Legislature(2001 - 2002)

03/19/2001 09:09 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     SENATE CONCURRENT RESOLUTION NO. 7                                                                                         
     Establishing a Health Care Cost Review Task Force.                                                                         
                                                                                                                                
                                                                                                                                
This  was the  first  hearing  for  this resolution  in  the  Senate                                                            
Finance Committee.                                                                                                              
                                                                                                                                
Senator  Green announced  that while  the Department  of Health  and                                                            
Social   Services   Budget   Subcommittee    was   addressing   that                                                            
department's budget,  the members were "surprised"  at the growth of                                                            
the  Medicaid  program.  She emphasized  the  increasing  costs  and                                                            
subsequent  impacts to both the federal  and state governments.  She                                                            
spoke of  continued proposals  for new matching  fund programs,  but                                                            
stated  that the question  is how  to continue  to pay for  existing                                                            
Medicaid programs.                                                                                                              
                                                                                                                                
Senator Green  informed that the Medicaid program  in Alaska expends                                                            
approximately  $10  million a  week of  combined  state and  federal                                                            
funds. She  calculated this  equals about  one-half billion  dollars                                                            
annually. She pointed out  that Medicaid is the second largest state                                                            
program  behind  education.  She ascertained  several  state  agency                                                            
budgets could  be combined  and still cost  less than the cost  of a                                                            
month of Medicaid expenses.                                                                                                     
                                                                                                                                
Senator Green  expressed the difficulties in examining  the Medicaid                                                            
expenses because  there are "various  layers" of service  providers,                                                            
vendors,  agencies, departments,  individuals  and nonprofit  groups                                                            
that rely on Medicaid funds  as a part of their on-going operations.                                                            
                                                                                                                                
Senator Green  stated the intent of this resolution  is to establish                                                            
a group to investigate  the reasons for the high costs  and possibly                                                            
identify cost containing  alternatives. This, she said would include                                                            
determining  whether  the state  is  participating  in programs  not                                                            
mandated  by the federal  government,  finding out  if any  programs                                                            
could  be restructured  or privatized  to  have less  impact on  the                                                            
state general fund and perhaps build a better program.                                                                          
                                                                                                                                
Senator Green stressed  there is no intent to "negatively impact the                                                            
Medicaid budget."                                                                                                               
                                                                                                                                
Co-Chair Kelly  commented that any  attempt to reduce the  budget is                                                            
beneficial.                                                                                                                     
                                                                                                                                
JIM BRADY, Kenai Peninsula  Independent Living Center, testified via                                                            
teleconference from Homer  to request the Committee keep in mind the                                                            
costs required  to care for  disabled people.  He stressed  that for                                                            
many, Medicaid  is the  only method  of health  insurance. He  noted                                                            
that providing  care at the early  stages of a condition  could save                                                            
considerable  money  in the  long run.  He referenced  the  "buy-in"                                                            
option  that  allows  disabled  individuals  to  pay  for  continued                                                            
Medicaid coverage once they are employed.                                                                                       
                                                                                                                                
Co-Chair  Kelly  noted  that  the  discussion  at this  time  is  to                                                            
determine  whether or not  to form the task  force. He stated  there                                                            
would be another  opportunity to debate  the issues before  the task                                                            
force.                                                                                                                          
                                                                                                                                
DAVID JACOBSON, Member,  State Independent Living Council, testified                                                            
via  teleconference   from  Fairbanks   in  appreciation   that  the                                                            
Committee  was  not yet  setting  the  agenda  for the  task  force.                                                            
However,  he emphasized that  Medicaid is  an essential program.  He                                                            
also spoke  of the necessity  of treating  illnesses in their  early                                                            
stages  rather  then  waiting  for  the  condition  to  become  more                                                            
serious.  He spoke  of  the savings  to the  state  in allowing  the                                                            
elderly to remain in their  community rather than an institution. He                                                            
supported a proposed  language change prepared by  the Department of                                                            
Health and  Social Services.  He explained  this language  addresses                                                            
specific  needs   of  the  disabled  and  elderly   and  also  gives                                                            
recommendations  on  the membership  of the  task  force to  include                                                            
consumers.   He  commented  on  the   Long-Term  Care  Task   Force,                                                            
commending the representation by all factions of the community.                                                                 
                                                                                                                                
TIM ANDERSON,  Senior Service  Provider and  Director, Wasilla  Area                                                            
Seniors, testified via  teleconference from Mat-Su about the various                                                            
services provided  to the elderly by Medicaid. He  estimated that 30                                                            
percent  of Medicaid costs  in his  community go  to pay for  senior                                                            
services.                                                                                                                       
                                                                                                                                
RICHARD TUBBS,  Executive Director, Palmer Senior  Center, testified                                                            
via teleconference  from Mat-Su that  he understood the reasons  the                                                            
state wishes to  reduce costs, but emphasized the  necessity of home                                                            
community  based senior services.  He referenced  a state  conducted                                                            
study that found  that community based services cost  much less than                                                            
nursing   home  care.  He   urged  that   the  task  force   include                                                            
representation from the senior care community.                                                                                  
                                                                                                                                
JANE  DEMMERT,  Executive  Director,  Alaska  Commission  on  Aging,                                                            
testified in Juneau about  the Long-Term Care Task Force. She stated                                                            
that there  were recommendations  of  this task  force that  remains                                                            
unimplemented.  She suggested the  new task force consider  the work                                                            
and structure  of the earlier task  force. She stressed the  lack of                                                            
flexibility of insurance for elderly care.                                                                                      
                                                                                                                                
ROSEMARY HAGAVIG,  Executive Director, Catholic Community  Services,                                                            
testified in Juneau to  echo the remarks of the previous testifiers.                                                            
She also  noted that Alaska  is one of only  a few states  that does                                                            
not provide Medicaid for  Alzheimer disease, which she stressed is a                                                            
growing  portion of  elderly  needs. She  spoke of  the benefits  of                                                            
providing care  in the early stages  of this disease. She  hoped the                                                            
task force would consider this.                                                                                                 
                                                                                                                                
SUZANNE PRICE Executive  Director, Fairbanks Community Mental Health                                                            
Center and representative  of Mental Health Providers Association of                                                            
Alaska,  testified   in  Juneau  sharing  the  message   that  cost-                                                            
containment has  been included in the organization's  practice for a                                                            
number of years.  She offered the  groups input in the task  force's                                                            
efforts. She warned  of the "domino effect" when a  task force makes                                                            
cost-containment  decisions.  She stressed,  "Cost containment  is a                                                            
tricky  issue."   She  said  that  the  providers  association   has                                                            
knowledge  in  this  area  and she  requested  they  be  allowed  to                                                            
participate in the task force.                                                                                                  
                                                                                                                                
Senator  Green noted  that  there  would be  a decrease  in  federal                                                            
participation  in Medicaid  funding in  the year  2002. She said  it                                                            
needed  to  be decided  how  the  state's  general  funds  would  be                                                            
prioritized.  She  ascertained  that additional  programs  would  be                                                            
introduced, making the need to prioritize greater.                                                                              
                                                                                                                                
RUTH  L'HOMMIDIEU,   Chair,   State  Independent   Living   Council,                                                            
testified   via  teleconference  from   Fairbanks,  to  advise   the                                                            
Committee to  proceed with caution  in establishing the task  force.                                                            
She  stated  that  Medicaid  is  the  number  one  form  of  medical                                                            
insurance for  people with disabilities.  She recommended  expanding                                                            
the Medicaid  buy-in option. She listed  the annual cost  of nursing                                                            
home  treatment as  $96,809 per  person.  She stressed  the need  to                                                            
ensure  people can  remain in  their own  community,  and return  to                                                            
work. She supported  the Department  of Health and Social  Services'                                                            
proposed language.                                                                                                              
                                                                                                                                
RICHARD  RAINERY, Acting  Executive Director,  Alaska Mental  Health                                                            
Board  testified in  Juneau  to reiterate  other  points raised.  He                                                            
agreed  that the  proposed task  force membership  excludes  several                                                            
factions.  He opined that  health care users,  payers and  providers                                                            
should  be included  in the  primary membership  instead  of ad  hoc                                                            
members. He predicted that  the task force would learn that Medicaid                                                            
is a "very complex subject"  and he was concerned that the timeframe                                                            
allowed would  be inadequate. He warned  that the impacts  on access                                                            
to health care should be  carefully considered, in the mental health                                                            
field.  He spoke  of  the reliance  on  Medicaid by  many  community                                                            
mental  health care  providers and  the limited  ability to  replace                                                            
that funding  from other  sources. He pointed  out that Alaska  does                                                            
not have a health  insurance parody clause, so private  insurance is                                                            
not required to include mental health coverage.                                                                                 
                                                                                                                                
JAY LIVEY,  Deputy  Commissioner,  Department of  Health and  Social                                                            
Services,   testified  in  Juneau   to  voice  concerns   about  the                                                            
resolution.  He expressed  that the task force is "narrowly charged"                                                            
in  that  it  is  only  directed  to  review  cost  containment.  He                                                            
emphasized  the "interrelationships  and complexity of health  care"                                                            
He stated  that  the department  supports  cost containment  and  he                                                            
agreed that  the cost of  health care is  rising. However,  he said,                                                            
"cost containment itself does not exist entirely in a vacuum."                                                                  
                                                                                                                                
Mr. Lively  shared there  are three  ways to reduce  costs within  a                                                            
health  care program.  He  listed  them as  reducing  the number  of                                                            
participants,  lowering  the  reimbursement  rate and  reducing  the                                                            
amount of  services. He pointed  out that  each of these would  have                                                            
other  ramifications on  the health  care system.  He stressed  that                                                            
many  elderly  and  disabled  patients  do  not  have  other  health                                                            
insurance options, due  to preexisting conditions, lack of income to                                                            
purchase private insurance, and other factors.                                                                                  
                                                                                                                                
Mr. Lively  spoke of the connection  between publicly funded  health                                                            
care programs and local  health care economies. He explained that in                                                            
many smaller  communities,  there is a  connection between  Medicaid                                                            
funding  for long-term  care  and the  economic viability  of  small                                                            
rural hospitals.  He stated that the  Medicaid portion of  long-term                                                            
care funding  keeps the  hospitals operational.  He also noted  that                                                            
Medicaid funding for disabled  patients provides funding to maintain                                                            
many mental health  care programs. While he acknowledged  that these                                                            
programs  do  not  serve Medicaid  eligible  patients  exclusively,                                                             
without the  Medicaid funding, there  would not be adequate  private                                                            
funding income to provide the services to any patients.                                                                         
                                                                                                                                
Senator  Green asked  if the witness  was addressing  the impact  of                                                            
private insurance  and subsidized Medicaid in providing  lower rates                                                            
to those individuals that pay for services without insurance.                                                                   
                                                                                                                                
Mr. Livey  agreed  there is  an interrelationship  between  Medicaid                                                            
payments  and the  health  care economy.  He  explained  that if  an                                                            
individual  does  not  have  health care  coverage,  and  must  seek                                                            
medical  care, "somebody  has to  pay for  that." He  said that  the                                                            
"somebody"  is "the rest  of the  public that  pays the health  care                                                            
bill."                                                                                                                          
                                                                                                                                
Mr. Lively qualified that  "the worst" would not necessarily happen,                                                            
but stressed  that because  of the complexity  of the issue,  if the                                                            
task force  only addresses  cost containment,  "it is going  to miss                                                            
some of these  connections. He was  concerned that unless  the scope                                                            
of the  task force  is broadened  to include access,  the impact  on                                                            
other  health  care   economies  and  other  providers,   unintended                                                            
consequences could result.                                                                                                      
                                                                                                                                
Mr.  Livey  concluded suggesting   that the  task  force  membership                                                            
should include  additional representation from recipients,  families                                                            
of recipients  or  advocates for  recipients as  well as  additional                                                            
membership for the Administration.                                                                                              
                                                                                                                                
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
                                                                                                                                

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