Legislature(2003 - 2004)

03/31/2003 03:25 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 152                                                                                                            
                                                                                                                                
     An  Act relating  to payment  rates  under the  Medicaid                                                                   
     program   for  health  facilities   and  to   budgeting,                                                                   
     accounting,   and  reporting   requirements  for   those                                                                   
     facilities;   abolishing  the  Medicaid   Rate  Advisory                                                                   
     Commission; and providing for an effective date.                                                                           
                                                                                                                                
JOEL GILBERTSON, COMMISSIONER,  DEPARTMENT OF HEALTH & SOCIAL                                                                   
SERVICES,  introduced HB 152.   He  explained that  under the                                                                   
authority of Article III,   Section   18,   of   the   Alaska                                                                   
Constitution,  HB  152  was  being   transmitted  to  provide                                                                   
greater  flexibility to  the Department  of  Health &  Social                                                                   
Services  to   set  Medicaid   payment  rates  for   Alaska's                                                                   
hospitals, nursing homes and other health care facilities.                                                                      
                                                                                                                                
The proposed bill would eliminate  the Medicaid Rate Advisory                                                                   
Commission and  place the responsibility for  calculating and                                                                   
setting  Medicaid payment  rates for  health care  facilities                                                                   
under the general  authority of the Department  of Health and                                                                   
Social Services.                                                                                                                
                                                                                                                                
Commissioner  Gilbertson  added, historically,  the  Medicaid                                                                   
facility rate  setting process has been  extremely cumbersome                                                                   
and  costly   for  both  the   State  and  the   health  care                                                                   
facilities.    The current  rate-setting  process  is both  a                                                                   
barrier to effective cost containment  as well as problematic                                                                   
for assuring adequate reimbursement  for Alaska's diverse mix                                                                   
of health care facilities.                                                                                                      
                                                                                                                                
Passage  of the  legislation would  allow  the Department  to                                                                   
develop in  regulation a  more flexible, cost-effective  rate                                                                   
setting process that would allow  the Department to take into                                                                   
account the  appropriations made  by the Legislature  for the                                                                   
Medicaid program when establishing rates.                                                                                       
                                                                                                                                
Commissioner  Gilbertson offered to  answer questions  of the                                                                   
Committee.                                                                                                                      
                                                                                                                                
Representative Croft  asked what "fair and  reasonable" rates                                                                   
would be replaced with.                                                                                                         
                                                                                                                                
BOB LABBE, DEPUTY  DIRECTOR, DEPARTMENT OF HEALTH  AND SOCIAL                                                                   
SERVICES, responded that it would  be facility specific, fair                                                                   
rates for reasonable costs.  The  Department is interested in                                                                   
looking at grouping  facilities of a certain type  or size as                                                                   
an option  rather than facility  specific.  He  observed that                                                                   
when the  change was  complete, the  Department would  aim to                                                                   
provide  a  fair rate  while  reimbursing  reasonable  costs.                                                                   
Facility   specific   does  not   provide   cost   management                                                                   
incentives.                                                                                                                     
                                                                                                                                
Representative  Croft   recommended  that  there   should  be                                                                   
overriding   standards  indicated   somewhere.    Mr.   Labbe                                                                   
explained  that the  replacement standard  would comply  with                                                                   
what  the federal  government  now provides,  rates that  are                                                                   
adequate  and with  reasonable  service.   There are  federal                                                                   
requirements,  which the  State  will have  to  follow.   The                                                                   
Department  is proposing  not to  do any more  than the  feds                                                                   
require.                                                                                                                        
                                                                                                                                
Commissioner  Gilbertson referenced  the fiscal note,  noting                                                                   
the savings.  He explained that  the bill eliminates the need                                                                   
for  expenditures that  support  commission members'  travel,                                                                   
per diem and other related support costs.                                                                                       
                                                                                                                                
Representative  Croft  inquired who  currently  sits on  that                                                                   
Commission.   Mr. Labbe replied  that there are  five members                                                                   
on the Commission:                                                                                                              
                                                                                                                                
   ·    A physician,                                                                                                            
   ·    A certified public accountant (CPA),                                                                                    
   ·    A public member,                                                                                                        
   ·    A   Department   of   Health   &    Social   Services                                                                   
        representative, and                                                                                                     
   ·    A facility administrator.                                                                                               
                                                                                                                                
Co-Chair  Harris  referenced  the  letter  contained  in  the                                                                   
member's   packets   from  the   Governor,   who   recommends                                                                   
eliminating  the Medicaid  Rate  Advisory  Commission.   That                                                                   
agency  has  the  responsibility   of  establishing  Medicaid                                                                   
rates.  He  thought such action would provide  the Department                                                                   
more  flexibility   for  determining  the   Medicaid  payment                                                                   
amounts, thus, saving money.                                                                                                    
                                                                                                                                
Commissioner  Gilbertson  advised that  Commission  currently                                                                   
serves only  in an  advisory capacity  and that rate  setting                                                                   
authority currently  rests with  the Department.   He pointed                                                                   
out that  associated with  that legislation  is an  appeal of                                                                   
the  Bouren amendment.   By  repealing  that language,  there                                                                   
would  be  additional  discretion within  the  Department  to                                                                   
develop multiple  methodologies, which  is where  the savings                                                                   
emerges.   Having  one  methodology  for all  the  facilities                                                                   
would not necessarily reflect  the relative efficiency of the                                                                   
various  facilities.   This action  would  reduce any  excess                                                                   
payments being made to any facility.                                                                                            
                                                                                                                                
Co-Chair Harris asked how long  had the Bouren Amendment been                                                                   
in place.  Mr. Labbe replied it  was placed in federal law in                                                                   
1982  and  repealed  in  1997.    The  Bouren  Amendment  was                                                                   
initially intended  to provide  flexibility to the  states in                                                                   
establishing  rates.   Because of  extensive litigation,  the                                                                   
amendment had the reverse effect  and years later, after many                                                                   
federal lawsuits, the amendment was repealed.                                                                                   
                                                                                                                                
Co-Chair Harris questioned  if it had been the  policy of the                                                                   
previous Administration to do  things in less beneficial ways                                                                   
to   relieve  the   Medicaid  amount   the  State   receives.                                                                   
Commissioner  Gilbertson  commented  that  there  are  always                                                                   
various considerations  when making  changes to Medicaid  and                                                                   
those individuals affected by  the changes.  At present time,                                                                   
the Administration believes that  the State must have greater                                                                   
authority and  discretion in setting  rates that  reflect the                                                                   
actual costs.                                                                                                                   
                                                                                                                                
Co-Chair  Harris  remembered  that  in  past  years,  he  had                                                                   
requested  the Department to  get the  costs of the  Medicaid                                                                   
program down.  He voiced frustration  that there had not been                                                                   
the motivation  to accomplish  that.   He voiced his  support                                                                   
for the current work of the Department.                                                                                         
                                                                                                                                
Representative  Croft pointed  out that  the bill would  save                                                                   
about $10  thousand dollars by  getting rid of  a significant                                                                   
public  process.   He claimed  that the  public input,  which                                                                   
comes from the Commission, is worth that amount of money.                                                                       
                                                                                                                                
Co-Chair  Harris  rebutted that  eliminating  the  Commission                                                                   
would  only save  about $10  thousand  dollars, however,  the                                                                   
process that the  Department would then go through  will save                                                                   
considerably  more by being  more flexible  in rates  and the                                                                   
optional rates.                                                                                                                 
                                                                                                                                
Representative  Croft  emphasized  that  it would  lower  the                                                                   
rates paid to providers in many  areas, which are already too                                                                   
low.   He added that  stopping the  benefits to these  people                                                                   
have caused tremendous political  fights.  He emphasized that                                                                   
they can be called "cost containments",  but in reality, they                                                                   
are getting rid of services.                                                                                                    
                                                                                                                                
Co-Chair  Williams stated  that the  bill would  be HELD  for                                                                   
further discussion.                                                                                                             
                                                                                                                                
HOUSE BILL NO. 152                                                                                                            
                                                                                                                                
     An  Act relating  to payment  rates  under the  Medicaid                                                                   
     program   for  health  facilities   and  to   budgeting,                                                                   
     accounting,   and  reporting   requirements  for   those                                                                   
     facilities;   abolishing  the  Medicaid   Rate  Advisory                                                                   
     Commission; and providing for an effective date.                                                                           
                                                                                                                                
Representative Croft MOVED to  report HB 152 out of Committee                                                                   
with  individual recommendations  and  with the  accompanying                                                                   
fiscal note.  There being NO OBJECTION, it was so ordered.                                                                      
                                                                                                                                
HB  152  was reported  out  of  Committee  with a  "do  pass"                                                                   
recommendation and  with fiscal note #1 by  the Department of                                                                   
Health and Social Services.                                                                                                     
                                                                                                                                

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