Legislature(1993 - 1994)

03/31/1994 08:05 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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  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  directed that  SB  366 be  brought  on for                 
  discussion  and  referenced  Amendments 1  through  4  and a                 
  proposed letter of intent.                                                   
                                                                               
  DAVE SKIDMORE, aide to Senator Frank, came before committee.                 
  He explained that Amendment No. 1 was drafted in response to                 
  recommendations by  the division  of insurance.   It  breaks                 
  health maintenance  organizations out onto  a separate  line                 
  under the part  of the bill  that defines "insurer," and  it                 
                                                                               
                                                                               
  links  HMOs   with  the  appropriate  citation  from  Alaska                 
  Statutes.  The  amendment is technical in  nature.  Co-chair                 
  Frank  MOVED for adoption  of Amendment No.  1 and requested                 
  unanimous  consent.    No  objection  having  been   raised,                 
  Amendment No. 1 was ADOPTED.                                                 
                                                                               
  Mr. Skidmore said  that Amendment No.  2 was recommended  by                 
  the drafter, Terri Lauterbauch, who felt that the  title was                 
  not sufficiently broad to include some insurance language in                 
  Sec. 3 of  the bill.  Co-chair  Frank MOVED for  adoption of                 
  Amendment  No.  2  and  requested  unanimous  consent.    No                 
  objection having been raised, Amendment No. 2 was ADOPTED.                   
                                                                               
  Mr. Skidmore  explained that Amendments 3 and 4 were drafted                 
  in response  to concerns raised by hospital representatives.                 
  The  bill  currently  directs  the  state Medicaid  plan  to                 
  provide the maximum co-payment allowed by federal law.   For                 
  in-patient hospital  care, the  maximum is 50%  of the  cost                 
  associated  with   the  first   day  of   care.     Hospital                 
  representatives indicated that  cost can range from  $300 to                 
  $20,000,  based  on  what  services   are  provided.    When                 
  calculating potential savings  from the bill, $100  was used                 
  as the co-payment, since that is the  amount set by a number                 
  of other  states.   Amendment No.  3 is  recommended by  the                 
  Alaska  State  Hospital and  Nursing  Home Association.   It                 
  would provide a straight co-payment of $50.  Amendment No. 4                 
  was developed by Senator  Frank.  It would provide for a co-                 
  payment  of  $25  per  day  up to  a  maximum  of  $100  per                 
  discharge.  Co-chair  Frank said  he did not  have a  strong                 
  preference  for   one  amendment   over  the   other.     He                 
  acknowledged that the hospital  and nursing home association                 
  prefers  Amendment No.  3  over Amendment  No.  4 since  the                 
  latter involves more administrative effort.  He then advised                 
  that the House  envisions a co-payment of  $100 a day.   The                 
  division  of  medical  assistance  is   supportive  of  that                 
  approach.  The  Co-chair asked that staff from  the division                 
  speak  to  the  issue  prior  to  committee  action  on  the                 
  amendments.                                                                  
                                                                               
  DAVE  WILLIAMS, Division  of  Medical  Assistance, Dept.  of                 
  Health and Social Services, came before committee.  Co-chair                 
  Frank asked  if the  maximum allowable  co-payment is  $100.                 
  Mr. Williams responded negatively, advising that the maximum                 
  allowable is  50% of the cost  of the first day  of hospital                 
  stay.  That is  the controversy.  Co-chair Frank  noted that                 
  the average  stay  is  approximately four  days.    He  then                 
  advised  he  was attempting  to  establish a  reasonable co-                 
  payment that would not be too onerous but would achieve cost                 
  sharing.  Sharing  in the cost and  discouraging unnecessary                 
  use  are the  purposes behind  the co-payment.   Mr. William                 
  advised that the average stay is  three days.  Under federal                 
  law, the amount of the co-payment depends on what happens on                 
  the first day.  The fiscal note for in-patient hospital care                 
  assumes $200.   If  the co-payment  is reduced  to $50,  the                 
                                                                               
                                                                               
  savings would be  approximately $300.0.   Speaking to  costs                 
  that might be reasonable for  Medicaid eligible clients, Mr.                 
  Williams said it would be unlikely  the client would pay any                 
  of the co-pay.   Federal law says  that if they do  not have                 
  it, they do  not have to pay.  For hospitals that means that                 
  part of the  debt would  remain unpaid.   Other states  have                 
  advised  that  collection   efforts  on  Medicaid   eligible                 
  recipients are not productive.   That effort, however, would                 
  be up to the hospital.                                                       
                                                                               
  HARLAN  KNUDSON,  Alaska  State  Hospital  and  Nursing Home                 
  Association, came  before committee voicing support  for the                 
  $50 co-payment.  Co-chair Frank inquired concerning hospital                 
  experience in attempts to  collect on co-pays.  Mr.  Knudson                 
  voiced his  understanding that  all prepaid  health care  is                 
  "into  deductibles  and co-pay."    He noted  that hospitals                 
  fully  expect  the co-pay  to  end  up  as  bad debt.    The                 
  individuals will  be  billed once  or  twice, and  then  the                 
  hospital will consider it bad debt.  Co-chair Frank stressed                 
  need for individuals to pay their  debts, even if the co-pay                 
  must be repaid over time.  The service should not be free.                   
                                                                               
  Senator Kerttula stressed  that patients must not  be turned                 
  away from hospitals  because of lack  of ability to pay  the                 
  co-pay. Mr. Knudson  voiced support  for the deductible  but                 
  concurred that  it  should  not  delay entry  to  a  medical                 
  facility.                                                                    
                                                                               
  Senator  Rieger   voiced  need  for  authorization  for  the                 
  department to institute  a case  management service to  make                 
  the best use  of Medicaid  dollars.  The  present system  is                 
  excessively rigid.   He attested  to problems with  priority                 
  ranking of services set in statutes.  He then suggested that                 
  if  the  committee  intends  to  revamp the  state  Medicaid                 
  program, the proposed bill is the proper vehicle.                            
                                                                               
  Co-chair Frank referenced Amendment No. 4 and explained that                 
  it would apply a $25 co-payment  per day up to a maximum  of                 
  $100.  He then asked why that approach would cause problems.                 
  GARREY PESKA, Alaska Hospital and Nursing Homes Association,                 
  came  before  committee,  advising  that  hospital   finance                 
  officers have indicated the system  would be much simplified                 
  if the co-payment  is established at  a specific amount  per                 
  discharge.  That  eliminates having to calculate  the number                 
  of days up to a maximum for each Medicaid patient.  Co-chair                 
  Frank then  voiced a  preference for  a $100 co-payment  per                 
  discharge.  He observed that  that is considerably less than                 
  the maximum allowed by the federal government.                               
                                                                               
  In response to a question from Co-chair Frank concerning the                 
  average daily rate,  Mr. Peska said,  "You will not find  an                 
  admission for less  than $1,000 a  day."  The Co-chair  then                 
  recommended  changing the  co-payment  amount set  forth  on                 
  Amendment  No.  3  from $50  to  $100  per  discharge.   Mr.                 
                                                                               
                                                                               
  Williams voiced his belief that the current rate for general                 
  relief medical is $50 a day up to $200.  Co-chair Frank then                 
  suggested that the Medicaid  co-payment should be consistent                 
  with  general  relief.    That   could  be  accomplished  by                 
  increasing the $25 co-payment  set forth on Amendment No.  4                 
  to $50 and the maximum from $100 to $200.                                    
                                                                               
  Co-chair  Frank next  inquired  concerning medical  facility                 
  experience  in  collection  of  general  relief medical  co-                 
  payments.  Mr. Peska  advised that he would have  to consult                 
  with hospital  finance officers  to properly  respond.   Co-                 
  chair Frank voiced  need to  understand what the  experience                 
  has been in terms  of whether people are paying,  not paying                 
  because collection is  not undertaken, or not  paying simply                 
  because  they cannot.    SB  366 was thus  HELD in committee                 
  with Amendments 3 and 4 pending.                                             
                                                                               

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