Legislature(2005 - 2006)SENATE FINANCE 532
02/23/2005 09:00 AM FINANCE
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SENATE BILL NO. 98 "An Act making supplemental appropriations, capital appropriations, other appropriations, and reappropriations; amending appropriations; making appropriations to capitalize funds; and providing for an effective date." This was the third hearing for this bill in the Senate Finance Committee. The Committee concluded hearing presentations from State agencies outlining the appropriation requests. Department of Health and Social Services Item: 34 Section: 9(a) RDU: Alaskan Pioneer Homes: Pioneer Homes Supplemental Need: replacing unrealizable federal Medicaid funds with receipt supported services. Lower receipts is due to the voluntary nature of residents signing up for Medicaid. -$1,200,000 federal funds $1,200,000 receipt supported services $0 Total Funds JANET CLARKE, Director, Division of Administrative Services, Department of Health and Social Services, noted this item was addressed at the previous hearing. This request would allow services to be continued to residents of the Pioneers' Homes. The residents have paid these monies and the legislature has continually reappropriated the funds to the Homes. Item: 35 Section: 9(b) RDU: Behavioral Health: Behavioral Health Medicaid Svc Supplemental Need: Medicaid caseload growth above FY 05 budget projections. At current expenditure rate, the existing appropriation will be gone in April or May. $2,653,700 general funds $3,517,700 federal funds $6,171,400 Total Funds Ms. Clarke explained this increased need is the result of expenditure growth of the behavioral health program, particularly the out of state placements of children. This program is the fastest growing segment of the Department's budget. This request is for those costs over the amount projected would be required. Co-Chair Green asked if the increased costs of the out of state placement program are the result of additional patients served or longer stays by patients. Ms. Clarke replied that the Department is reviewing all causes of the increases, which includes the number of children in out of state placement and the longer stays. Co-Chair Green asked if the daily rate has stayed consistent. Ms. Clarke answered that the rates have changed some, but the amount is insignificant and not the cause of the large cost increases to operate the program. Item: 36 Section: 9(c) RDU: Health Care Services: Women's and Adolescents Services Supplemental Need: Feds reduced FFY05 funding in the Breast and Cervical Cancer screening program. The fund source change will allow services to 1600 enrolled women that otherwise would not be served due to federal funding reductions. Funds will be required by late March or early April to continue the program. $500,000 general funds -500,000 federal funds $0 Total Funds Ms. Clarke informed that when the FY 05 operating budget was adopted, the Department was not aware that the federal funding for this program would be reduced. Reducing the program would have resulted in fewer women being screened for the cancers. A chart included in the back-up material for this request [copy on file] shows the increased number of women served through this program. This request would restore funds to the program to prevent any women from being eliminated from the program. Co-Chair Green asked what services besides cancer screening are paid through this program. Ms. Clarke indicated she would provide this information, noting that mammograms and the diagnostic analysis of those mammograms are included. Co-Chair Green was unaware that the screening program was separate from the free health care program. Ms. Clarke affirmed it is a separate program and has been fully funded by the federal government for many years. This program serves as the "gate" to receive Medicaid-paid treatment for those eligible to receive it. Co-Chair Green asked where the shortfall is listed in this legislation. Ms. Clarke replied the next item reflects the growth in health care services. Ms. Clarke reported that the program includes a clinical breast examination, a mammogram and a pap smear. If abnormalities in a patient's screening appear, that patient is provided care within that Medicaid enrollment year. Co-Chair Green asked why the federal funding was reduced. Ms. Clarke replied that the federal grant award was reduced, but did not know the reason. Senator Olson asked the plan for the following fiscal year if the federal funding were not reinstated. Ms. Clarke replied that the Governor's proposed FY 06 budget has requested reinstatement of federal funds. Otherwise, the program would restrict the screening procedures to women over the age of 55, the mandatory age. Currently, any qualified woman over the age of 18 is eligible for the screening. Senator Olson asked about women under the age of 55 with signs of potential cancer, such as a suspicious breast lump. Ms. Clarke was unsure how the program would address these women. She would research the matter. Item: 37 Section: 9(d) RDU: Health Care Services: Medicaid Services Supplemental Need: Unable to implement cost containment measures as quickly or to the extent planned: e.g., Prescription Drug List delay, Transportation, Rate Setting, Cost Avoidance of Medicare Covered Drugs. At current expenditure rate, the existing appropriation will be gone in April or May. $13,821,400 general funds $16,888,300 federal funds $30,709,700 Total Funds Ms. Clarke stated this funding request is due to the Department's inability to accomplish its budget goals of the previous year. In FY 05, the Department proposed a total of approximately $45 million of cost containment items, but has been able to implement only approximately $11 million. The backup documentation details those areas where the reductions were unrealized [copy on file]. Ms. Clarke highlighted two components, which demonstrate the majority of the unrealized savings. The first involves anticipated reduced transportation costs of the Medicaid program through the use of the newly created State travel office. The Medicaid program did not get enrolled in the travel office to enable the Department to purchase bulk tickets until later in the fiscal year and thus the Department was unable to realize the full amount of anticipated cost reductions. The Department had also projected changes to the preferred drug list would save $20 million; however the adjusted projection is $8.4 million. This is due to the decision to exempt behavior drugs from the preferred drug list restrictions. Inclusion of the behavior drugs proved to be controversial. Ms. Clarke noted savings for several other components were less than the amounts projected. Senator Hoffman recalled that during discussions on the FY 05 budget during the previous session he asserted the cost containments were aggressive and recommended revising the amounts. Of the projected $45 million, $30 million was not achieved. This is less than 25 percent and reflects a "Far cry from good management." Senator Hoffman asked the current status of the Medicaid travel component in securing cost containment. Ms. Clarke replied that the Department joined the State travel office as of January 1, 2005, although the savings of this collaboration were less than anticipated. Senator Hoffman asked if savings from the travel office over the next four months would reduce the $30 million of unrealized cost containment. Ms. Clarke answered it would. She noted that at the time the Governor's supplemental appropriation request was drafted, the Department had realized no savings from participation with the travel office. This supplemental request would be updated to reflect savings realized since participation began as well as anticipated savings through the end of the fiscal year. Senator Hoffman had expected the Department would achieve at least 50 percent of the projected cost containment efforts proposed to the legislature. He reminded that he sponsored amendments to reduce the funding reductions, as he had predicted they were unrealistic Senator Olson asked the percentage of Medicaid funds spent for behavioral drugs. Ms. Clarke estimated the cost of behavioral drugs comprise one- third of the Medicaid funds expended for prescription medication. DWAYNE PEEPLES, Director, Division of Health Care Services, Department of Health and Social Services, testified via teleconference from Anchorage that the expense of behavioral drugs is between 25 and 30 percent of the total prescription drug cost. Item: 38 Section: 9(e) RDU: Senior/Disabilities Svcs: Senior/Disabilities Medicaid Svc Supplemental Need: Unable to implement cost containment measures as quickly or to the extent planned: e.g., Contract Waiver Assessments, Medicaid Waivers, Reducing Respite Utilization, Nursing Homes Preadmission Care Plans, $7,084,400 general funds and $7,606,300 federal = $16,690,700. Formula growth over budgeted amount will cost $15,487,800 general funds and $20,930,200 federal = $36,418,100. Primary growth is in Personal Care Attendant Services. At current expenditure rate, the existing appropriation will be gone in March. $22,572,200 general funds $30,536,600 federal funds $53,108,800 Total Funds Ms. Clarke stated this request includes two items. She noted cost containment efforts were more successful for these. The Department had projected $48.5 million of cost containment and refinancing savings for the Senior and Disability Services Medicaid program and expects would realize approximately two-thirds, or $32 million of the initial projected savings. Ms. Clarke informed that the second portion of this request is for funding to cover continued formula growth above projections, particularly for the Personal Care Attendant program. This program continues to expand above the Department's estimate, despite the audits conducted. January incurred the highest costs to date of $7.4 million. She anticipated extensive discussions would be held in the budget subcommittee to reevaluate policy choices for this program. Other states have addressed the issue in various ways, which would be reviewed. Senator Dyson recalled that Commissioner Gilbertson expressed concerns a year ago about the growth of this program. Those discussions established the significant advantage for senior citizens to remain in their homes rather than be institutionalized. Senator Dyson understood that criteria was implemented to require that patients must be qualified to enter a care facility in order to qualify for this program. Ms. Clarke learned that one section of the Department's regulations stipulate that clients must require an institutional level of care to qualify for this program. However, other regulations stipulate that patients demonstrate one deficiency. STEVE ASHMAN, Director, Division of Senior and Disabilities Services, Department of Health and Social Services, reiterated that two regulations apply. One requires that an eligible recipient have one or more deficiencies in an activity required for daily living, such as meal preparation. Senator Dyson pointed out that regulations could be changed without legislative approval, and asked why the Department had not taken steps to control the costs of this program. Mr. Ashman replied that regulations adopted the previous year resulted in substantial outcry from patients, their families and service providers. The Department has also conducted audits of the program to determine what changes should be implemented to contain costs. Senator Dyson clarified the Department is gathering information necessary to make decisions regarding the program, but requires additional data before decisions could be made. Mr. Ashman answered this was correct. Senator Dyson remarked that this program should not be abused. Families have a duty to provide some services; however, some subsidy is necessary in situations where family members must take time away from paying jobs to provide care. He asked the timeframe for making decisions regarding the future guidelines of the program. Mr. Ashman replied that the audits should be completed by mid-March and that some preliminary data is already available. Ms. Clarke stressed the Department's intent that changes made to the program are acceptable to the legislature. This should be determined before any changes are implemented to avoid complaints. Therefore, the matter would be discussed in the budget subcommittee meetings. Senator Dyson commented that the chair of that budget subcommittee is experienced on this issue. He requested that a copy of the audit be forwarded to the chair of the Senate Health, Education and Social Services Committee upon completion to allow a hearing on the topic to be scheduled in that committee. The only manner to specify legislative intent is through statutory changes, resolutions or direction given through appropriations. He asked the Department to relay direction to the legislature on how the legislature should proceed. Co-Chair Green asked if a change of statute would be appropriate. Mr. Ashman responded that the language in statute only provides that the service is an option. Co-Chair Green surmised that the qualification requirements could be changed without legislation. Senator Bunde sympathized that complaints are made when difficult decisions are made. Senator Hoffman reiterated that the appropriations requested for items #36 and #37 total almost $95 million, which demonstrate that the Department "missed its target" for cost containment. The documentation for these requests indicates the reductions were not achieved because changes were not implemented in a timely manner. He asked if the proposed enabling changes would be implemented by the start of FY 06 and subsequently reflected in the FY 06 operating budget. Ms. Clarke replied that some of the enabling changes would be implemented before the start of FY 06 although others would not. She exampled that the projected $4 million savings through a nursing homes preadmission care plan would not be realized. This plan was envisioned to prevent Medicaid expenditure related to patients entering expensive nursing home facilities unnecessarily. However, the plan failed to consider that other Medicaid eligible patients would be admitted to those beds and that the only way to eliminate that expense would be to eliminate those bed spaces. Senator Hoffman asked the percentage of the targeted cost containment would be realized for FY 06. Ms. Clarke responded that the Department has achieved approximately $41 million in savings. Senator Hoffman remarked that the total projected cost containment was $93 million. Ms. Clarke clarified that a significant portion of the funding requested for the Senior/Disabilities Services BRU is not related to anticipated cost containment, but rather reflects the rate of growth in the cost of the program. Co-Chair Green ordered the bill HELD in Committee. AT EASE 9:34:01 AM / 9:35:45 AM Co-Chair Wilken chaired the remainder of the meeting.