Legislature(2003 - 2004)
03/26/2003 01:32 PM Senate HES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 109-MEDICAID COST CONTAINMENT & PRIORITY LIST
CHAIR FRED DYSON announced SB 109 to be up for consideration.
COMMISSIONER JOEL GILBERTSON, Department of Health and Social
Services (DHSS), said SB 109 is the third bill in the Medicaid
package that is necessary to bring about fiscal stability to the
Medicaid program for Alaska. He explained:
It would eliminate the Medicaid options list found in
AS 47.07.035. This establishes a priority list of how
the department will go about bringing cost savings in
years in which the legislature does not appropriate
sufficient funds to carry out Medicaid operations for
an entire 12-month period. Under the options list, if
the Legislature does not allocate funds to fully fund
the Medicaid program for a year, the department is
directed to work its way down the options list to
achieve the cost savings necessary to effectively
manage the program within the amount of money that is
appropriated by the legislature. The administration's
position is that while there must an effort to
administer the program within the confines of the
amount of funds that are appropriated by the
Legislature, the options list is not the most
effective or the most beneficial way of going about
cost containment. The options list itself is not
reviewed annually and is not necessarily a list of the
most beneficial ways of going about cost containment.
As an example, he noted DHSS would have to eliminate
prescription drug coverage and wheel chairs before it could
touch the eligibility standards for individuals with high
incomes. He continued:
The Governor's bill will replace that language with
broad direction to the department to engage in cost
containment necessary to achieve the same level of
savings and will provide instead, as guidance, that
first the department must pursue all other reasonable
cost containment measures before eliminating any
eligibility group or service.
Second, that the department should aggressively pursue
strategies to maximize federal financial participation
in the Medicaid program and third, that the cost
containment decision should be made in the manner that
best reflects the needs and interests of eligible
Medicaid populations. We believe with this guidance
and direction, the department will have greater
flexibility in achieving the same level of cost
savings without going through an options list that it
is the administration's position is not effectively
managing the program. It doesn't really balance the
relative benefits of cost containment tools and, in
addition, takes things off the table until other
things are removed first, which we believe further
exacerbates the acute care costs, such as removing
prescription drug coverage before you would eliminate
an eligibility population who is at the top level of
our Medicaid program. The intent of the options list
is preserved in the Governor's legislation, which is
directing the department to initiate cost containment
measures to live within its means and what is
appropriated to it....
SENATOR GRETCHEN GUESS asked if the cost containment measures
have to be exhausted within the BRU or the department and what
the burden of proof is before services are dropped.
COMMISSIONER GILBERTSON responded that the department has
regulatory authority to enact a number of cost containment
measures that bring about large savings to the Medicaid
population without actually affecting eligibility or a service
that's provided, for example pharmaceutical usage or
reimbursement rates to providers. This would be done department-
wide where Medicaid services are provided.
SENATOR GUESS asked how he would make those decisions. She was
concerned that the department would decide who got what and
when. She asked, "How are you going to decide dropping off a
population versus dropping off a procedure and where is that in
the bill? It makes me very nervous to turn over that
authority...."
She also wanted to know if groups of people would be ineligible
or individuals would be ineligible.
COMMISSIONER GILBERTSON said DHSS is including a fiscal note
that shows no savings, because the department doesn't anticipate
requiring any additional cost containment if the budget passes
in the form submitted by the Governor. He understood her
concern, but thought the department is in the best position to
engage in that type of policy decision-making. He thought those
decisions would be a burden for the Legislature. As they move
forward, his strategy is to maintain cost savings within the
program without going towards eligibility groups. He didn't
think that is necessary. He remarked:
We can bring about tremendous savings by moving
forward on a broad agenda to maximize federal
resources to work with our travel partners to see ways
we can capture a greater amount of federal revenues
for carrying out the trust responsibility the federal
government has for Alaska Native Medicaid
beneficiaries and working with the Denali Commission
to try and build up capacity within the tribal health
care system. Also, we can have tremendous savings by
looking at the way we provide services in doing case
management and looking at using preferred drugs that
stay away from eligibility populations. Naturally, if
funds are not appropriated to allow us to run the
Medicaid program even after these cost containment
measures are moved forward, we'll have to do
something....
SENATOR GUESS said she trusted that during any administration,
the department would try to do everything it can before it
removes people from the rolls or removes procedures, but he is
asking the legislature to hand over that decision-making
authority to the department. She questioned, "How would costs
and benefits be weighed in the department?"
She also wanted clarification on whether DHSS would determine
that individuals not receive a procedure or group of procedures
or groups of individuals.
MR. LABBE responded:
The Medicaid program structure provides for coverage
for groups of individuals that are either mandatory or
optional in categories of service rather than
individual procedures. For instance, we may not cover
physical therapy for, in this case, adults. Children
are mandatory for the services. I think one of the
things I was concerned about is if we had a large
budget reduction and we're starting to cut off all
these services, we're only cutting off services for
the adult population - senior, disabled adult. We're
not touching the children. At the same time, the
committee has been discussing reducing eligibility
levels for kids. It may make more sense to do a
balance and the way the list is constructed, you would
never get to the other discussion of eligibility
groups until you essentially have gone through all of
the services. So, you would eliminate wheel chairs and
prescription drugs for some of our more frail
population and may still be covering higher income
individual children, which is why I've not felt this
is an effective tool for a long time.
TAPE 03-14, SIDE A
MR. LABBE said they can make decisions on groups, broad
eligibility guidelines and on services, but the department
doesn't have the ability to make discrete decisions on one
individual's access to a single procedure.
SENATOR GUESS noted that the bill contains no requirement that
the department submit a report to the legislature yet it makes a
big change in policy in one year. She recommended that a report
to the legislature be required.
CHAIR DYSON thought that might go into the "Measures" section.
MR. ROBERT BRIGGS, staff attorney, Disability Law Center of
Alaska, Juneau, raised some important points. If the bill
passes, the department's exercise of discretion will still be
constrained by the Administrative Procedures Act and the
department must comply with federal mandates to provide services
that are sufficient in amount, duration, and scope to accomplish
the purposes of the Act. However, this bill raises potential
constitutional issues. The Alaska Supreme Court in the case of
State v. Fairbanks North Star Borough, 1987, found the issues of
delegation of legislative appropriation of authority and
separation of powers unconstitutional.
There is also the potential argument that section 3 of the bill
raises equal protection problems. It basically talks about how
cost containment measures will be implemented and appears to
grandfather-in the benefits of those people who were lucky
enough to have their benefits approved and in place before the
cost containment measures are implemented.
CHAIR DYSON asked if Mr. Briggs was suggesting that this
approach would be dubious if scrutinized by the court if the
department didn't do a fair job of looking after the interests
of people.
MR. BRIGGS said he just wanted to raise the question and hedged
that his research is dated and relates back to the pro rata
reductions bill.
CHAIR DYSON pointed out that this bill is different.
MR. BRIGGS agreed.
SENATOR GREEN moved to pass SB 109 from committee with
individual recommendations and the accompanying fiscal note.
SENATOR DAVIS objected.
The motion to move SB 109 from committee carried with SENATORS
GREEN, WILKEN and DYSON voting yea and SENATORS GUESS AND DAVIS
voting nay.
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