presentations on Medicaid cost drivers and reform
updates.
SB 144 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 013018 SFC DHSS FY19 Budget Overview .pdf |
SFIN 1/30/2018 9:00:00 AM |
SB 144 |
| 013018 DHSS Chart of Different Types of Services.pdf |
SFIN 1/30/2018 9:00:00 AM |
SB 144 |