Legislature(1993 - 1994)
03/28/1994 09:00 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 366: An Act relating to medical support for children; allowing a member of the teachers' retirement system or the public employees' retirement system to assign to a Medicaid-qualifying trust the member's right to receive a monetary benefit from the system; relating to the effect of a Medicaid-qualifying trust on the eligibility of a person for Medicaid; relating to the recovery of certain Medicaid payments from estates and trusts; requiring persons who receive Medicaid services to be liable for sharing in the cost of those services to the extent allowed under federal law and regulations; and providing for an effective date. Dave Skidmore, aide to Co-chair Frank, spoke in support of SB 366. Kimberly Busch, Director; Kevin Henderson, John Sherwood, and Dave Williams, Medical Assistance Administrators, Division of Medical Assistance, Department of Health & Social Services; Dennis Murray, Administrator, Heritage Place; Don Koch, Marketing Surveillance, Division of Insurance, Department of Commerce & Economic Development; and Phil Petrie, Child Support Enforcement Division, Department of Revenue, via teleconference from Anchorage, all testified in support of SB 366 and answered questions. Discussion was had by Senators Rieger, Sharp, Kerttula and Co-chair Frank regarding federal requirements, the estate recovery program, Medicaid co-payments, etc. SB 366 was HELD in committee until amendments and letter of intent language were drafted. SENATE BILL NO. 366: An Act relating to medical support for children; allowing a member of the teachers' retirement system or the public employees' retirement system to assign to a Medicaid-qualifying trust the member's right to receive a monetary benefit from the system; relating to the effect of a Medicaid-qualifying trust on the eligibility of a person for Medicaid; relating to the recovery of certain Medicaid payments from estates and trusts; requiring persons who receive Medicaid services to be liable for sharing in the cost of those services to the extent allowed under federal law and regulations; and providing for an effective date. Co-chair Pearce announced that SB 366 was before the committee. She said that Phil Petrie, Child Support Enforcement Division, Department of Revenue, was on line via teleconference from Anchorage. She invited David Skidmore to join the committee. DAVID SKIDMORE, aide to Co-chair Frank, said that SB 366 was introduced at the request of the Division of Medical Assistance, Department of Health & Social Services. He said that the statutory changes in the bill were necessary to comply with the 1993 Federal Omnibus Budget Reconciliation Act (OBRA93). These changes fell in three areas; medical support orders, Medicaid estate recovery, and Medicaid qualifying trusts. Medical support orders had to do with orders for minor children, usually through divorce decrees in regard to health insurance coverage. He went on to detail those provisions. OBRA93 also required states to provide a Medicaid estate recovery program to collect amounts paid by Medicaid to individuals receiving long term care services, such as nursing home care, unless it would prove an undue hardship. In regard to Medicaid qualifying trusts, OBRA93 changed the law so that individuals in nursing facilities who dispose of resources during a 2-1/2 year period before they apply for Medicaid were not subject to a punitive delay in eligibility if it caused undue hardship. Mr. Skidmore said that the fourth part of SB 366 had to do with co-payments and was not contained in OBRA93. This would reduce cost to the state in regard to Medicaid. In answer to Senator Rieger, regarding Section 20, KIMBERLY BUSCH, Director, Division of Medical Assistance, said Kevin Henderson, Medical Assistance Administrator, had done a lot of work on this bill. She said the department supported the bill and it would enable the department to continue to receive federal funding for long term care. She said it also supported the provision allowing PERS and TERS to be put into a trust. It also allowed individuals to enter other nursing homes other than the Pioneer Homes. She thanked Co-chair Frank for taking the initiative on this bill. In regard to Section 20, Ms. Busch said it embraced federal regulations. Individuals could put social security and other income (not including their assets) into a qualifying trust in order to receive long term care. In return, at the time of death, the state and the federal government should be able to recover from the trust what it had paid out for long term care benefit (probably in excess of $100,000 a year, $50,000 state and $50,000 federal). Senator Rieger asked the difference between an estate and a trust. Ms. Busch said a trust was a way to put the income aside so it was not counted for Medicaid eligibility. The estate could include a home that was left. Generally the home was not counted if the individual could return to it, or, in rare circumstances, if there was a spouse at home. She agreed with the statement that when a person died, the state had a claim on that person's net worth. In answer to Senator Rieger, KEVIN HENDERSON said that the language in the bill was taken from OBRA93. He went on to say that there were only limited situations when a lien on someone's real property was appropriate. They went on to discuss other language regarding liens, and exceptions and exclusions regarding trusts and liens. JOHN SHERWOOD, Medical Assistance Administrator, said the lien was only extinguished when a person would go home from long term nursing care. The state could still recover from the estate (the remaining income trust) if the person was over 55 when they entered long term care. Senator Sharp asked how the bill addressed the current situation regarding a person's monthly income if it was over $1100. Ms. Busch said that the income cap was around $1340 in Alaska, as high as allowable, and the balance could be assigned to an income trust. What gives some individual's problems was their assets, such as stocks. This bill should solve this problem for many people. Senator Kerttula asked if grandchildren were included on page 11, lines 1-5. Mr. Henderson said that grandchildren were not allowed and again, language had been taken directly from federal law. Ms. Busch said the department would look at adding grandchildren. She understood the state could be more restrictive than federal law but not more liberal. Senator Kerttula pointed out that grandchildren were sometimes the main care givers. She reminded him that this legislation targeted people in long term care facilities. Mr. Henderson said that the section he was questioning may be protecting the rights to certain individuals who may have a right to real property. Senator Kerttula maintained, from personal experience, his belief that grandchildren should be included. PHIL PETRIE, Child Support Enforcement Division, Department of Revenue, via teleconference from Anchorage, offered to answer any questions from the committee. In answer to Senator Rieger, in reference to medical orders of support, Mr. Petrie said that as federal and state statutes exist, a medical support order was required of AFDC of a general nature which required the obligor to obtain insurance when it was available through an employer or union policy. The state did not have to pursue it any further than that unless the custodial parent had outstanding, out of pocket expenses and those were reduced to a judgement. SB 366 provided a new area where the state could go after retirement plans and trusts. Currently, the department only pursued Qualified Domestic Relations Orders (QDRO) when income was attached. This bill provided a Qualified Medical Support Order which would increase the workload although there were not many cases like this. Mr. Petrie confirmed Senator Rieger's statement that SB 366 allowed the state to go after the obligor for the state's Medicaid outlays to the extent the person had insurance available through a union group or policy only. Again, Mr. Petrie said that it would have to be reduced to a judgement. Senator Rieger then asked the department for a comment regarding recovery. Mr. Henderson said that it would be part of an on-going program to recover as much as possible. Ms. Busch said that in third party recovery, the provider of the medical care would bill the third party except for such things as pharmaceuticals. Senator Rieger said if there was a case where the non- custodial parent had an order to buy health insurance for the child, and if that child went on Medicaid, the state would not file a claim against the custodial but could go after the non-custodial parent. Mr. Petrie agreed with that statement. Senator Rieger objected to this philosophy. Mr. Petrie pointed out that individuals going on Medicaid were probably already on AFDC. With this legislation, the department would not have to go to the Department of Law to have child(ren) added to a parent's health insurance. The employer would be required to add child(ren) by the department's request through the court order. Senator Sharp asked if all non-custodial parents would be eligible for this judgement. Mr. Henderson said that anyone determined by the Court that had insurance was subject to this law and that included military health coverage. Mr. Petrie said that child(ren) of divorced military personnel remained eligible for medical coverage and if not near a military facility, CHAMPUS covered military dependents in a civilian facility. He said that there were some problems with Indian Health Service Benefits which was being debated by the feds. He gave more details about that area. End SFC-94 #55, Side 1 Begin SFC-94 #55, Side 2 Senator Sharp stated that considering the Native population in Alaska, this would effect a large number of people. Mr. Petrie agreed but said that at present there were not many native obligors that were employed in businesses where medical insurance was available. DENNIS MURRAY, Administrator, Heritage Place, a nursing facility in Soldotna operated by Lutheran Health Systems, testified in support of SB 366. He said the question of the qualifying trust had been problematical for persons who had combinations of retirements. The critical issue was the upper threshold for eligibility and this bill would allow the individual to establish the trust, the income would go into the trust, and at the time of death, escheat to the state. He encouraged passing the bill. DON KOCH, Marketing Surveillance, Division of Insurance, Department of Commerce & Economic Development, said section 3 had sizeable revisions to the Unfair Trade Practices Act. He said that page 4, line 3, needed an amendment adding the words "as defined in AS 21.86.900;" after the word "organization." Mr. Koch went on to speak to concerns regarding reaching some insurance companies and self-insured plans mentioned in provisions on page 4, items 2 and 5. In answer to Co-chair Frank, Mr. Koch said that he would not remove the self- insureds from the legislation but be advised that they could not be reached. He suggested it be added in other parts of the statutes where self-insured's could be reached. He closed his comments saying the department did support the bill. Co-chair Frank brought up the co-payment issue. He asked Dave Williams to speak to it. Ms. Busch said essentially, the recipient went to their medical provider, and there was an expected amount that would be co-paid. If the amount was not known at the time of service, the individual could not be denied service. The provider needed to know the category of the individual. On a Medicaid coupon and on the automated eligibility system, it told the provider the category of the recipient. Different services were going to be examined to see if it was even cost effective to pay. She asked Mr. Williams to speak further on this issue. DAVE WILLIAMS, Medical Assistance Administrators, Division of Medical Assistance, Department of Health & Social Services, added that SB 366 would allow deductible co- insurance or co-pay. Every state he was aware of had found the co-pay system the most reasonable way to ask for contributions toward cost of care. The federal law was broad in allowing states to administer co-pay. He wanted to investigate the most practical way other states had used. Places to enlist co-pay could include services, equipment, and in and out-patient hospital care. He felt that SB 366 was a good tool in managing co-pay. He added that a word on page 10, line 11, should be changed to read "to the maximum extent practicable" instead of "to the maximum extent allowable." Co-chair Frank said he wanted a clear statement in SB 366 and was hesitant to make that change. He said the House had decided to take a more flexible approach and delineate all co-payments. He wanted the department to implement this as soon as possible. The word practicable could give the department another message. Mr. Williams understood the intent behind the bill but felt there could be some intent language added to solve this problem. He then spoke to the fiscal note. Co-chair Frank announced that SB 366 would be HELD in committee. ADJOURNMENT The meeting was adjourned at approximately 10:50 a.m.
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