Legislature(2005 - 2006)CAPITOL 106
02/22/2005 03:00 PM House HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| HJR10 | |
| University of Alaska Board of Regents | |
| Professional Teaching Practices Commission | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| *+ | HJR 10 | TELECONFERENCED | |
HJR 10-FEDERAL MEDICAL ASSISTANCE REDUCTION [Contains a brief mention of SJR 6.] CHAIR WILSON announced that the first order of business would be HOUSE JOINT RESOLUTION NO. 10, "Relating to a proposed reduction in the Federal Medical Assistance Percentage for Alaskans; and urging the United States Congress to take action to prevent the reduction." 3:09:17 PM SUE WRIGHT, Staff to Representative Mike Chenault, Alaska State Legislature, presented HJR 10 on behalf of Representative Chenault, sponsor. She explained that the proposed joint resolution was crafted to urge the U.S. Congress to take action to prevent the reduction of the Federal Medical Assistance Percentage (FMAP) for Alaskans from a 57.58 percent federal/42.42 percent state match to an even 50:50 even split on October 1, 2005. She said, "This resolution outlines the environmental and demographic reasons health care costs in Alaska are so high and substantiates that it is reasonable to maintain a rate at 57.58 percent instead of a reduction to 50 percent." 3:10:26 PM JOEL GILBERTSON, Commissioner, Alaska Department of Health and Social Services, explained that HJR 10 has a parallel in the Senate side, which is SJR 6. He said: What this gets towards is a resolution by the legislature finding a lot of cost drivers in the Alaska health care system. And also acknowledging that, absent some congressional action, on October 1, 2005, ... we will see a sizeable reduction in the federal support for our health care system in this state. ... It's quite concerning to this administration and to health care providers generally. And what this resolution expresses is an acknowledgement of this challenge and this problem, and urges Congress and the presidential administration to focus on passing legislation this session that will hold Alaska harmless and will preserve our current Medicaid match rate. 3:11:43 PM COMMISSIONER GILBERTSON continued: To give you a little background: we run this program called Medicaid ... which, for the State of Alaska, is serving almost 130,000 Alaskans. And in our FY 06 [fiscal year 2006] budget, for the first time ever, it actually creeps above $1 billion in program operations. It's a billion-dollar program, but it's not wholly financed by the state. The Medicaid program, when established in 1965, was established as a partnership between the states and the federal government to provide ... health care services to low income and needy populations. Many people become eligible because of other assistance benefits they have access to, such as being disabled and being on [Supplemental Security Income (SSI)]. But regardless of how you got on the program, there is federal support to finance that person's health care services. ... How much of your ... Medicaid program that's going to be financed by the federal government is based on a pretty rough formula that tries to calculate [if the state is rich or poor]. And this formula is called the FMAP, or the Federal Medical Assistance Percentage, and it's a really rough formula. It looks at a state's per capita income and then compares it to the national average for per capita income, and benchmark[s] states according to that continuum of incomes. The richest states are required to bear a greater burden of their Medicaid costs. The poorest states, and overwhelmingly that's always been Mississippi, ... receives the highest amount of federal support. 3:13:33 PM COMMISSIONER GILBERTSON continued: The least you can receive in federal support is 50 percent, and historically Alaska was a 50:50 state, meaning that when that claim for Medicaid went through the system ... the state [paid 50 percent of the claim and the federal government would pay 50 percent of the claim]. What that formula failed to acknowledge is that, while our per capita incomes might be incrementally higher in Alaska, our cost of delivering that care is exponentially higher. And when you start looking at the cost of living, the cost of delivering supplies, the labor costs, the construction costs, [and] the geographic challenges around transportation, ... it is very expensive to deliver health care services in this state. We spend almost $10 million a year just on Medicaid transportation for nonemergency cases, just bringing people into more urban areas to receive services.... 3:14:46 PM COMMISSIONER GILBERTSON continued: [There are] a lot of cost drivers. We're dealing with a state that, ... in land mass size, has no peer amongst other states. For these various reasons, ... Congress twice - once in 1997 and once again in 2000 - passed legislation to temporarily increase Alaska's Medicaid match rate. It was historically a 50:50 state, then U.S. Senator Frank Murkowski ... passed legislation ... to increase Alaska's Medicaid match rate to 59.8 [percent] ...; it increased the federal share by 9.8 points, and in real dollars that brought in about $100 million of additional support for our health care system for three years. When that sunset, he passed another piece of legislation to extend and to increase the subsidy .... And this time it was not set at a fixed amount; it was a formula change. The net effect was [that] it decreased our per capita income going into the formula by about 5 percent. But in real dollars, it increased our Medicaid match rate to about ... 61 percent federal. ... And that has slowly evolved down as per capita income in the State of Alaska has increased over the last couple of years. And right now, in the last year of that five-year rate adjustment, we're getting about 57.5 percent federal financing for a Medicaid claim. 3:16:27 PM What has that meant to the State of Alaska over those five years? It's meant about $300-350 million of additional federal funds that have come into our health care system through this adjustment over that time period. ... This last adjustment was a five-year adjustment for the State of Alaska; it sunsets on October 1, 2005. And ... I believe the department provided to the committee a set of charts and documents [a 6-page handout included in the committee packet, with the first page labeled, "Impact of FMAP Reduction on State Match"], ... which sort of explains what is the long term fiscal impact to the State of Alaska's health care system - absent change. And that change can be about one thing: ... legislation passed by the United States Congress to extend the adjustment, [to] hold harmless the State of Alaska, or [to] come up with some other methodology that acknowledges the high cost of delivering care in this state. 3:16:51 PM Absent that change, October 1, 2005, which ... would run for three quarters of our fiscal year of 2006, the impact would be the loss of about $53 million in federal support to the state's Medicaid program and our health care system generally. Once that's annualized in the first state fiscal year, 2007, where it runs for a full 12 months, the impact will be roughly $73 million. And what you see in the charts we provided is that over the next 10 years the loss of this federal adjustment that was passed by Congress five years ago would be almost a billion dollars - $914 million dollars over the next ten years - of support that's providing services across the state. 3:17:48 PM While this is money that comes through the state, this money does not stay within the state; this money is used to pay providers. These are the dollars that are paying for everything from wheel chairs and prosthetics, to seniors and skilled nursing care, to home and community-based services, personal care attendant services, acute care services, services for chronic disease, for children, for youth, and for the seniors of this state. These are resources that are going out right now to support infrastructure, ongoing operations and maintenance, and personal services of facilities all throughout the state. And who is hurt the most, I think, is largely rural Alaska, because rural Alaska disproportionately relies upon Medicaid as its primary source of payment ... and revenue. 3:19:06 PM These challenges are real; the fiscal challenge is real. What this resolution expresses is ... a summation of the cost drivers in Alaska's health care system. The reason why the formula currently does not serve Alaska very well ... [is] that the underlying formula is fundamentally flawed; it simply does not acknowledge the high cost of delivering care in rural, remote frontier states. And through resolution, [it] urges Congress and the federal administration to pass legislation this year to fix this funding challenge and to continue the federal support for Alaska's Medicaid program as it is doing in the current year. 3:19:34 PM CHAIR WILSON asked if the fix would be temporary. 3:19:44 PM COMMISSIONER GILBERTSON answered that that's largely the discretion of the language drafters. He stated from experience that the most recent adjustment for the state was set with a five-year sunset, because that was the amount of money that was available in the budget at the time. He said he thinks there will be a lot of competing factors. He said in the grand scheme of Medicaid "this is very small." He offered his understanding that over the 10 years, Medicare/Medicaid will be spending $2.6 trillion. Notwithstanding that, he stated, "In the grand scheme of the programs themselves it's very large when you start talking about a state our size and with our population base." COMMISSIONER GILBERTSON said some states will be seeing their federal support increase next year, while others will be seeing it decrease. He explained that is due to an annual adjustment that looks at a rolling average of per capita incomes. He reported that Alaska is the most negatively affected state at a 7.5-point drop. The second-most affected state is Wyoming, with a 3-point drop. The magnitude of Alaska's drop is unprecedented. He concluded, "It's going to be a challenge to get this passed; I think it's something that Congress can do, and we're certainly working with our delegation to try and get this passed this year. But will it be sunset again? I think parts of that will be budgetary concerns that will drive that decision." 3:21:28 PM CHAIR WILSON asked if Commissioner Gilbertson thinks that the delegation needs the resolution "to give them a little bit of backup when they ask for it." 3:21:39 PM COMMISSIONER GILBERTSON responded that he thinks Alaska's delegation is keenly aware of the challenge and has been generally supportive of the state's health care system. He continued: This has been passed twice by the United States Congress; it's been passed twice by the U.S. Senate unanimously. I think it's been generally acknowledged that this is a challenge facing the state, and it is in need of additional assistance. I'm sure we're all aware ... federal employees receive a cost of living adjustment for the state. Many federal programs are adjusted. This is one that should be adjusted as well. COMMISSIONER GILBERTSON said he thinks even though the delegation is aware of [the need for adjustment], it is important for all affected parties to share their concerns with the delegation. 3:22:32 PM REPRESENTATIVE SEATON asked Commissioner Gilbertson to describe the difference between Title 21 and Title 19. 3:22:46 PM COMMISSIONER GILBERTSON explained that there is a different match rate for different populations. He directed attention to [the first page of the previously mentioned 6-page handout] and noted that [the chart at the far-right of the page, titled, "Announced FMAP*"] shows a 57.58 percent match in fiscal year 2005 (FY 05) [under Title XIX FMAP] and a 70.31 percent match the same year [under Title XXI FMAP]. He said the former reflects the general Medicaid population, while the latter reflects the enhanced federal medical assistance percentage, including the state children's programs, such as Denali Kid Care. He added, "We also were able to get that enhanced match rate for our breast and cervical cancer program, under Medicaid." He noted that there is a third category for Alaska Natives who receive services through Native operated facilities at 100 percent federal reimbursement. That is not expressed on the chart. 3:23:57 PM REPRESENTATIVE SEATON asked if the 100 percent match population would be affected by the reduction. 3:24:08 PM COMMISSIONER GILBERTSON said it's important to remember that the reduction is not felt by the provider, but is felt initially by the state. The real impact to the providers is felt the second year when the legislature, as the appropriator, has to factor into a new budget decision that "it's going to cost you $72 million in additional funding to do the same thing you were doing the previous year." The challenge created then is whether to offset that loss with the general fund or proposing program reductions, or a combination of the two. He said, "When that's converted, the providers will feel that downstream, because that could be reductions in optional services, ... rates, [and/or] ... eligibility." He reiterated that the more rural providers will be more affected by that, because they disproportionately rely upon Medicaid as one of their key sources of funding. 3:25:05 PM COMMISSIONER GILBERTSON continued as follows: When the claim is submitted by our provider, we pay that provider. We then turn to our federal sister agency - Centers for Medicare/Medicaid Services - and we submit proof of that payment, and then we claim it and request payment back from the federal government for their share of that claim. 3:25:39 PM REPRESENTATIVE SEATON reiterated that he wants to know whether the population with the 100 percent match would be unaffected by the reduction and would still remain at 100 percent. 3:25:52 PM COMMISSIONER GILBERTSON answered yes. He noted that's a sizeable claim volume in the system. He added, "So, the numbers that you're seeing, in terms of impact, to some extent [are] actually more drastic, because it's that impact over a smaller percentage of the overall Medicaid slice." 3:26:14 PM CHAIR WILSON asked if many services will have to be cut "if this doesn't happen." 3:26:29 PM COMMISSIONER GILBERTSON responded that the governor's budget for FY 06 assumes that the President and Congress will pass and sign legislation this year that will hold harmless Alaska and not implement this reduction. If there is no change in law by October 1, 2005, the administration will submit "a supplemental" to the legislature in FY 06 to offset the loss in federal funds. It will be up to the legislature to decide at that time whether to fully fund the supplemental request or not to and instead propose changes to the program, "or some other reduction." 3:27:36 PM CHAIR WILSON asked, "What happens if the legislature didn't okay that? How would all this get paid then if it's past tense?" 3:27:56 PM COMMISSIONER GILBERTSON said there is an acknowledged challenge if the hold harmless provision is not passed by Congress. If it is six-seven months into a fiscal year and the legislature chooses not to fund the entire amount of the supplemental, that would put tremendous pressure upon the agency to reduce expenditures in the remaining months of the fiscal year "to bring in line expenditures with authorization." He offered an example. 3:29:39 PM REPRESENTATIVE SEATON moved to report HJR 10 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HJR 10 was reported from the House Health, Education and Social Services Standing Committee.
| Document Name | Date/Time | Subjects |
|---|