Legislature(2003 - 2004)
05/13/2003 04:08 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 109
"An Act repealing the statute that sets priorities for
the Department of Health and Social Services to apply
to administration of the medical assistance program
when there are insufficient funds allocated in the
state budget for that program; authorizing the
department to make cost containment decisions that may
include decisions about eligibility of persons and
availability of services under the medical assistance
program; and providing for an effective date."
Co-Chair Harris MOVED to ADOPT the Committee Substitute,
Work Draft 23-GS1124\H. There being NO OBJECTION, it was
so ordered.
JOEL GILBERTSON, COMMISSIONER, DEPARTMENT OF HEALTH &
SOCIAL SERVICES, spoke in support of the legislation. He
stressed that the legislation is needed for the Department
to move forward in the prudent adoption of cost containment
measures, which would allow it to meet the legislative
mandate for fiscal accountability while minimizing the
impact on Medicaid beneficiaries. Intent language was
modified and is consistent with the Department's intent to
develop a preferred drug list that is responsive to
clinical evidence. It would also develop an authorization
system, which would allow providers to prescribe drugs
outside of the preferred drugs in each drug class. He
observed that the Committee had held hearings on the House
version of the bill.
Co-Chair Harris asked if the bill had been discussed with
pharmaceutical companies. The Commissioner did not perform
that duty.
Vice-Chair Meyer referred to line 2 of the intent language
and asked if "all" was appropriate. Commissioner Gilbertson
explained that the section clarifies that the drugs are
Medicaid approved medications. This is a smaller subset
than "all pharmaceutical products available for sale in the
United States". The Medicaid program or Alaska's medical
systems program does not necessarily cover a product simply
because it is an approved pharmaceutical product. It would
also need to be on the national negotiated fee rate system.
Each drug company negotiates with the federal government to
establish a nation drug rebate schedule for states that
participate in the Medicaid Program. The Medicaid program
at a state level does not cover a drug unless it has been
approved at the federal level. He noted that drugs, which
are specifically excluded from the Medicaid program, such
as abortion drugs, which are not under the federally
approved program, cannot be prescribed.
Representative Kerttula MOVED Amendments #1: 23-GS1124\A.2.
Co-Chair Williams OBJECTED. Representative Kerttula
explained that Amendment 1 would address the delegation of
authority issue. The amendment would force the Department
to bring the list to the Governor so that budgetary
decisions could be made. The Department would not be able
to eliminate a group until all optional services were
eliminated. The Legislative Affairs Agency's attorneys
indicated that the bill might over delegate legislative.
Commissioner Gilbert stated that the Administration did not
support the amendment. The amendment allows a new priority
list to be set in statute a year in advance. He stressed
that it would be more responsive to make the decision when
the budget deficit in the Medicaid program is determined. He
maintained that the list should be more ongoing to be more
responsive. He indicated that the list would be created in
response to current deficits, in order to achieve savings
and minimize impacts. He observed that the amendment would
require that all optional services be eliminated before an
optional eligible group could be eliminated. He acknowledged
that eligible individuals should be protected, but pointed
out that the amendment would require that wheel chairs and
prosthetics be eliminated before eligibility guidelines for
higher earning individuals could be affected. He maintained
that this was not feasible and harmful to recipients and
stressed that the system is flawed.
Representative Kerttula noted that the amendment is geared
toward providing the information with enough time to
scrutinize decisions and address the delegation of
authority.
STACY KRALY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
testified via teleconference. She stated that the
Department of Law did not feel that the bill would create
an indefensible delegation of authority. She noted that
the central issue was whether the legislation would pass
legislative authority on to an agency without any
limitations on the implementation of the authority. She
noted that there were a variety of state and federal
limitations, which govern the Medicaid program. She
concluded that the issues related to the Medicaid program
prevented prioritizing to address budget shortfalls without
addressing statutory and regulatory limitations. The
legislation limits the discretion of the Department in
regards to the implementation of cost containment measures.
She asserted that the legislation is an appropriate
delegation, providing an agency with a vary specific area
of expertise the authority to administer a program.
Representative Kerttula asked if there is any law that
would define the order in which cuts would occur. Ms.
Kraly acknowledged that there is no companion list, but
pointed out that there are limitations regarding the
coverage of optional services. Individual determinations
would occur, rather than a category of services. She
stated that there was no list in federal or state law, but
that there were limitations pertaining to individuals.
A roll call vote was taken on the motion.
IN FAVOR: Berkowitz, Kerttula, Moses
OPPOSED: Chenault, Hawker, Meyer, Harris, Williams
Representatives Foster, Stoltze and Whitaker were absent
from the vote.
The MOTION FAILED (3-5).
Representative Kerttula MOVED Amendment #2. Co-Chair
Williams OBJECTED.
Representative Kerttula stated that the amendment contains
a notice provision, which would require the Department to
notify individuals that are impacted at least 60 days
before coverage would be denied by written notice.
Commissioner Gilbertson agreed that there should be notice
provisions, but pointed out that there are already a host
of notice requirements under the Medicaid program. There is
a minimum 30 days public notice period and a minimum 30-day
waiting period before the regulation change can occur. He
estimated that it already takes 90 to 120 days for a change
[in regulations] to occur. He stated that under federal
law, participants have to receive a 10 ten day notice on
adverse actions if service is denied, terminated, reduced
or required. He concluded that federal law and state
regulations addressed notice for changes in service.
Representative Berkowitz clarified that a 10-day notice is
required [for the denial of service] and asked if there was
a reason not to give more notice.
BOB LABBE, DEPUTY DIRECTOR, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, pointed out that the participants would probably
receive two notices. Individual case actions typically
required a ten-day notice, but broad category changes
generally received a longer notice. He reiterated the ten-
day minimum under federal law.
Representative Berkowitz asserted that, in a rural state,
ten days was not adequate. He stressed that people might
not be contacted in time to make alternative arrangements.
He proposed that the state of Alaska be more courteous than
the requirements under federal law
Commissioner Gilbertson responded that there are ample
notice requirements under federal law and state
regulations. The regulation process would take longer than
sixty days. He pointed out that larger changes would
require longer notice.
Representative Berkowitz asked the time frame for notifying
impacted individuals. Mr. Labbe stated that individual
cases were given a 10-day notice. General changes would
have a minimum thirty-day notice. He added that regulation
changes would be necessary. He speculated that a longer
process might require [the Department to institute] larger
reductions due to delay [in savings] and a lack of
efficiency.
Representative Kerttula pointed out that a regulation
notice was very different than a notice to the participant
that they are losing a benefit. She observed that there
was little information about the nature of notice received
by individuals. She suggested that a written notice was
easy enough, and maintained that a written notice would not
be onerous.
A roll call vote was taken on the motion.
IN FAVOR: Berkowitz, Kerttula, Moses
OPPOSED: Foster, Stoltze, Hawker, Meyer, Harris,
Williams
Representatives Chenault and Whitaker were absent from the
vote.
The MOTION FAILED (3-6).
Co-Chair Harris MOVED to report CSSB 109 (FIN) out of
Committee with the accompanying fiscal note.
Representative Kerttula OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Berkowitz, Kerttula, Moses
OPPOSED: Foster, Stoltze, Hawker, Meyer, Harris,
Williams
Representatives Chenault and Whitaker were absent from the
vote.
CSSB 109 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with previously published fiscal
note: #1 HSS.
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