Legislature(2003 - 2004)
01/14/2004 01:31 PM Senate HES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 259-SENIORCARE
CHAIR FRED DYSON called the Senate Health, Education and Social
Services Standing Committee meeting to order at 1:31 p.m.
Present were Senators Wilken, Davis, Guess and Dyson. The first
order of business to come before the committee was SB 259.
MR. JOEL GILBERTSON, Commissioner, Department of Health and
Social Services, said SB 259 was a bill presented by the
Governor to establish the SeniorCare Drug Assistance Program for
the State of Alaska.
For a number of years seniors have been facing
difficult challenges in trying to afford prescription
drugs and the Medicare Program was established over 38
years ago. Yet, in those 38 years, it never covered
the mast majority of prescription drugs that seniors
needed. That changed last fall; Congress did act and
Congress did add a prescription drug benefit to
Medicare.... But, that benefit does not begin in full
until January 1, 2006. In the meantime, seniors will
continue to be faced with difficulty in affording
prescription drugs, vital medicines that are necessary
for them to maintain good health....
SENATOR LYDA GREEN arrived at 1:35 p.m.
COMMISSIONER GILBERTSON stated that SeniorCare was developed to
fill that gap. It is a three-step effort to make prescription
drugs both more affordable and more accessible for seniors. It
offers the choice of either cash assistance or a drug subsidy to
make prescription drugs directly more affordable. It also
includes the development and implementation of a preferred drug
list and makes it accessible to all Alaskan seniors in an
understandable form so they can see that some drugs serve the
same purpose, but have a varied price. Thirdly, the SeniorCare
program establishes a senior information office within the
department so seniors can see firsthand that they have one place
to go - one-stop shopping - and this can help them move through
the wide variety of programs offered by the Department of Health
and Social Services.
In FY03, the department provided almost $203 million worth of
programs directly to seniors in the state - from heating
assistance, energy, food, housing, assisted living, long-term
care and health care coverage.
COMMISSIONER GILBERTSON said SB 259 delivers the first part of
this state program, which is the direct subsidy or cash
assistance to seniors to help them afford prescription drug
coverage. When the Longevity Bonus was replaced with the needs-
based Alaska Senior Assistance Program last fall, his department
implemented that program. It provides $120 per month of cash
assistance to seniors below 135 percent of poverty level. This
program will continue and is in the governor's FY04 budget. The
SeniorCare program puts that into statute and establishes an
option for these seniors and new ones who qualify to opt for
prescription drug benefits instead of the money. Single seniors
below 135 percent of the poverty level have an annual income of
$15,135 and just under $20,500 for a couple. They would receive
a $1,600 annual prescription drug subsidy or a continuation of
the $120 cash assistance under the governor's SeniorCare
proposal. So, seniors between 135 percent and 150 percent of the
poverty level, (slightly less than $17,000 for a single
individual and a little over $23,000 for a couple), have access
to a $1,000 prescription drug subsidy. This program is bridge
assistance until the Medicare program begins in full in 2006.
COMMISSIONER GILBERTSON explained that the federal government is
also providing temporary assistance for low-income seniors in
the form of an annual subsidy of $600, which would interact with
the state's $1,600 subsidy for those below 135 percent of
poverty level. All seniors will have access to a Medicare
prescription drug discount card, which will provide negotiated
discounts of 10 - 25 percent of the drugs' cost. He showed the
committee a chart of how the two programs would work together
for qualifying seniors.
He emphasized that this is not an insurance program; it is a
drug subsidy. Over the counter drugs and vitamins are excluded
and generic drugs have a preference, although brand name drugs
can be specified by the provider as long as the need is
documented on the prescription, itself.
COMMISSIONER GILBERTSON concluded that the program is part of
the three-prong effort to make drugs more affordable.
CHAIR DYSON said, in reference to the governor's letter in which
he urges the Legislature to pass this legislation in January so
the benefits can begin in April, that he is reluctant to take
significant pieces of legislation and pass them on the first
day. He asked how quickly the Legislature needed to act in order
for him to proceed with his plans.
COMMISSIONER GILBERTSON replied that the need exists now.
Congress acknowledged that there is a need for a prescriptions
drug benefit in the fall. His goal is to have the bill up and
running on April 1 of this year; that is also when the federal
temporary assistance is targeted to begin. He would like to
begin the eligibility verification in March with applications
going out in February. A companion bill is also in the House.
CHAIR DYSON said the governor's press release implied that
SeniorCare was more than this component and asked if it was
going to create one-stop shopping for all of the programs that a
senior Alaskan might be able to access.
COMMISSIONER GILBERTSON replied that SeniorCare legislation is
about establishing the drug subsidy program, but outside of the
legislation, it would provide a clearinghouse for all the other
programs seniors are offered inside the department, like Adult
Public Assistance, the Alaska Senior Assistance Program, Food
Stamps Program, heating and energy assistance, Medicaid, home
and community based waivers, assisted living and more. He said
the department would be working with local Medicare-accepting
providers and making a clear list of all doctors who are
accepting new Medicare patients so that when a senior needs to
find one, they can.
CHAIR DYSON asked him if that program was up and running.
COMMISSIONER GILBERTSON replied that a contractor began
operating the senior information office in late December and
that will continue until the hiring process for the two full-
time employees that will be staffing the senior information
office is finalized.
CHAIR DYSON asked if the new reimbursement rates the feds are
offering induce more doctors to be willing to treat Medicare
patients.
COMMISSIONER GILBERTSON replied that anecdotally the rate is
providing greater access, but it's too early to tell for sure.
SENATOR GUESS complimented the governor for presenting this
legislation. She asked why 135 percent and 135 - 150 percent of
the poverty level were picked as the levels to use.
COMMISSIONER GILBERTSON replied that the 135 percent and below
is the same criteria used for the Senior Assistance Program
along with the same asset test requirements ($4,000 for an
individual and $6,000 for a couple). That is also the
demographic that is identified by the federal government in its
legislation for receiving bridge assistance. The 135 - 150
percent is an additional build out on top of that for
individuals who will not be receiving assistance at all from the
federal government until the full benefit begins in 2006.
SENATOR GUESS asked if they needed to worry that the 135 percent
of poverty level for this state is tied to some federal code on
page 2, line 4.
COMMISSIONER GILBERTSON responded that this is how other
programs, like Denali Kid Care, for instance, are handled. The
federal poverty level is established by the federal government
and adjusted in the base formula by 25 percent in Alaska to
reflect the cost of living.
1:46 p.m.
SENATOR GUESS asked him to explain the interaction between
Medicaid and Medicare. Does the federal government say that you
have to have Medicaid before you can have Medicare?
COMMISSIONER GILBERTSON explained that seniors on Medicaid are
already receiving a prescription drug benefit through their
Medicaid eligibility and they would receive the cash assistance
in lieu of the drug benefit. Medicaid has very comprehensive
drug benefits.
SENATOR GUESS asked how the Indian Health Service fit into the
picture.
COMMISSIOER GILBERTSON answered that this program is based on
out-of-pocket costs. Some individuals receive services
(federally funded programs) from facilities where they incur no
out-of-pocket costs. This program would not compensate the
facility or the federal government for that service.
SENATOR GUESS asked him to explain how the credit works.
COMMISSIONER GILBERTSON answered that some details would be
handled through regulation, but they are currently looking at
the delivery method, itself. The federal drug discount card is
going to be available in the spring and they are looking to see
if the credit can in some way be embedded in the discount card
so seniors don't have to have more than one card. Another option
is to see if the state can piggyback its subsidy directly onto
the federal subsidy and run it through one process. The benefit
is not reliant upon the delivery mechanism being finalized and
can begin immediately.
SENATOR GUESS asked if the goal of the administration is not to
have seniors be reimbursed, but have the credit happen at the
point of sale.
COMMISSIONER GILBERTSON replied that their goal, which depends
on other partners agreeing to it, is to have an electronic debit
card rather than having people sending in receipts.
SENATOR WILKEN asked what the residency qualifications were
specifically on page 2, line 2 and page 4, line 28.
COMMISSIONER GILBERTSON responded that there is no waiting
period and page 3, line 27, clarifies residency for people who
have to leave the state, sometimes for medical treatment or a
business trip and absences less than 30 days and not have their
eligibility challenged.
SENATOR WILKEN asked further on page 4, line 1, who defines the
special circumstances if you leave the state for more than 30
days.
COMMISSIONER GILBERTSON replied that the department would.
SENATOR WILKEN asked if other departments had that discretion,
because it could set up a system over time by which they would
simply grant extensions.
COMMISSIONER GILBERTSON replied that the intent of this section
was to give the ability to individuals to leave the state and
still have access to programs.
SENATOR WILKEN asked him to explain the funding source of
federal receipts in fiscal note 2.
COMMISSIONER GILBERTSON replied that Alaska was the recipient of
fiscal relief as a part of the recently passed federal
assistance and tax reduction plan by President Bush. It consists
of two deposits to the state. The last of the payments under
that legislation would be used for the bulk of the cost for
FY05. They can't predict that the program will be extended and
that's why the program for FY06 is funded from the general fund.
SENATOR WILKEN asked, regarding fiscal note 3, if an individual
in a Pioneer Home have special circumstances.
The commissioner answered that the legislation, itself, excludes
eligibility for individuals who are in institutional settings,
because nursing homes, for instance, already have access to
prescription drug coverage through the facility. The program
would be compensating facilities and not individuals under that
scenario, which wasn't in the spirit of the program. The
Pioneer's Home System has a series of sliding scales and if they
were to provide assistance to the individuals, their rent would
go up. They instead provide Pioneer Homes with prescription drug
program coverage and discounted medications.
SENATOR WILKEN asked why the Pioneer Home has a fiscal note if
the program doesn't apply to them.
COMMISSIONER GILBERTSON replied that the eligibility
determinations for the drugs and the cash assistance are being
done through the Pioneer Home management, because that is where
the Longevity Program was formerly located and the
infrastructure was in place.
CHAIR DYSON asked if irrevocable election happened on an annual
basis or once in a lifetime (page 2, line 23).
COMMISSIONER GILBERTSON replied that the legislation requires
individuals upon their application to make an annual election.
This refers to individuals below 135 percent poverty where they
have the choice between prescription drugs and cash assistance.
The reason is that they create the strange incentive where
individuals could exhaust their benefits under one program half
way through the year and switch to the other program and receive
benefits for the remainder of the year.
2:00 p.m.
SENATOR GUESS asked if there was a reason they excluded smoking
cessation products on page 3, line 13.
COMMISSIONER GILBERTSON said most of the exclusions are
consistently excluded from most public programs. They also
looked at what was the intent of the program which was providing
drug assistance to seniors. They wanted to make sure the
resources were going towards the drugs seniors have the
prescriptions for, but can't afford to fill.
SENATOR GUESS asked if she was correct in that he assumes
approximately 600 out of the 8,100 seniors who are eligible will
choose the prescriptions over the cash.
COMMISSIONER GILBERTSON answered that their assumption is for
the last quarter of FY04, they would serve 7,550 seniors under
the cash benefits and 600 seniors under the drug benefit for
those below 135 percent of poverty level and 2,120 seniors for
the drug benefit between 135 and 150 - for a total of 10,500
seniors served. Of those, roughly 46.6 percent didn't receive
the Longevity Bonus indicating that they are tapping a number of
people who were not served through the Longevity Bonus into a
needs-based program.
SENATOR GUESS thanked him for implementing the Senior Assistance
Program after the Longevity Bonus was gone. Since most people
under this program would be choosing the cash option and the
program runs only to 2006, she wanted to know why the cash
assistance part of the program doesn't keep going. "...I got
confused about why we're cutting off cash assistance for seniors
in four years when that cash maybe didn't have to go towards
prescriptions. It went towards food or rent."
COMMISSIONER GILBERTSON replied that the department would
continue after this program to believe in cash assistance for
seniors.
"We currently run the Adult Public Assistance Program
in the State of Alaska, which is a 100 percent
generally funded program that provides direct cash
assistance to low income seniors in the state. We are
providing the Alaska Senior Assistance Program now as
an additional supplement on top of that. We have a
vibrant collection of social service programs, largely
administered through my department for seniors in the
state. I think it's one of the richest programs for
seniors across the nation.... Well over $200 million
of services directly administered from that building
across the street to seniors across the state in a
variety of areas from heating to housing to food to
public assistance to Medicaid services...services that
are costing more on an annual basis...The Medicaid
Program has grown by $100 million in this state each
year since 1999 and we're projecting continued growth
going into the future. That's requiring an additional
general fund investment. The Governor's key philosophy
is that first and foremost our resources have to be
targeting toward those individuals who are the
neediest. We will continue to strengthen first the
Medicaid and safety net services such as Adult Public
Assistance, which sometimes gets lost in the
conversation. We're providing cash assistance to
almost 5,000 seniors in the state right now at $20
million per year for low-income senior. We have to
continue funding that program which is growing at a
very high rate.
SENATOR GUESS said she was still confused. If the purpose of
this program isn't cash assistance, why is he providing cash
assistance to seniors who have enough support and may not use it
on prescription drugs?
If the goal is prescription drugs, why aren't we
spending all the funding on prescription drugs? If the
goal is cash assistance, why are we setting up a
similar situation that we just went through [by
stopping the Longevity Bonus]?
She didn't want seniors to think they would start to get $120
for the rest of their lives and then be disappointed.
COMMISSIONER GILBERTSON responded that this is a prescription
drug program and the reason they continue the cash assistance is
because this is a needs based program and seniors are going to
be on it until the Medicare drug benefit becomes available. The
governor felt that seniors, at least, deserved a choice.
CHAIR DYSON said he wanted to get to the public testimony and
asked Marie Darlin to testify.
2:12 p.m.
MS. MARIE DARLIN, AARP, said that 2003 was a difficult year for
many older Alaskans, especially those over 72, as the Alaska
Longevity Bonus was part of their retirement budgets and it was
stopped. As some people get older, they require more
prescription drugs and those costs have been increasing at rates
higher than normal inflation.
Although the Senior Assistance Program did not replace
the Longevity Bonus, it does help over 7,000 of our
lowest income older Alaskans determine how to pay
their day-to-day costs, especially for prescription
drugs.
MS. DARLIN said the Medicare prescription drug bill that
Congress just passed would help an estimated 23,000 older
Alaskans who are below 150 percent of the federal poverty level
when it fully takes effect in 2006. Until then, the proposed
Senior Care Program will provide some financial relief. "Any
financial assistance to help cope with escalating drug costs
will be welcome...."
She said that AARP approves the legislation as presented by the
governor's office.
2:16 p.m.
TAPE 04-1, SIDE B
MS. DARLIN continued saying that AARP supports the Senior Care
preferred drug list (PDL). Her final comment was on how the
senior programs are going to be paid for. They want to be
certain they are not supporting a new benefit for older persons
that will result in a decrease in funding for a neo-natal
program somewhere and that, "We are all in this together. We are
all Alaskans no matter what our age..."
MR. ED ZASTROW, AARP, supported Ms. Darlin's comments and SB
259.
MS. SARA JACKSON, St. Francis House, Catholic Social Services,
said they run the largest food pantry in Alaska. For the last
six months they have been operating a USDA food program that
uses 130 percent of the poverty level for qualification. In
December they fed 4,693 people - 188 were 65 years and older.
They are among the most desperately poor. She supported SB 259
and thanked the governor for introducing it.
CHAIR DYSON asked what was the will of the committee and did
they want to pass it out now.
SENATOR GREEN moved to pass SB 259 from committee with
individual recommendations with the understanding that if anyone
had any additional concerns, they could be addressed in Senate
Finance, since three of the committee members were on the
Finance Committee also.
CHAIR DYSON added, "If we choose to do that, I will certainly
commit to our two members who aren't a member of that, that any
questions or objections or amendments or whatever, I'll work
hard to get them addressed."
There were no objections and SB 259 moved from committee with
individual recommendations.
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