Legislature(2001 - 2002)

04/23/2002 03:03 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 345 - EDUC. FUNDING/DISABLED/CORRESPONDENCE                                                                                
                                                                                                                                
CHAIR DYSON announced  that the first order of  business would be                                                               
SENATE BILL NO.  345, "An Act relating to  medical assistance for                                                               
rehabilitative services  for certain children  with disabilities;                                                               
relating  to agreements  to pay  medical  assistance for  covered                                                               
services  paid  for  or  furnished   to  eligible  children  with                                                               
disabilities  by   a  school  district;  and   providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
Number 0105                                                                                                                     
                                                                                                                                
JERRY  BURNETT,  Staff  to  Senator   Lyda  Green,  Alaska  State                                                               
Legislature, presented  SB 345  on behalf  of the  Senate Health,                                                               
Education and  Social Services Standing  Committee, sponsor.   He                                                               
explained  that   SB  345  allows  schools   to  become  Medicaid                                                               
providers  for certain  special  education  students who  qualify                                                               
under the Medicaid  program.  Under this bill,  schools which are                                                               
currently  required  to  provide  these same  services,  such  as                                                               
physical  or   speech  therapy,   under  the   IDEA  [Individuals                                                               
Disabilities  Education Act],  receive  about 16  percent of  the                                                               
money  for special  education services  that  Congress should  be                                                               
providing.   This  bill allows  school districts  to provide  the                                                               
services and then  bill Medicaid for those services.   The school                                                               
districts would  pay the state  match, so there is  no additional                                                               
cost to the  state.  It allows the school  districts in Alaska to                                                               
generate  about  $7 million  in  additional  funding for  special                                                               
programs, with  no additional  cost to the  state other  than the                                                               
small administrative  fiscal note.   He said  42 other  states do                                                               
this.                                                                                                                           
                                                                                                                                
Number 0245                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON asked  if  this is  just transferring  the                                                               
responsibility from  the state to  the school district or  if the                                                               
districts actually gain some money.                                                                                             
                                                                                                                                
Number 0275                                                                                                                     
                                                                                                                                
MR. BURNETT  answered that  right now  the schools  provide these                                                               
services with  the general fund  money received under  the school                                                               
foundation formula.   If this  bill passes, the  school districts                                                               
can  seek  reimbursement  from the  Medicaid  program  for  those                                                               
services  that are  eligible.   Currently,  no one  can seek  the                                                               
Medicaid reimbursement.   If the federal match  rate for Medicaid                                                               
is 60:40,  that means for  a dollar that  the districts put  at a                                                               
state match,  they get  back $1.50  from the  federal government.                                                               
He told Representative Wilson that  it doesn't transfer any state                                                               
responsibility to the schools.                                                                                                  
                                                                                                                                
REPRESENTATIVE WILSON asked if the  state would provide forms for                                                               
the schools or if this will be complicated.                                                                                     
                                                                                                                                
MR. BURNETT  agreed it may  require some complicated forms  to be                                                               
filled out.   There is a small administrative  fiscal note that's                                                               
with the bill  to help with training and setting  up the program.                                                               
He noted  that the school districts  would not be required  to do                                                               
this for any student.                                                                                                           
                                                                                                                                
Number 0475                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOHRING asked  if there was any concern  as far as                                                               
this encouraging more spending in Medicare than was necessary.                                                                  
                                                                                                                                
MR. BURNETT replied  that he didn't think it would,  but that has                                                               
been discussed.   He explained that the students have  to have an                                                               
IEP [individual  education plan] to  qualify for this,  and those                                                               
students are  getting those  services now.   There could  be some                                                               
legitimate  concern  that  a  school  district  could  decide  to                                                               
provide  more services  for students  who  are Medicaid  eligible                                                               
than for  students that aren't.   But, the school  district would                                                               
be under  pressure not to do  that, and he said  he can't imagine                                                               
that the educators would do that.                                                                                               
                                                                                                                                
Number 0535                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEVENS   asked  what  the  districts   would  be                                                               
required to do that they are not now doing.                                                                                     
                                                                                                                                
MR.  BURNETT  suggested that  the  department  could answer  that                                                               
better, but basically  the difference between what  is being done                                                               
now and  what will be done  is billing Medicaid.   The difference                                                               
would be paperwork, he noted.                                                                                                   
                                                                                                                                
Number 0575                                                                                                                     
                                                                                                                                
REPRESENTATIVE  COGHILL commented  that he  thinks IDEA  has been                                                               
characterized as an  unfunded mandate.  He wondered  if this bill                                                               
would change that a little bit.                                                                                                 
                                                                                                                                
MR. BURNETT  replied yes, that  was most  of the point  for doing                                                               
this.                                                                                                                           
                                                                                                                                
Number 0616                                                                                                                     
                                                                                                                                
BOB LABBE,  Director, Division of Medical  Assistance, Department                                                               
of Health  & Social Services,  expressed support  of SB 345.   He                                                               
noted that the schools will  participate voluntarily, and each of                                                               
the districts  will have to  assess the cost benefit  of entering                                                               
into   this,  because   it  does   require  some   build  up   of                                                               
administrative  structure.    The  intent is  to  have  something                                                               
streamlined to the extent possible  under a Medicaid program, and                                                               
to  do  it in  a  way  that is  less  burdensome,  but there  are                                                               
requirements that will need to be met.                                                                                          
                                                                                                                                
Number 0738                                                                                                                     
                                                                                                                                
MR.  LABBE expressed  concern about  the provider  complying with                                                               
the  regulations to  avoid potential  pitfalls  of recoupment  or                                                               
other  types  of activity  that  could  occur if  people  weren't                                                               
diligent.   He noted  that there  is some  ability to  tailor the                                                               
requirements and the services.   Most of the states participating                                                               
in  this have  generated some  revenue, but  they've also  had to                                                               
jump through some  hoops.  It isn't necessarily an  easy thing to                                                               
do,  but this  legislation  will get  the  discussion started  on                                                               
policy and the best way to do it.                                                                                               
                                                                                                                                
Number 0790                                                                                                                     
                                                                                                                                
CHAIR DYSON  asked what part of  the fiscal note is  general fund                                                               
dollars  that  will  be  used   to  prepare  the  forms  and  the                                                               
administrative procedures.                                                                                                      
                                                                                                                                
MR.  LABBE answered  that it  amounts to  about $52,000  in 2003,                                                               
$40,000 in 2004,  $54,000 in 2005, and then drop  back to $51,000                                                               
for  on  going.   He  explained  that  the  costs to  modify  the                                                               
computer  system is  generally  matched at  75  percent; but  the                                                               
staff effort is generally matched at 50 percent.                                                                                
                                                                                                                                
REPRESENTATIVE STEVENS asked about the funding.                                                                                 
                                                                                                                                
Number 0937                                                                                                                     
                                                                                                                                
GREG MALONEY,  Special Education, Teaching and  Learning Support,                                                               
Department  of Education  & Early  Development, replied  that the                                                               
funds used now  are a mixture of local, state,  and federal funds                                                               
to provide the  services.  This bill would  be another "catchment                                                               
of  services" that  is allowed  under the  IDEA to  help pay  for                                                               
those services.   He replied to an earlier question  and told the                                                               
committee  that  the services  covered  are  speech and  language                                                               
therapy, occupational  therapy, physical therapy; those  types of                                                               
services which have a licensed  provider providing those services                                                               
within the school.  Another  set of services are medical services                                                               
that  are now  being  required  to be  provided  in the  schools.                                                               
Since the conclusion  of several court cases, schools  now have a                                                               
larger  responsibility  for  providing medical  services  in  the                                                               
school  setting.   This bill  then  allows the  federal funds  to                                                               
offset some more  of those costs without significant  cost to the                                                               
state, he noted.                                                                                                                
                                                                                                                                
REPRESENTATIVE STEVENS asked for clarification on the funding.                                                                  
                                                                                                                                
Number 1073                                                                                                                     
                                                                                                                                
MR. MALONEY explained that the  expectation is that approximately                                                               
$7 million  in costs, once the  system is fully ramped  up, would                                                               
be able  to be  billed as  Medicaid.  After  the match  was taken                                                               
out, it  would create  about $4  million in  new revenue  for the                                                               
districts,  and that  could be  a conservative  estimate.   There                                                               
would  be new  revenue that  districts would  be able  to use  to                                                               
provide the  services.   He indicated  that there  plans to  be a                                                               
group of stakeholders  to look at what will be  the most feasible                                                               
system  for  reimbursement.    He noted  that  it's  a  voluntary                                                               
system.                                                                                                                         
                                                                                                                                
MR. MALONEY explained  that the match would  not require up-front                                                               
funds  but would  come  after the  Medicaid  reimbursement.   The                                                               
district  would never  be required  to put  funds up  front.   He                                                               
commented that electronic billing is  being looked at to ease the                                                               
burden  on the  districts.   He  said, hopefully,  the impact  on                                                               
districts would  be limited.   Also taken  into account  has been                                                               
rural  districts  versus urban  districts  and  making sure  that                                                               
everyone has an equal opportunity  to participate, and there will                                                               
be  benefits for  all.   In some  of the  smaller districts,  the                                                               
benefits are  going to be  smaller, but he reiterated  that there                                                               
would be new revenue coming in.                                                                                                 
                                                                                                                                
Number 1146                                                                                                                     
                                                                                                                                
CHAIR  DYSON asked  if the  schools are  not providing  all these                                                               
services now, will they be required to provide more services.                                                                   
                                                                                                                                
MR. MALONEY  replied that  that is not  expected.   Under federal                                                               
law  and state  law,  the districts  are  providing the  services                                                               
developed by  the IEP team.   With additional funds, it  is hoped                                                               
there will  be improved  services.  He  said that  extra services                                                               
wouldn't   be  expected,   because  the   incentive  to   provide                                                               
additional  services coming  from  Medicaid alone  is not  strong                                                               
enough, because the  paperwork or the challenge  of providing the                                                               
services,  even  with  this  additional   revenue,  is  going  to                                                               
outweigh the incentive.                                                                                                         
                                                                                                                                
Number 1253                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON asked  for  an explanation  on the  fiscal                                                               
note where it says, "Districts  would reimburse the Department of                                                               
Health and Social Services for the state match required."                                                                       
                                                                                                                                
MR. MALONEY answered  that while there is no  process attached to                                                               
this  legislation that  says  how it  exactly  would happen,  the                                                               
expectation is  that once a district  bills its Medicaid-eligible                                                               
cost,  it  would receive  100  percent  reimbursement; from  that                                                               
allotment, it would return a check  back to the state that covers                                                               
the match  requirement.  It  may sound like  duplicative efforts,                                                               
but this  makes sure  that the  audit trail is  clean.   It shows                                                               
that the  matching requirements are  met, there is  no additional                                                               
burden on  the districts, and  the funds  are able to  be cleanly                                                               
disbursed.                                                                                                                      
                                                                                                                                
Number 1320                                                                                                                     
                                                                                                                                
MR. LABBE  said one of the  concerns was to make  sure that there                                                               
was no additional cost to the  state program for putting this in.                                                               
Normally if a new service is  added to Medicaid, there would be a                                                               
new state general  fund cost to draw down the  federal funds.  In                                                               
this case, the district will  be providing the match, but instead                                                               
of  getting  100 percent  of  the  payment, they're  getting  the                                                               
federal share  of the  payment because  they are  responsible for                                                               
the match.   Instead of  the districts sending the  state funding                                                               
for the match,  the state will forward fund it  and get the match                                                               
back from  the districts.  He  agreed it was a  bit circular, but                                                               
that makes the  audit trail for the federal  government easier to                                                               
find, so  it doesn't have  to audit  all the school  districts to                                                               
see if there  were actually matching funds  available for payment                                                               
claimed.                                                                                                                        
                                                                                                                                
Number 1483                                                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON asked  Mr. Labbe to track the  trail of the                                                               
money.                                                                                                                          
                                                                                                                                
MR. LABBE  answered the  school sends  the state  a bill  for the                                                               
services;  the state  pays  the district  for  that service;  the                                                               
state collects  back from the  district the amount for  the state                                                               
match  for  the  federal  funds;  the  state  bills  the  federal                                                               
government and the federal government pays the state.                                                                           
                                                                                                                                
Number 1595                                                                                                                     
                                                                                                                                
REPRESENTATIVE STEVENS  asked what  happens to the  districts who                                                               
choose not to enter the program.                                                                                                
                                                                                                                                
MR.  MALONEY   answered  that  no   change  would   be  expected.                                                               
Districts  are currently  receiving a  portion of  Medicaid funds                                                               
under  the "admin  capturement."   It's  based on  a time  survey                                                               
that's done; it's not a  direct billing reimbursement system, and                                                               
that would  stay in place.   These additional funds would  be for                                                               
direct reimbursement.   So if a district chose  to participate in                                                               
that system, it would get those funds.   If it chose not to, then                                                               
the system  would just  be the  same.  The  real purpose  of this                                                               
funding  is to  give districts  a  better shot  at providing  the                                                               
services  they are  required to  provide.   There  are some  very                                                               
expensive programs that districts are  not able to get additional                                                               
support  for.   This  bill  will  help provide  some  significant                                                               
support  for   on-going  costs.     It  may  be   complicated  in                                                               
description,  but the  actual process  for  application does  not                                                               
have to be that complicated.   He indicated that the stakeholders                                                               
group would discuss how best to get that process in place.                                                                      
                                                                                                                                
REPRESENTATIVE STEVENS asked  if there would be  any penalties to                                                               
those districts who  chose not to enter the program.   He said he                                                               
assumes that most districts would voluntarily enter the program.                                                                
                                                                                                                                
Number 1659                                                                                                                     
                                                                                                                                
MR. LABBE  said each district  would have to make  an assessment.                                                               
There might be a district that  had only one child with expensive                                                               
service, but  it still  might be  worthwhile to  participate even                                                               
for one  child on  Medicaid.  On  the other hand,  it may  not be                                                               
worth it  if the cost  of the services is  less than the  cost of                                                               
complying.   The bigger districts  will certainly see  a benefit;                                                               
the  smaller  ones  may  see   a  benefit  depending  upon  their                                                               
caseload.  The state will work with them on the assessment.                                                                     
                                                                                                                                
Number 1715                                                                                                                     
                                                                                                                                
REPRESENTATIVE COGHILL  commented that the federal  government is                                                               
going  through a  revamp  of  IDEA and  wondered  how that  would                                                               
interface with this.                                                                                                            
                                                                                                                                
MR.  MALONEY  answered  that  the   reauthorization  of  IDEA  is                                                               
expected to  move forward, and  this is  one of the  topics being                                                               
discussed  around the  country,  because there  are conflicts  in                                                               
federal law  regarding special education  and Medicaid.   He told                                                               
the  members that  there has  been discussion  with the  Medicaid                                                               
folks in  Washington, D.C., and  there has been no  indication of                                                               
any interference or conflict.                                                                                                   
                                                                                                                                
Number 1765                                                                                                                     
                                                                                                                                
REPRESENTATIVE COGHILL  moved to report  SB 345 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There being no objection,  SB 345 was reported out of the                                                               
House Health, Education and Social Services Standing Committee.                                                                 
                                                                                                                                

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