Legislature(2003 - 2004)

03/18/2003 03:02 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 152-HEALTH FACILITY MEDICAID RATES/ADV. COM'N                                                                              
HB 153-MEDICAID COST CONTAINMENT & PRIORITY LIST                                                                              
HB 172-MEDICAID:CHILDREN/PREGNANT WOMEN/FACILITY                                                                              
                                                                                                                                
CHAIR WILSON announced that the  first order of business would be                                                               
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";  HOUSE BILL NO.  153, "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"; and  HOUSE BILL NO.  172, "An Act relating  to eligibility                                                               
requirements  for   medical  assistance  for   certain  children,                                                               
pregnant women,  and persons  in a  medical or  intermediate care                                                               
facility; and providing for an effective date."                                                                                 
                                                                                                                                
CHAIR WILSON  explained that the  three bills would be  looked at                                                               
as a  group because  each bill  on its  own does  not demonstrate                                                               
what the administration  is trying to achieve.   She reminded the                                                               
committee  of  the  reorganization  overview  the  Department  of                                                               
Health  and  Social  Services  presented  to  the  committee  [on                                                               
3/11/03] and  said these bills  will assist in  implementation of                                                               
that reorganization.                                                                                                            
                                                                                                                                
Number 0211                                                                                                                     
                                                                                                                                
JOEL GILBERTSON,  Commissioner, Department  of Health  and Social                                                               
Services, explained that HB 152, HB 153  and HB 172 are part of a                                                               
larger  effort by  the  governor  to control  the  growth of  the                                                               
Medicaid  program while  preserving  services for  those who  are                                                               
currently eligible, stabilizing the  program in the coming years,                                                               
and as  end product having  a health care safety-net  system that                                                               
the state can rely on into the future.                                                                                          
                                                                                                                                
Number 0377                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON told  the committee  that a  little over                                                               
two weeks  ago the  department [Department  of Health  and Social                                                               
Services]  announced  a  major restructuring  of  its  operations                                                               
going into fiscal year 2004 (FY 04).   He said there are a number                                                               
of changes  being done to  improve customer service at  points of                                                               
entry,  as well  as  quality of  care that  is  delivered by  the                                                               
department  to  grantees,   client  beneficiaries,  and  provider                                                               
groups.                                                                                                                         
                                                                                                                                
Number 0405                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  referred to  a chart ["FY  2004 Medicaid                                                               
Services Distribution  of Funds"]  provided to the  committee and                                                               
asked the members to note one  of the most significant aspects of                                                               
the  restructuring  in  the  department.    He  pointed  out  the                                                               
redistribution of funding  of the Medicaid program  from where it                                                               
is currently located,  in the Division of  Medical Assistance, to                                                               
the divisions that are  actually administering Medicaid services.                                                               
He told  the committee  next year the  department would  have the                                                               
Division  of   Children's  Services,  Division  of   Health  Care                                                               
Services,  Division  of  Senior   and  Disability  Services,  and                                                               
Division of  Behavioral Health, all  of which will  be delivering                                                               
aspects of  the Medicaid program.   Commissioner  Gilbertson said                                                               
that  the  department  will  have  directors  in  each  of  these                                                               
divisions  making  daily  decisions   on  managing  the  Medicaid                                                               
program, designing the Medicaid  services, issuing regulations on                                                               
Medicaid services  that they  provide, and,  for the  first time,                                                               
having actual budgetary responsibility for those decisions.                                                                     
                                                                                                                                
Number 0475                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON explained  that the  first chart  in the                                                               
packet shows how  the FY 04 Medicaid budget will  be broken up in                                                               
the department.   Currently, all  Medicaid funding is  located in                                                               
the Division  of Medical Assistance,  which will no  longer exist                                                               
under the restructuring plan.   He said roughly $930 million will                                                               
be broken  up, with the  bulk of it,  $630 million, going  to the                                                               
Division of  Health Care Services.   This division  will continue                                                               
on with  most of  the Division  of Medical  Assistance's previous                                                               
functions, but the department will also  be adding in a number of                                                               
functions from the  Division of Public Health.   For example, the                                                               
EPSDT [Early  and Periodic  Screening, Diagnostic  and Treatment]                                                               
for  breast   and  cervical  cancer,  family   planning,  genetic                                                               
screening, and some infant services  will be provided through the                                                               
Division of Health Care Services.                                                                                               
                                                                                                                                
COMMISSIONER GILBERTSON  said the next largest  portion displayed                                                               
on the chart  is the Division of Senior  and Disability Services.                                                               
He said  this will be  a large  portion of the  restructuring and                                                               
integration as the  department takes over the  Division of Senior                                                               
Services from  the Department of Administration.   The department                                                               
will   be  combining   that  division   with  the   developmental                                                               
disabilities services that currently  are underserved through the                                                               
Division  of Mental  Health  and  Developmental Disabilities,  to                                                               
create  a new  Division of  Senior and  Disability Services.   He                                                               
told the committee that this  change will allow the department to                                                               
unify all  of the "waiver services"  in one division.   This will                                                               
also mean that there  will be a single point of  entry for all of                                                               
[the state's] senior services.  He  told the committee this is an                                                               
issue  seniors  have  been  pushing  for a  very  long  time  and                                                               
something they deserve.   Customer service and  continuum of care                                                               
for  seniors will  be overseen  by  one division  director.   The                                                               
amount  of  $196  [$191.6]  million will  be  budgeted  for  that                                                               
division and  the department  will have  a division  director who                                                               
will  be  appearing  before  the  legislature  and  who  will  be                                                               
accountable  for  the  waitlist,  budget,  and  policy  decisions                                                               
behind the waitlist,  rather than having it fractured  the way it                                                               
is right now.                                                                                                                   
                                                                                                                                
Number 0540                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON told  the  committee  the third  largest                                                               
portion of  the budget, which is  $108.7 million, will go  to the                                                               
Division of Behavioral  Health.  He explained  that this division                                                               
joins the current Division of  Alcohol and Drug with the Division                                                               
of Mental Health and Development  Disabilities, taking the mental                                                               
health component  from that and  merging it with the  alcohol and                                                               
drug  abuse  component  so  there  is  one  division  focused  on                                                               
behavioral health  services.  In  many regions across  the state,                                                               
particularly in  Western Alaska, the mental  health providers and                                                               
the substance  abuse providers  are the  [same] individuals.   He                                                               
said  this will  allow grant  efforts  and decisions  to be  made                                                               
recognizing  the fact  that there  is a  tremendous link  between                                                               
alcohol and mental health services.   This change really benefits                                                               
the system and  benefits the quality of care  the state delivers.                                                               
He  reiterated that  this [restructuring]  plan will  assure that                                                               
there  will  be  an  individual who  will  be  administering  and                                                               
managing Medicaid  services and who  will be accountable  for the                                                               
financial condition of the division.                                                                                            
                                                                                                                                
COMMISSIONER GILBERTSON said  a small portion of  the budget that                                                               
goes  to the  Division of  Children's Services  is $5.8  million,                                                               
which  is  associated  with  behavioral  rehabilitation  services                                                               
[residential child care] that are  being administered through the                                                               
Division of Family and Youth Services.                                                                                          
                                                                                                                                
Number 0645                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON  asked   Commissioner  Gilbertson  if  the                                                               
portion  allocated  for the  Division  of  Senior and  Disability                                                               
Services  incorporates estimates  for increases  that may  result                                                               
from the elimination of the Longevity Bonus Program.                                                                            
                                                                                                                                
COMMISSIONER  GILBERTSON responded  that it  does not.   He  said                                                               
this  budgetary   component  is  a  redistribution   of  Medicaid                                                               
funding.   He said if there  is an assumption that  there will be                                                               
additional costs based on the  elimination of the Longevity Bonus                                                               
Program,  it would  certainly be  less than  the longevity  bonus                                                               
payments  themselves.   That cost  is  not shown  in the  figures                                                               
before the committee.                                                                                                           
                                                                                                                                
Number 0716                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON  said  that in  conjunction  with  these                                                               
efforts, the  governor has proposed a  number of cost-containment                                                               
mechanisms  within the  Medicaid program  to stabilize  costs and                                                               
preserve services  for beneficiaries, including services  such as                                                               
a  preferred  drug  list, a  transportation  brokerage  for  non-                                                               
emergency  services, and  a  host of  regulatory  actions by  the                                                               
department that will help maintain costs.                                                                                       
                                                                                                                                
Number 0845                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON  told  the committee  the  governor  has                                                               
submitted  three statutory  items that  are before  the committee                                                               
today.   The  first  one is  HB 152,  which  would eliminate  the                                                               
Medicaid Rate Advisory Commission (MRAC).   He explained that the                                                               
commission  was  established  in  1984   and  was  at  that  time                                                               
responsible for  establishing the state's Medicaid  payment rates                                                               
to  facilities.   In 1989,  by executive  order, the  MRAC became                                                               
advisory only, and the department  became responsible for setting                                                               
the  rates.    In  1997,  federal law  that  called  for  certain                                                               
statutory requirements  for how  rates would  be set  in Medicaid                                                               
programs was  changed and Alaska  followed those  requirements in                                                               
establishing  fair  and  reasonable  costs.    However,  Alaska's                                                               
statutory  provision remained,  even though  the federal  law had                                                               
changed.                                                                                                                        
                                                                                                                                
COMMISSIONER GILBERTSON  explained that  the proposed  changes to                                                               
these  sections  bring  Alaska's  statutes  into  alignment  with                                                               
federal  law and  remove unnecessary  provisions.   Removing  the                                                               
Medicaid Rate  Advisory Commission  also removes  the duplicative                                                               
public  process  that is  currently  done,  but not  required  in                                                               
federal  statute.   He  said  current  Alaska statutory  language                                                               
requires  a  standard.     The  department  set   rates  for  all                                                               
facilities from  a 10-bed facility  up to  one that has  over 200                                                               
beds  using the  exact  same methodology.    To promote  adequate                                                               
payment  rates as  well as  cost containment  for the  state, the                                                               
department   would   like   the  flexibility   to   use   varying                                                               
methodologies  for  each  facility   because  each  facility  has                                                               
different  circumstances.   The proposed  legislation would  also                                                               
simplify  the  statutes  and  provide   the  department  and  the                                                               
facilities with the  necessary flexibility for rate  setting.  He                                                               
reiterated  that  current  rate  setting is  being  done  by  the                                                               
department, and the  MRAC serves solely in  an advisory capacity.                                                               
He pointed out that there  is an administrative cost, even though                                                               
it  serves in  an advisory  capacity and  the elimination  of the                                                               
commission  will  provide  a  nominal   savings  for  the  state.                                                               
Commissioner  Gilbertson  told  the  committee this  bill  is  an                                                               
acknowledgement  of  current  practice  and  should  be  done  to                                                               
clarify current Medicaid rate setting functions.                                                                                
                                                                                                                                
Number 0866                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER asked  who sits on the  commission now and                                                               
if  those  members  provide  input  that  is  beneficial  to  the                                                               
department.                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  referred the  question to  Jack Nielsen,                                                               
the executive director of the Medicaid Rate Advisory Commission.                                                                
                                                                                                                                
Number 0899                                                                                                                     
                                                                                                                                
JACK   NIELSON,  Executive   Director,  Medicaid   Rate  Advisory                                                               
Commission, Division of Medical  Assistance, Department of Health                                                               
and   Social   Services,   testified  via   teleconference   from                                                               
Anchorage.   He told the  members the  MRAC has a  CPA [certified                                                               
public accountant],  a physician, a department  representative, a                                                               
health  facility  administrator,  and a  consumer  representative                                                               
that preside over the facility  rate hearings and public hearings                                                               
on  rates, and  provide  input and  analysis  based on  "facility                                                               
comments" and staff comments.                                                                                                   
                                                                                                                                
Number 0937                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KAPSNER  asked Mr.  Nielson  if  he believes  the                                                               
department would get adequate information  if the commission were                                                               
disbanded.                                                                                                                      
                                                                                                                                
MR.  NIELSON replied  that  he thinks  the  department could  set                                                               
rates without the commission's assistance.                                                                                      
                                                                                                                                
CHAIR WILSON  commented that she  received a call earlier  in the                                                               
day  from a  member  of  the commission  who  told  her that  the                                                               
members support this legislation.                                                                                               
                                                                                                                                
Number 0973                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CISSNA asked,  if the  legislature abolishes  the                                                               
commission and  the method of  gathering public input,  where the                                                               
information will come from.                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  responded that during  the restructuring                                                               
of the department, an office  of rate review will be established.                                                               
He  said the  department  will bring  individuals  who have  been                                                               
working on  rate setting into  one office.   There will  still be                                                               
data  collection covering  department activities  and there  will                                                               
still be  information collected to  provide good  information for                                                               
rate  setting.    Currently,  MRAC serves  only  in  an  advisory                                                               
capacity.    The  department's  position is  that  it  should  be                                                               
aligned with federal law.  He  said MRAC is acting in a different                                                               
capacity  than  what  it was  originally  intended  by  executive                                                               
order.  He  told the committee the department  will have adequate                                                               
access to information through cost  reports and other data to set                                                               
reasonable rates.  Commissioner  Gilbertson said there will still                                                               
be a  public process; however,  rather than two  public processes                                                               
there will be one.                                                                                                              
                                                                                                                                
Number 1078                                                                                                                     
                                                                                                                                
BOB LABBE,  Deputy Commissioner, Department of  Health and Social                                                               
Services, testified that the  department does collect information                                                               
from facilities through  Medicare cost reports.  He  said it also                                                               
gets requests  for information from  other planning  efforts that                                                               
are  ongoing  with  respect  to  the  facility-costs  issues  and                                                               
patient days.   Mr. Labbe told the committee that  the new office                                                               
of rate  review would actually  broaden the scope  of information                                                               
gathering and would work to  find information on various types of                                                               
rate activities  within the department.   He said  the commission                                                               
has  been focused  fairly narrowly  on hospitals,  nursing homes,                                                               
and rural health clinic services,  and not as broadly on pharmacy                                                               
rates, physician  rates, or childcare  rates.  The  department is                                                               
looking at something more comprehensive.                                                                                        
                                                                                                                                
Number 1142                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  asked Mr. Labbe  how long he has  worked in                                                               
the department.                                                                                                                 
                                                                                                                                
MR. LABBE  said he  has served as  the deputy  commissioner since                                                               
January, but had  previously worked in the  department in another                                                               
role for seven and a half years.                                                                                                
                                                                                                                                
REPRESENTATIVE GATTO asked  why the MRAC was  established and how                                                               
that need has been diminished.                                                                                                  
                                                                                                                                
MR.  LABBE responded  that both  the  need and  federal law  have                                                               
changed.   He said  Mr. Nielson would  have some  recollection of                                                               
the history of the commission.                                                                                                  
                                                                                                                                
Number 1199                                                                                                                     
                                                                                                                                
MR. NIELSON said in 1984, federal  law required states to pay for                                                               
facilities  services through  a retrospective  cost-based system,                                                               
and costs  were increasing so  rapidly that Congress  changed the                                                               
federal law  to provide more  flexibility to states  to establish                                                               
rates.  He  said it was at  that point when Alaska  decided to go                                                               
from a retrospective cost to  a more flexible process through the                                                               
commission.   Then,  in 1997,  the law  changed again  to provide                                                               
more flexibility, and really all it  does now is require a public                                                               
hearing on  the rates  and opportunities  for people  to comment.                                                               
There has been an evolution in federal law.                                                                                     
                                                                                                                                
Number 1258                                                                                                                     
                                                                                                                                
CHAIR WILSON  asked if  there will  still be  a place  for public                                                               
input.                                                                                                                          
                                                                                                                                
COMMISSIONER GILBERTSON responded  that is correct.   He said the                                                               
way it  now stands,  there are two  public hearings,  but through                                                               
this new public process there  would be a hearing process through                                                               
[the  department's] office  of rate  review.   He said  as Deputy                                                               
Commissioner  Labbe  mentioned,  MRAC does  the  facilities-based                                                               
rate  setting, but  the department  does  a whole  host of  other                                                               
payments as  well.  It  does reimbursement rates  for physicians,                                                               
childcare  services,  and  a whole  host  of  other  rate-setting                                                               
functions that go  through the traditional public  process.  This                                                               
is  a  duplicative  process,  as it  now  exists.    Commissioner                                                               
Gilbertson  explained that  this is  a structural  change in  the                                                               
department  so that  it  has  one office  of  rate  review and  a                                                               
uniform rate-setting system across the state.                                                                                   
                                                                                                                                
Number 1329                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON told the committee  the second bill he is                                                               
here to  introduce on  behalf of  the governor  is HB  153, which                                                               
would eliminate the  options list under Medicare.   He said under                                                               
current statute, a priority list  for medical assistance has been                                                               
created; in which  years when there have  been insufficient funds                                                               
allocated to fully fund the  Medicaid program, the department can                                                               
begin eliminating  services along  the options list  as a  way of                                                               
bring   cost  containments   to  the   Medicaid  program.     The                                                               
administration's position  and the department's position  is that                                                               
the existing list is not an  effective management tool.  If used,                                                               
it  needlessly results  in the  denial of  services and  does not                                                               
necessarily  result  in  cost-effective  management  of  Medicaid                                                               
services.                                                                                                                       
                                                                                                                                
COMMISSIONER GILBERTSON  told the members that  the proposed bill                                                               
would  replace   the  obsolete   language  with   broad,  general                                                               
authority  for  the   department  to  undertake  cost-containment                                                               
measures based  on three key  principles.  First,  the department                                                               
must  pursue  all   other  reasonable  cost-containment  measures                                                               
before eliminating  any eligibility  group or services.   Second,                                                               
the department  must aggressively  pursue strategies  to maximize                                                               
federal  financial participation  in the  Medicaid program.   For                                                               
example,  the  governor's  current   budget  put  a  priority  on                                                               
identifying areas  in which the  federal government is  not fully                                                               
paying for  its share of  the Medicaid program, namely,  close to                                                               
between $17  and $19 million that  should have come to  the state                                                               
for  services that  were eligible  for a  federal Medicaid  match                                                               
through  grant  programs.     Third,  cost-containment  decisions                                                               
should  be made  in a  manner that  best reflects  the needs  and                                                               
interests of eligible recipients.                                                                                               
                                                                                                                                
Number 1396                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON   pointed  out  that  the   fiscal  note                                                               
associated with  this bill  shows a zero  savings.   Assuming the                                                               
governor's budget  and proposals are passed,  the department does                                                               
not  anticipate  using   any  of  this  new   authority  to  have                                                               
additional  cost-containment measures.   He  said this  is simply                                                               
replacing  an  obsolete  options  list  that  the  administration                                                               
believes   is  unworkable   and   not  an   appropriate  way   of                                                               
administering  the Medicaid  program.   He  recommended that  the                                                               
committee look  at the  options list provided  and asked  them to                                                               
note  the services  that would  be eliminated  in years  in which                                                               
there  would be  insufficient funds  allocated to  the department                                                               
for its  Medicaid program operations.   First, would  be clinical                                                               
social  workers   services,  then  psychologist   services,  then                                                               
chiropractic   services,   then   advanced   nurse   practitioner                                                               
services, then  adult dental [services], then  emergency hospital                                                               
service and a host of other services.                                                                                           
                                                                                                                                
COMMISSIONER  GILBERTSON  said  it  would be  difficult  for  the                                                               
department to justify  one before another.  Some  would result in                                                               
increased costs,  some are preventative  in nature, and  some are                                                               
acute care.   Commissioner Gilbertson said it is a  list that the                                                               
department does  not believe is  effective for  cost containment.                                                               
The  administration   does  understand  the  reason   behind  the                                                               
legislation that  created this.   There is  a need  to prioritize                                                               
services at times when the  state cannot fully fund all services;                                                               
however, he offered  the belief that this can best  be managed by                                                               
having  flexibility  retained by  the  executive  branch and  the                                                               
department   that   oversees   the   program   to   ensure   that                                                               
beneficiaries  are  not  being   unnecessarily  harmed  by  those                                                               
decisions.                                                                                                                      
                                                                                                                                
Number 1546                                                                                                                     
                                                                                                                                
CHAIR  WILSON noted  that emergency  hospital  services would  be                                                               
eliminated  before  physical therapy.    She  said she  does  not                                                               
believe  the  options  list  is  even  close  to  being  properly                                                               
prioritized.                                                                                                                    
                                                                                                                                
Number 1545                                                                                                                     
                                                                                                                                
MR.  LABBE   offered  a  point  of   clarification  on  emergency                                                               
services, saying  the item listed  on the options list  refers to                                                               
emergency  services to  a  facility  that is  not  licensed as  a                                                               
hospital.   He said this  does not mean  the state would  not pay                                                               
Bartlett  Hospital for  emergency services.   That  is mandatory.                                                               
This is an odd one, he  remarked.  There is a definitions section                                                               
to the  bill.   Mr. Labbe  pointed out that  in order  to achieve                                                               
savings, since  "we" have about  60 percent federal  funding, and                                                               
the department is  looking for general fund  savings, there would                                                               
have  to be  pretty significant  cuts  down the  list before  the                                                               
department would get any savings.   He told the committee in this                                                               
situation there would have to  be a discussion and decision about                                                               
whether  the state  would cover  all  the people  or not  provide                                                               
prescription drug coverage  for those it does cover.   It is that                                                               
kind of  a discussion  the administration would  be having.   The                                                               
department cannot get there with the list.                                                                                      
                                                                                                                                
Number 1612                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON spoke  to the final bill  in the package,                                                               
HB  172, which  would freeze  income levels  for eligibility  for                                                               
Denali  KidCare, Medicaid  coverage for  pregnant women,  and the                                                               
special income limit  for nursing homes and  home- and community-                                                               
based waiver  services.  Under  current law income  standards are                                                               
adjusted annually based on cost of  living.  There is a desire by                                                               
the  administration  to  not  roll   back  coverage,  not  remove                                                               
individuals  from programs  such  as Denali  KidCare or  insuring                                                               
pregnant women under Medicaid.   However, the administration does                                                               
have to  take steps at  this point to  contain the growth  of the                                                               
program and  strengthen and  stabilize it  to prevent  what could                                                               
occur  in future  years.   The administration  sees that  at some                                                               
point the  state may have  the inability to fully  fund services,                                                               
and  that  would  require  the   department  to  pull  back  core                                                               
emergency  services and  vital  coverage  options for  low-income                                                               
populations.                                                                                                                    
                                                                                                                                
Number 1660                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON said  the administration  needs to  take                                                               
steps to control growth and  maintain the eligibility populations                                                               
at what  the state has  right now, which  is what it  can afford.                                                               
He reiterated  that those  that are being  covered right  now are                                                               
the ones [the state] can afford  to cover; however, new ones will                                                               
be  added  and  some  will  be removed  in  time.    The  general                                                               
structure of what  is affordable and where to draw  the line will                                                               
remain at  the 200 percent  threshold for Denali KidCare  and not                                                               
go higher  after 2003.   This  obviously will  affect eligibility                                                               
levels, and the  fiscal note shows nominal savings  in the coming                                                               
years.  He said the administration  believes it is a prudent step                                                               
that should be taken at this  time to ensure the stability of the                                                               
program  and the  ability  of the  state to  fully  fund all  the                                                               
services it currently offers for  the eligible population that it                                                               
currently covers.                                                                                                               
                                                                                                                                
Number 1695                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WOLF asked  if the  income levels  on page  4 are                                                               
based on gross income, not net income.                                                                                          
                                                                                                                                
Number 1710                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON  responded that  is  correct.   He  said                                                               
those  are  the  current  eligibility  standards  for  the  three                                                               
population  [Denali  KidCare  participants, pregnant  women,  and                                                               
individuals receiving care in nursing  homes] groups.  This is an                                                               
effort to lock  the current eligibility levels, which  are at the                                                               
maximum allowable level for the state.                                                                                          
                                                                                                                                
Number 1720                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER  asked what  programs will be  affected by                                                               
this bill.                                                                                                                      
                                                                                                                                
COMMISSIONER  GILBERTSON replied  that they  are Denali  KidCare,                                                               
pregnant women,  and individuals receiving nursing  home care and                                                               
home-based waivers.                                                                                                             
                                                                                                                                
REPRESENTATIVE  KAPSNER asked  if the  income eligibility  levels                                                               
are based on federal poverty guidelines.                                                                                        
                                                                                                                                
COMMISSIONER  GILBERTSON responded  that  they are  based on  the                                                               
federal poverty guidelines for Alaska.                                                                                          
                                                                                                                                
REPRESENTATIVE KAPSNER  commented that the state  could have kids                                                               
who are over the 300-percent-of-poverty  guidelines who might not                                                               
be getting services in the future.                                                                                              
                                                                                                                                
Number 1759                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON   responded  that  the   current  income                                                               
threshold for eligibility for Denali  KidCare is 200 percent over                                                               
the  poverty guidelines  for  FY  03.   That  is  the amount  the                                                               
administration  wants   to  lock  in.     He  said   he  believes                                                               
Representative  Kapsner's   concern  is   based  on   the  effect                                                               
inflation will  have on poverty  levels.  He said  that inflation                                                               
will  not  be   reflected  in  the  poverty   guidelines.    That                                                               
assumption is  correct.   He told  the committee  that this  is a                                                               
policy   decision  by   the  administration   that  the   current                                                               
eligibility levels are what the state can afford.                                                                               
                                                                                                                                
COMMISSIONER GILBERTSON  told the committee that  it is essential                                                               
to have prudent cost containment  and to ensure that the services                                                               
are  strengthened so  that cuts  will not  be necessary  in other                                                               
areas.   He  commented  that there  are  not equal  distributions                                                               
along  income  guidelines.   The  number  of individuals  at  190                                                               
percent of  poverty and 200 percent  of poverty are not  the same                                                               
as those below 100 percent of  poverty.  He said there really are                                                               
more individuals in the lower-income  [category] than the higher.                                                               
The numbers get  smaller as income rises.  He  told the committee                                                               
the  number of  individuals who  will be  affected even  over the                                                               
next  five years  is small.   As  an example,  a family  of three                                                               
children  on Denali  KidCare  right  now can  have  an income  of                                                               
$3,130 per  month; however,  the cost-of-living  allowance, which                                                               
is about  1.4 percent inflation  going into 2004,  would increase                                                               
that amount  to $3,179.   So there  are individuals who  made $49                                                               
more  per  month who  could  see  their  services reduced.    The                                                               
possibility  of  people still  not  availing  themselves of  that                                                               
service, knowing that  it is a $49 income  difference, shows that                                                               
there will not  be individuals in bulk removed  from the Medicaid                                                               
eligibility levels, he concluded.                                                                                               
                                                                                                                                
Number 1856                                                                                                                     
                                                                                                                                
REPRESENTATIVE WOLF  asked if  a family of  four, on  last year's                                                               
levels,  could make  $51,600  per year,  and  qualify for  Denali                                                               
KidCare, including the PFD [permanent fund dividend] income.                                                                    
                                                                                                                                
COMMISSIONER GILBERTSON  replied that is correct.                                                                               
                                                                                                                                
CHAIR WILSON responded that that is  quite a high income to still                                                               
be qualified for the Denali KidCare program.                                                                                    
                                                                                                                                
REPRESENTATIVE WOLF  commented that when  he was raising  his two                                                               
children he did not make $51,000 per year.                                                                                      
                                                                                                                                
COMMISSIONER  GILBERTSON   told  the  committee   the  governor's                                                               
position  is that  there currently  are have  fair standards  for                                                               
eligibility for  the state programs.   He  said in order  for the                                                               
department to continue to provide  the level of service currently                                                               
provided,  it will  be necessary  to cap  the eligibility  income                                                               
guidelines.  Commissioner Gilbertson  reiterated that he believes                                                               
the guidelines  are very fair.   He said the department  does not                                                               
see  this  as  an  arbitrary  reduction  in  eligibility  of  the                                                               
Medicaid program, but as part of  a collection of steps that will                                                               
allow [the department] to preserve the program for the future.                                                                  
                                                                                                                                
Number 1929                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA  prefaced her  comments by saying  that she                                                               
believes the number  of children reduced from the  rolls will not                                                               
be large; however,  she is concerned that  the administration may                                                               
not  factor in  the accelerating  cost of  health care  and other                                                               
possible conditions  that could  occur in  Alaska.   She reminded                                                               
members that  20 years  ago, when  many of  the members  may have                                                               
been raising  kids, the cost  of health  care was not  very high.                                                               
She told  the members that at  that time she paid  100 percent of                                                               
medical expenses, so she can speak to that.                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA asked the members to  look at page 2 of the                                                               
fiscal note dated March 5, where  there is a table that shows the                                                               
reduction of  eligible recipients  beginning in  2004 at  101; in                                                               
2005 it  doubles, and  the numbers  keep going  up to  five years                                                               
out,  for a  reduction  of  832 recipients.    It  is a  definite                                                               
reduction, and this is money that is for kids, not for adults.                                                                  
                                                                                                                                
CHAIR WILSON commented that if the  members look at page 4 of the                                                               
bill [HB 172]  it shows how much  a family can make  and still be                                                               
eligible for Denali KidCare.                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA  said what  she is  concerned about  is how                                                               
many children are affected, not how much [the family] makes.                                                                    
                                                                                                                                
COMMISSIONER  GILBERTSON interjected  that he  believes he  knows                                                               
Representative Cissna's  concern.  He  asked the members  look at                                                               
the  FY 04  numbers [page  2 of  the fiscal  note dated  March 5,                                                               
2003] where there are 61 fewer  eligible children for the Title I                                                               
[Title  XXI  Children]  Denali  KidCare program.    He  told  the                                                               
committee the state has about  26,000 children on Denali KidCare.                                                               
While the  department shows a reduction  in FY 04 because  of the                                                               
new poverty standard  for that year, new poverty  figures will be                                                               
coming  out in  about  one  month.   The  61  figure is  actually                                                               
inflated up front  because the bill was drafted a  month ago, but                                                               
the  new poverty  figures will  not  come out  until next  month.                                                               
Commissioner  Gilbertson  said  the  state  has  26,000  children                                                               
currently  enrolled  and  will  probably have  far  more  in  the                                                               
future.                                                                                                                         
                                                                                                                                
Number 2073                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON asked if the PFD counts as income.                                                                        
                                                                                                                                
COMMISSIONER  GILBERTSON  responded  that  to  the  best  of  his                                                               
knowledge, the PFD income is held harmless.                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON commented  that for a family  of four, that                                                               
would  be  four  PFDs  and   a  significant  income  amount  held                                                               
harmless.                                                                                                                       
                                                                                                                                
REPRESENTATIVE KAPSNER said  she knows $52,000 sounds  like a lot                                                               
of money.   However,  for individuals living  in a  small village                                                               
with the  price of electricity  at 53  cents a kilowatt  hour, $4                                                               
per  gallon  for  gasoline  for a  snow  machine,  4-wheeler,  or                                                               
outboard motor to  go hunting, and $6 or $7  per gallon for milk,                                                               
that income does  not stretch as far, especially for  a family of                                                               
four.   Representative  Kapsner  asked when  this  issue will  be                                                               
readdressed.   She  said poor  people typically  do not  have the                                                               
capacity  to  hire a  lobbyist  to  come  to the  legislature  to                                                               
advocate for a change in the statute.                                                                                           
                                                                                                                                
Number 2129                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  told the  committee this  is statutorily                                                               
driven and  revisiting it is up  to the legislature.   He said he                                                               
understands the  concern of Representative  Kapsner, but  at this                                                               
particular point, the administration is  trying to figure out how                                                               
it can  afford the  current Medicaid program  as it  is currently                                                               
structured.                                                                                                                     
                                                                                                                                
Number 2165                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  said there is tremendous  pressure being                                                               
placed on the  state's budget, and because of the  rising cost in                                                               
the Medicaid program,  without these changes there  are likely to                                                               
be far  more reductions  to the  Medicaid program,  including the                                                               
inability to finance core services.   The department is trying to                                                               
engage in  a collection of  activities that can bring  about cost                                                               
containment on  the margins  so that  it can  continue to  have a                                                               
strong  Medicaid  program,  strong Denali  KidCare  program,  and                                                               
insurance program  for seniors who  are receiving  long-term care                                                               
services.    Absent  prudent cost  containment,  it  will  become                                                               
increasingly difficult  for this  state to ensure  the individual                                                               
who is well  below 200 percent of poverty will  be able to access                                                               
emergency, dental, or other health care services.                                                                               
                                                                                                                                
COMMISSIONER  GILBERTSON  told  the committee  the  governor  and                                                               
department  are  committed to  taking  those  steps in  order  to                                                               
strengthen   those  programs.     There   is  incredible   fiscal                                                               
instability  in maintaining  the Medicaid  program at  the status                                                               
quo.  He reported that there  was close to $72 million in general                                                               
fund  program  growth in  the  Department  of Health  and  Social                                                               
Services,  and over  80 percent  of that  is associated  with the                                                               
Medicaid  program.   These are  general fund  increases that  the                                                               
state does  not have the  capacity to absorb, absent  steps taken                                                               
at this point, he told members.                                                                                                 
                                                                                                                                
Number 2203                                                                                                                     
                                                                                                                                
CHAIR WILSON  pointed out that  any legislator could  introduce a                                                               
bill to address this issue next  year.  She pointed out that last                                                               
year at  this time there was  a bill in the  legislature to bring                                                               
the percentage  down to 150  percent of  the poverty level.   She                                                               
told the  committee she is  pleased that the governor  is looking                                                               
at  maintaining  the  program  at  200  percent  of  the  poverty                                                               
guidelines.                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  said in reviewing  charts provided  by the                                                               
department,  [he  found]  it looks  as  though  Medicaid-eligible                                                               
children's  costs have  increased  much faster  than have  adult-                                                               
eligible costs  or Medicaid costs for  the elderly.  He  asked if                                                               
there  is a  $40 million  increase  from the  FY 03  supplemental                                                               
[budget]  to the  projection  for  FY 04  in  the Denali  KidCare                                                               
program.                                                                                                                        
                                                                                                                                
Number 2274                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON responded  that that is correct.   The FY                                                               
03  figures, including  the supplemental,  had $264  million, and                                                               
[the state]  is projecting $306  million for coverage  through FY                                                               
04.                                                                                                                             
                                                                                                                                
REPRESENTATIVE  SEATON said  his  concern is  that  the state  is                                                               
allowing this  program [Denali  KidCare] to  grow very  fast, and                                                               
yet  there  are  some  pretty drastic  cuts  being  proposed  for                                                               
education for our children.                                                                                                     
                                                                                                                                
Number 2298                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  responded that the  chart Representative                                                               
Seaton  is looking  at  is  not a  chart  on  the Denali  KidCare                                                               
program, but  rather a  chart on  Medicare services  to children.                                                               
Denali KidCare's  growth is much  lower.   He said he  thinks the                                                               
difference  between 200  percent of  poverty and  150 percent  of                                                               
poverty is  about $3 million  in general  fund dollars.   He told                                                               
the committee he believes Representative  Seaton was referring to                                                               
a larger pool of services in the figures he mentioned.                                                                          
                                                                                                                                
Number 2336                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON   said  Denali  KidCare  is   a  special                                                               
[insurance] program  that allows the  state to bring  in children                                                               
in families  that have  income levels  slightly higher  than that                                                               
for Medicaid  eligibility.  This  program has helped  [the state]                                                               
address  part  of the  problem  for  uninsured children  and  the                                                               
social costs.   He said most of the care  provided to children in                                                               
terms  of  costs  is  delivered outside  of  the  Denali  KidCare                                                               
program through the traditional Medicaid program.                                                                               
                                                                                                                                
CHAIR WILSON asked  if children who live in  Native villages, who                                                               
do not qualify for the  Denali KidCare program, would be provided                                                               
health care through some kind of Native funding.                                                                                
                                                                                                                                
Number 2342                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON replied  that  if the  individual is  an                                                               
Alaska Native, he/she  would be able to  receive services through                                                               
an Indian Health Service [IHS]  facility.  The state has actively                                                               
worked with Native health  corporations towards having enrollment                                                               
in Medicaid  programs.  He told  the committee it is  a good deal                                                               
for  the  state  because  the  department  receives  100  percent                                                               
reimbursement from  the federal government for  Medicaid services                                                               
provided  to Alaska  Native Medicaid  beneficiaries.   That  care                                                               
must  be provided  through Alaska  Native health  care facilities                                                               
that  have compacted  to provide  IHS services  previously.   The                                                               
state  tries  to work  with  Native  corporations to  have  their                                                               
populations become dual-eligible.  They  receive that care at the                                                               
facility and there is no cost to the state.                                                                                     
                                                                                                                                
TAPE 03-26, SIDE B                                                                                                            
Number 2378                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KAPSNER said  she  is  not necessarily  concerned                                                               
with  just  Native   kids  in  the  state,  but   kids  in  small                                                               
communities  like Tenakee  Springs where  the cost  of living  is                                                               
very high.   There are a lot of non-Native  villages in Southeast                                                               
Alaska.  She said it is little or  no comfort to her to think the                                                               
legislature can  come back  and readjust  the figures  next year.                                                               
She  referred to  last year's  debate  on the  income tax  versus                                                               
sales tax and  said there was an implied message  that people who                                                               
do not make a lot of  money are not hard workers.  Representative                                                               
Kapsner said  there are not  a lot  of advocates in  the building                                                               
for poor people.   She said she does not  see how the legislature                                                               
will come  back and give  away money  to poor people  or increase                                                               
the money it gives  away to poor people in the  future.  She said                                                               
she is  sensitive to poor  people's issues and taking  money away                                                               
from  people  who need  it,  especially  with kids  and  pregnant                                                               
women.  She  said she does not  see the will being  there [in the                                                               
legislature] to change this at any time.                                                                                        
                                                                                                                                
Number 2336                                                                                                                     
                                                                                                                                
REPRESENTATIVE WOLF asked if there  is any reimbursement from the                                                               
federal government for the Denali KidCare program.                                                                              
                                                                                                                                
COMMISSIONER  GILBERTSON responded  that the  state does  receive                                                               
funds  for  the Denali  KidCare  program.   Recently,  the  state                                                               
received  a redistribution  of  funds, as  other  states are  not                                                               
fully implemented.  He said  the state received about $12 million                                                               
last  year.   Since the  Denali  KidCare program  is the  state's                                                               
children's  health  care  program,  it  is  able  to  access  the                                                               
advanced  federal  medical  assistance  percentage,  which  is  a                                                               
little   over  58   percent.     The  enhanced   federal  medical                                                               
assistance, which is  for the Denali KidCare  program, Breast and                                                               
Cervical  Cancer  Programs,  and   other  programs,  the  federal                                                               
government has provided incentives  for states to participate and                                                               
[the State  of Alaska] receives  between 71  and 72 percent.   He                                                               
commented that percentage changes each year.                                                                                    
                                                                                                                                
Number 2288                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA  asked what percentage of  enrollees in the                                                               
Denali  KidCare program  is Native  Alaskans.   If  they get  100                                                               
percent  reimbursement from  the  federal  government, does  that                                                               
means there is no cost to the state?                                                                                            
                                                                                                                                
Number 2271                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON replied that  the state only receives 100                                                               
percent reimbursement  when the  services are provided  through a                                                               
IHS-compacted  facility.   If a  child  is eligible  for a  state                                                               
insurance  product,   the  Medicaid  program  for   example,  and                                                               
receives   that  service   through  the   Yukon-Kuskokwim  Health                                                               
Corporation, [the state] will  receive 100 percent reimbursement.                                                               
However,  if  that  same  child   goes  to  any  outside  medical                                                               
facility,  the  reimbursement  reverts back  to  the  traditional                                                               
formula and  is not eligible  for the 100  percent reimbursement.                                                               
He  told  the  committee  that  statewide  the  Medicaid  program                                                               
provides  roughly $240  million  in Medicaid  services to  Alaska                                                               
Native  Medicaid  beneficiaries.    Of that  $240  million,  $170                                                               
million  was provided  outside of  an  IHS-compacted facility  or                                                               
Native  health  care system,  so  the  state currently  pays  $80                                                               
million in general funds to provide  its 42 percent match for the                                                               
Native  Medicaid   beneficiaries  who  have  chosen   to  receive                                                               
services outside  the Native health  care system.   He summarized                                                               
by saying that being an Alaska  Native does not mean there is 100                                                               
percent reimbursement  from the federal  government.  It  is only                                                               
when services are  provide inside the Native  health care system,                                                               
and  currently  most services  are  provided  outside the  Native                                                               
health care system.                                                                                                             
                                                                                                                                
Number 2212                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA asked how  many Native Alaskan children are                                                               
enrolled in the Denali KidCare program.                                                                                         
                                                                                                                                
COMMISSIONER  GILBERTSON  replied  that  he  would  provide  that                                                               
number to the committee.                                                                                                        
                                                                                                                                
Number 2205                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  asked if there  are any costs to  the state                                                               
when  a  Native Alaskan  walks  into  the Alaska  Native  Medical                                                               
Center in Anchorage and receives care.                                                                                          
                                                                                                                                
COMMISSIONER GILBERTSON replied that  if the individual is Alaska                                                               
Medicaid-eligible, the state  is able to charge that  back to the                                                               
U.S. government at the 100 percent reimbursement rate.                                                                          
                                                                                                                                
REPRESENTATIVE GATTO  asked what the  cost would be to  the state                                                               
if the same  person with the same illness  walked into Providence                                                               
Hospital and  received the  same service.   If, for  example, the                                                               
cost is $1,000, what is the expense to the state?                                                                               
                                                                                                                                
COMMISSIONER  GILBERTSON responded  that in  that case  the state                                                               
would pay  42 percent.  He  told the committee that  the state is                                                               
currently working  with the  congressional delegation  to clarify                                                               
some of the reimbursement language  for IHS to ensure 100 percent                                                               
federal  reimbursement for  some services  that are  not provided                                                               
within the four  walls of an IHS-compacted facility.   This is to                                                               
ensure that  when there are compacted  relationships or referrals                                                               
made through the  IHS facility, that care is  still reimbursed at                                                               
100 percent.  He said this  administration's policy is to sign up                                                               
everyone who  is eligible for Medicaid.   He said that  while the                                                               
department  authorizes care,  it  does not  authorize where  that                                                               
care is provided.  Individuals do  have the right to choose where                                                               
they receive their services, and  the administration is committed                                                               
to  protecting that  right.   He said  the department  is working                                                               
with Native health care systems  to ensure that it recaptures the                                                               
greatest  number possible  for  federal  reimbursement to  Alaska                                                               
Native Medicaid  beneficiaries.  He  said these are  dollars that                                                               
can be  invested into the  tribal health care systems  and Native                                                               
health  care corporations  to expand  services in  their regions.                                                               
Doing this  will allow for  additional general fund  dollars that                                                               
will   ensure   the   department  can   have   fair,   reasonable                                                               
reimbursement rates for non-Native facilities.                                                                                  
                                                                                                                                
Number 2011                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO commented  that  there is  no recourse  for                                                               
patients  who are  eligible for  100 percent  reimbursement at  a                                                               
Native facility, but who go  to a non-Native facility where there                                                               
is a cost to the state.  He  pointed out that it would be cheaper                                                               
to pay for a cab ride to  the Native facility than to provide the                                                               
care at a non-Native facility.                                                                                                  
                                                                                                                                
COMMISSIONER GILBERTSON  told the committee that  the department,                                                               
as  the state's  administrator of  the federal  Medicare program,                                                               
must allow individuals the right  to receive care at the facility                                                               
of their choice.   He said the department  does not differentiate                                                               
between   populations   based   on    heritage   or   any   other                                                               
characteristics.    The  department  will  be  working  with  the                                                               
providers to  ensure that it  designs its  systems in a  way that                                                               
maximizes federal revenues.                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO replied  that a  soldier's family  could do                                                               
the same  thing.  While a  soldier gets free medical  care at the                                                               
air base,  there is the option  of getting medical care  where it                                                               
is more convenient.                                                                                                             
                                                                                                                                
COMMISSIONER  GILBERTSON  responded  that  he  is  talking  about                                                               
Medicaid-eligible individuals.                                                                                                  
                                                                                                                                
REPRESENTATIVE GATTO  replied that  is what  he is  talking about                                                               
too.  A lot of soldier's families are Medicaid-eligible.                                                                        
                                                                                                                                
COMMISSIONER GILBERTSON  told the  committee that  the department                                                               
administers  the  program  in  a   fair  manner.    He  said  the                                                               
department is subject to myriad  other federal laws including the                                                               
Emergency Medical  Treatment and  Active Labor Act  [EMTA], which                                                               
ensures  that hospitals  have to  treat individuals  who come  in                                                               
their doors regardless  of insurance coverage.  There  are a host                                                               
of laws that  require fair treatment of individuals,  and he said                                                               
the department is managed in the spirit of those laws.                                                                          
                                                                                                                                
Number 1987                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA asked if the  expanded language that covers                                                               
more situations  accommodates the "divert" system.   For example,                                                               
if  there is  an  emergency  in Anchorage  and  the ambulance  is                                                               
called,  an individual  might as  likely  show up  at the  Alaska                                                               
Native  Medical   Center  as  at   Providence  Hospital.     That                                                               
individual might  be headed for  the Native hospital, but  if the                                                               
facility is full,  which is becoming more and more  of a problem,                                                               
then that person would be taken to Providence Hospital.                                                                         
                                                                                                                                
Number 1948                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON  asked   if  Representative  Cissna  was                                                               
referring  to the  department's efforts  to clarify  federal law.                                                               
In  reply to  her affirmative  response, Commissioner  Gilbertson                                                               
said the department is working  with the congressional delegation                                                               
on the Indian  Health Care Improvement Act of 1976.   He told the                                                               
committee  that services  provided  through an  IHS facility  are                                                               
reimbursed at 100  percent.  So the question is  what is provided                                                               
through an  IHS facility.   That Act included language  that said                                                               
this was  not an effort to  increase any new burden  on states to                                                               
pay  for  care  for  individuals  where  the  federal  government                                                               
maintained  trust  responsibilities.     The  interpretation  the                                                               
federal  government has  reverted to  is that  the care  provided                                                               
includes services within  the four walls of that  facility.  [The                                                               
state] contends that  it has been historically  interpreted to be                                                               
beyond that  scope and that  it should include services  that are                                                               
provided through  a referral.  He  said he does not  believe that                                                               
the change  will be  so expansive  that it  will deal  with where                                                               
individuals' intent  was to receive  services.  Rather,  it would                                                               
be where  there is  a clear  contractual relationship  whereby an                                                               
individual  first  receives  his/her  services  through  an  IHS-                                                               
compacted facility and then is referred  out.  It is similar to a                                                               
gatekeeper in some health care systems.                                                                                         
                                                                                                                                
Number 1887                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA responded  that if there is  a gate keeping                                                               
agreement  between those  hospitals in  Anchorage and  the divert                                                               
system is  very carefully  planned, there  is a  contract between                                                               
the hospitals.                                                                                                                  
                                                                                                                                
COMMISSIONER  GILBERTSON  questioned  whether  that  would  still                                                               
qualify, even if the congressional  delegation were successful in                                                               
changing the federal law.                                                                                                       
                                                                                                                                
Number 1850                                                                                                                     
                                                                                                                                
MR.  LABBE commented  that  he  does not  know  if  that kind  of                                                               
agreement would apply, but said he would look into it.                                                                          
                                                                                                                                
Number 1821                                                                                                                     
                                                                                                                                
DENNIS  MURRAY, Administrator,  Heritage Place  Nursing Facility,                                                               
testified via  teleconference from  Kenai on HB  152 and  HB 153.                                                               
He urged  caution on the  part of  the committee with  respect to                                                               
eliminating the Medicaid  Rate Advisory Commission [HB  152].  He                                                               
said  he  would  not  be  as  concerned  as  long  as  the  state                                                               
prescribes a process  for public hearings.  He  said the language                                                               
"fair and reasonable" is a  problem because it creates a standard                                                               
for  the  state  in  terms  of  providing  services  to  Medicaid                                                               
recipients and adequate  reimbursement to providers.   He said he                                                               
would not be in favor of elimination of that language.                                                                          
                                                                                                                                
MR.  MURRAY  commented  that  in   HB  153  the  current  options                                                               
described by  the commissioner  do have  flaws in  them; however,                                                               
the  legislature has  looked at  the various  priorities and  has                                                               
determined  that  some are  higher  than  others.   He  said  the                                                               
elimination of  that language  would certainly  leave uncertainty                                                               
in terms of  whether one service is more crucial  to someone than                                                               
something  else.   He told  the committee  as a  nursing facility                                                               
administrator, he knows  that these clients are some  of the most                                                               
vulnerable  in  the  state  and that  the  elimination  of  those                                                               
service would  be devastating.   He said it would  be unfortunate                                                               
if  passing this  legislation would  mean  that those  priorities                                                               
established by the  legislature would be lost  and the department                                                               
would have  total discretion in  what services it chose  to fund.                                                               
The legislature  would be left out  of that equation in  terms of                                                               
giving its sense of what those priorities are.                                                                                  
                                                                                                                                
Number 1654                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  responded that the purpose  of this bill                                                               
is to align  Alaska Statute with current federal  law and current                                                               
practice.   The  Medicaid Rate  Advisory Commission  when it  was                                                               
established  did serve  in a  rate-setting function;  however, it                                                               
now serves  in an  advisory capacity.   The  department maintains                                                               
the  rate-setting  functions.    The  Boren  Amendment  that  was                                                               
referred to  is the  federal law  that established  the standard,                                                               
and the  Alaska Statute  was established  to mirror  that federal                                                               
statute.  The Boren Amendment  has been repealed; this bill would                                                               
repeal that state law.  He  told the committee that there will be                                                               
rate-setting  at [the  department's] new  office of  rate review.                                                               
There will still be a public  process for rate setting.  Facility                                                               
rate  setting  will  have  the   same  structure  and  design  as                                                               
physician-based   reimbursement  and   all  other   non-inpatient                                                               
reimbursement services.  The department  will have an office that                                                               
will reflect the varied rate-setting  functions of the department                                                               
including childcare and subsidized adoption.                                                                                    
                                                                                                                                
Number 1437                                                                                                                     
                                                                                                                                
CHAIR WILSON  asked the commissioner  to respond to  Mr. Murray's                                                               
comment concerning the options list.                                                                                            
                                                                                                                                
COMMISSIONER   GILBERTSON    told   the   committee    that   the                                                               
administration's  position is  that the  options list  is not  an                                                               
effective  cost-containment  mechanism.   The  options  list  has                                                               
rarely been utilized and is not  an effective way to manage costs                                                               
in the Medicaid  program.  He said the options  list will replace                                                               
the obsolete  language with general authority  for the department                                                               
to utilize  cost-containment mechanisms.   There are  three clear                                                               
principles that  have to be used  by the department.   First, the                                                               
department  must  pursue  all other  reasonable  cost-containment                                                               
measures  before eliminating  any eligibility  group or  service.                                                               
Second,  the  department  will actively  pursue  strategies  that                                                               
maximize federal receipts.  Third,  decisions should be made in a                                                               
manner that  best reflects  the needs  and interests  of eligible                                                               
Medicare  recipients.    The department  will  still  have  cost-                                                               
containment  reviews and  make prudent  decisions on  where cost-                                                               
containment  should  be  made,  what  services  should  be  fully                                                               
funded,  and if  there  needs to  be  a reduction  in  a type  of                                                               
service.   However, that would have  to be done with  the guiding                                                               
principles  protecting  the  public  interest.    Long-term  care                                                               
facilities  and nursing  home facilities  certainly would  not be                                                               
the  first areas  the department  would  be looking  at for  cost                                                               
containment.  These facilities would  be protected by more direct                                                               
and explicit  authority by the department,  rather than reverting                                                               
to an options list that is not constantly under review.                                                                         
                                                                                                                                
Number 1430                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  moved to  report HB  152 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 152 was reported  from the                                                               
Health, Education and Social Services Standing Committee.                                                                       
                                                                                                                                
Number 1420                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO moved  to report  HB 153  out of  committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 153 was reported  from the                                                               
Health, Education and Social Services Standing Committee.                                                                       
                                                                                                                                
Number 1396                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  moved to  report HB  172 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
Number 1379                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CISSNA objected  to the  motion, saying  that she                                                               
has difficulty  with cost containment  in the areas  addressed by                                                               
this bill.   Representative Cissna  said that she  believes these                                                               
kinds of measures will cause more people to leave the state.                                                                    
                                                                                                                                
Number 1326                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KAPSNER   agreed  with   Representative  Cissna's                                                               
objection.  She said the  cap being placed on poverty guidelines,                                                               
with  no   date  set   out  for   readdressing  this   issue,  is                                                               
problematic.   Representative  Kapsner  commented  that there  is                                                               
such   a  high   turnover   in  the   legislature,  and   limited                                                               
institutional memory,  that by the  time kids and  pregnant women                                                               
are at  300 to 400  percent of the  poverty guidelines, a  lot of                                                               
the legislators will  not be here.  She said  that more than half                                                               
of the House  has been here two  years or less, and  more than 75                                                               
percent  of  the  House  has   been  here  four  years  or  less.                                                               
Representative Kapsner said  that the climate in  the building is                                                               
very unfriendly to people with  hardships, and she cannot in good                                                               
conscience vote  for the bill.   She told the committee  she does                                                               
understand what the governor is  looking at with cost-containment                                                               
measures,  but she  does  not think  kids,  elders, and  pregnant                                                               
ladies  are the  people to  target.   There  are a  lot of  other                                                               
avenues to look  for money.  She told the  members she is totally                                                               
opposed to this bill.                                                                                                           
                                                                                                                                
Number 1257                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  asked Commissioner Gilbertson  whether, as                                                               
the poverty level is adjusted,  not including the Alaska cost-of-                                                               
living adjustment, those numbers will change.                                                                                   
                                                                                                                                
Number 1234                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON asked for the question to be clarified.                                                                 
                                                                                                                                
REPRESENTATIVE  SEATON said  that he  understands that  this bill                                                               
would revise statute from a percentage to a fixed number.                                                                       
                                                                                                                                
Number 1205                                                                                                                     
                                                                                                                                
CHAIR WILSON called  a brief at-ease at 4:19 p.m.   The committee                                                               
was reconvened at 4:20 p.m.                                                                                                     
                                                                                                                                
Number 1142                                                                                                                     
                                                                                                                                
A  roll call  vote  was taken.    Representatives Wilson,  Gatto,                                                               
Wolf,  and  Seaton  voted  in  favor of  reporting  HB  172  from                                                               
committee.  Representatives Cissna  and Kapsner voted against it.                                                               
Therefore,  HB  172  was  reported   out  of  the  House  Health,                                                               
Education and Social Services Standing  Committee by a vote of 4-                                                               
2.                                                                                                                              

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