Legislature(2017 - 2018)Anch LIO Lg Conf Rm

10/09/2018 10:00 AM House LEGISLATIVE BUDGET & AUDIT

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Audio Topic
10:00:49 AM Start
10:02:19 AM Approval of the Agenda
10:02:40 AM Approval of Minutes
10:03:31 AM Approval of Rpl(s)
10:14:14 AM Approval of Special Audit Request
10:47:54 AM Executive Session
11:34:02 AM Other Committee Business
11:35:59 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ RPL - 10-9-5001 - DNR, Exxon Valdez Oil Spill TELECONFERENCED
Special Audit Requests
a. DHSS - Medicaid Eligibility & other issues
Final & Preliminary Audit Reports
Final Audits Release
a. DCCED, Board of Marine Pilots (Sunset)
Preliminary Audits Release
a. DCCED, Board of Barbers & Hairdressers
b. DCCED, Board of Dental Examiners (Sunset)
c. DCCED, Board of Nursing (Sunset)
d. DHSS, Suicide Prevention Council (Sunset)
e. DNR, Matanuska Maid Property Disposal
f. DOA, Statewide Single Audit, FY 15 - Reissue
Other Committee Business
                    ALASKA STATE LEGISLATURE                                                                                  
             LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                           
                        October 9, 2018                                                                                         
                           10:00 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Bert Stedman, Chair                                                                                                     
Senator Anna MacKinnon                                                                                                          
Senator Cathy Giessel                                                                                                           
Senator Click Bishop                                                                                                            
Senator Natasha von Imhof (alternate)                                                                                           
Representative Andy Josephson, Vice Chair                                                                                       
Representative Paul Seaton                                                                                                      
Representative Ivy Spohnholz                                                                                                    
Representative Jennifer Johnston                                                                                                
Representative Dan Ortiz (alternate)(via teleconference)                                                                        
MEMBERS ABSENT                                                                                                                
Senator Lyman Hoffman                                                                                                           
Representative Scott Kawasaki                                                                                                   
COMMITTEE CALENDAR                                                                                                            
APPROVAL OF THE AGENDA                                                                                                          
APPROVAL OF MINUTES                                                                                                             
APPROVAL OF RPL(S)                                                                                                              
APPROVAL OF SPECIAL AUDIT REQUEST                                                                                               
EXECUTIVE SESSION                                                                                                               
OTHER COMMITTEE BUSINESS                                                                                                        
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
DAVID TEAL, Director                                                                                                            
Legislative Finance Division                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Spoke to RPL 10-9-5001, DNR, Exxon Valdez                                                                
Oil Spill (EVOS) Outreach.                                                                                                      
FABIENNE PETER-CONTESSE, Director                                                                                               
Central Office                                                                                                                  
Division of Support Services                                                                                                    
Department of Natural Resources (DNR)                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  during discussion of RPL                                                             
10-9-5001, DNR, EVOS Outreach.                                                                                                  
RANDY RUARO, Staff                                                                                                              
Senator Bert Stedman                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Offered information  regarding approval of a                                                             
special   audit  request   regarding  Medicaid   eligibility  and                                                               
KRIS CURTIS, Legislative Auditor                                                                                                
Legislative Audit Division                                                                                                      
Legislative Agencies and Offices                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided  information during  discussion of                                                             
the  special audit  request  regarding  Medicaid eligibility  and                                                               
ACTION NARRATIVE                                                                                                              
10:00:49 AM                                                                                                                   
CHAIR  BERT  STEDMAN  called the  Legislative  Budget  and  Audit                                                             
Committee  meeting  to  order  at  10:00  a.m.    Representatives                                                               
Josephson,    Seaton,    Spohnholz,     Johnston,    and    Ortiz                                                               
(alternate)(via    teleconference),    and   Senators    Stedman,                                                               
MacKinnon,  Bishop,  Giessel,  and  Von  Imhof  (alternate)  were                                                               
present at the call to order.                                                                                                   
^APPROVAL OF THE AGENDA                                                                                                         
                     APPROVAL OF THE AGENDA                                                                                 
10:02:19 AM                                                                                                                   
CHAIR STEDMAN  announced that the  first order of  business would                                                               
be the approval of the agenda.                                                                                                  
10:02:26 AM                                                                                                                   
REPRESENTATIVE JOSEPHSON  moved that  the Legislative  Budget and                                                               
Audit Committee  approve the agenda.   There being  no objection,                                                               
the agenda was approved.                                                                                                        
^APPROVAL OF MINUTES                                                                                                            
                      APPROVAL OF MINUTES                                                                                   
10:02:40 AM                                                                                                                   
CHAIR STEDMAN announced that the  next order of business would be                                                               
the approval of minutes.                                                                                                        
10:02:45 AM                                                                                                                   
REPRESENTATIVE JOSEPHSON  moved that  the Legislative  Budget and                                                               
Audit  Committee  approve  the  minutes of  the  July  12,  2018,                                                               
meeting as presented.   There being no objection,  the minutes of                                                               
the July 12, 2018, meeting were approved.                                                                                       
^APPROVAL OF RPL(s)                                                                                                             
                       APPROVAL OF RPL(s)                                                                                   
10:03:31 AM                                                                                                                   
CHAIR STEDMAN announced that the  next order of business would be                                                               
the approval of a revised program legislative (RPL).                                                                            
10:03:43 AM                                                                                                                   
REPRESENTATIVE JOSEPHSON  moved that  the Legislative  Budget and                                                               
Audit  Committee approve  RPL  10-9-5001,  Department of  Natural                                                               
Resources  (DNR),  Exxon Valdez  Oil  Spill  (EVOS) Outreach,  as                                                               
CHAIR STEDMAN objected for the purpose of discussion.                                                                           
10:04:08 AM                                                                                                                   
The committee took an at-ease from 10:04 a.m. to 10:05 a.m.                                                                     
10:05:13 AM                                                                                                                   
DAVID TEAL,  Director, Legislative Finance Division,  stated that                                                               
RPL  10-9-5001,  DNR, EVOS  Outreach  is  a  request by  DNR  for                                                               
authorization to spend  $140,712, provided by the  EVOS Trust, so                                                               
that staff  and the  parks management  and access  allocation can                                                               
develop  an outreach  program for  the  thirtieth anniversary  of                                                               
EVOS.   He stated that this  would be one-time funding,  it would                                                               
have no  impact on future  budgets, and existing  positions would                                                               
perform  the work.   Mr.  Teal  said Legislative  Finance has  no                                                               
issues with the RPL  but notes this is a new  fund source for the                                                               
parks   allocation,  and   sending  money   through  the   Alaska                                                               
Department  of Fish  & Game  (ADF&G) -  the typical  recipient of                                                               
EVOS  money -  was "possible  but not  necessary."   He said  DNR                                                               
responded to the comment by saying  that setting up a request for                                                               
application  (RFA)   would  add   administrative  work   to  both                                                               
agencies, with no improvement in  results, a statement with which                                                               
the   Legislative  Finance   Division  agreed.     He   said  the                                                               
Legislative Finance  Division has  noted that  Legislative Budget                                                               
and  Audit Committee  members may  wish to  ask the  agency about                                                               
money  freed by  using the  trust money  to replace  DNR's normal                                                               
funding sources.   He said the agency responded to  that issue to                                                               
the   satisfaction   of   the   Legislative   Finance   Division.                                                               
Notwithstanding  that,  he  offered his  understanding  that  the                                                               
director of [the  Division of Support Services],  within DNR, was                                                               
available on line to answer questions.                                                                                          
10:06:58 AM                                                                                                                   
SENATOR MACKINNON  asked what  would be  done with  the displaced                                                               
10:07:23 AM                                                                                                                   
FABIENNE  PETER-CONTESSE, Director,  Central Office,  Division of                                                               
Support   Services,  Department   of  Natural   Resources  (DNR),                                                               
answered as follows:                                                                                                            
     We have four  positions that are working  in that unit;                                                                    
     two will  be partially funded  by the Exxon  Valdez Oil                                                                    
     Spill Funding.  ... Two  of the positions are currently                                                                    
     100  percent   soft  funded,  so  they   have  [capital                                                                    
     improvement   project]   (CIP)  receipts,   interagency                                                                    
     receipts,  and  statutory  designated  program  receipt                                                                    
     funding.    That's all  soft  funding,  so ...  we  are                                                                    
     generally  looking   for  money  for   those  positions                                                                    
     throughout the year.  That may be realizable revenue.                                                                      
     The  other  two positions:    One  is 75  percent  soft                                                                    
     funded,  and  the  other 25  percent  is  general  fund                                                                    
     program  receipts in  the parks  components.   And  the                                                                    
     fourth  position is  60 percent  soft  funded [and]  40                                                                    
     percent general  fund program receipts.   So,  there is                                                                    
     not necessarily  actual money for those  positions that                                                                    
     will  be  displaced.   As  I  mentioned,  we're  always                                                                    
     looking  for  soft  funding  to  fund  those  positions                                                                    
     throughout the year.                                                                                                       
10:09:14 AM                                                                                                                   
REPRESENTATIVE   JOSEPHSON   restated   the   motion   that   the                                                               
Legislative  Budget and  Audit Committee  approve RPL  10-9-5001,                                                               
Department  of Natural  Resources (DNR),  Exxon Valdez  Oil Spill                                                               
Outreach, as presented.                                                                                                         
10:09:40 AM                                                                                                                   
SENATOR  VON  IMHOF  objected.   She  indicated  that  through  a                                                               
different  position  she  holds,  she learned  that  there  is  a                                                               
proposal that the  EVOS Fund be absorbed by  the Alaska Community                                                               
Foundation.  She  said she would like to  verify that information                                                               
and find  out how far along  the process is before  the committee                                                               
approves the  RPL, because  [the proposal]  could change  how the                                                               
fund is being managed and how grants are processed.                                                                             
10:10:41 AM                                                                                                                   
MS. PETER-CONTESSE said she was not  aware of the EVOS Trust fund                                                               
being absorbed by any foundation.   She said the funding has been                                                               
approved by  the trustee  council and via  court order  69, which                                                               
has been weighed in on by DOL and  is "in line with how the Exxon                                                               
Valdez Oil  Spill Trust  fund should be  spent."   She reiterated                                                               
that she  is not  aware of any  other change in  how the  fund is                                                               
10:11:33 AM                                                                                                                   
SENATOR MACKINNON  recollected that  during the  last legislative                                                               
session's  capital budget  process,  the  legislature "removed  a                                                               
request for use  of these funds, because there was  an issue with                                                               
whether people were competing fairly  for the funds."  She added,                                                               
"Those that  are in control  of these funds have  suggested these                                                               
are the funds that we've denied before."                                                                                        
10:12:05 AM                                                                                                                   
CHAIR  STEDMAN asked  Senator  Von Imhof  if  she maintained  her                                                               
10:12:11 AM                                                                                                                   
SENATOR VON IMHOF answered no.                                                                                                  
[The previous objection by Chair  Stedman for discussion purposes                                                               
was treated as withdrawn.]                                                                                                      
CHAIR STEDMAN  asked Senator  Von Imhof to  look at  her concerns                                                               
and get back to him regarding them.                                                                                             
10:12:37 AM                                                                                                                   
SENATOR  MACKINNON  said  she  would  not  be  returning  to  the                                                               
legislature  in  January;  therefore,  she  encouraged  committee                                                               
members to consider  how EVOS Trust fund money is  being spent to                                                               
benefit Alaska.   She  explained that although  some of  the fund                                                               
has been used  to restore damaged property in  coastal areas that                                                               
were impacted by  EVOS, for example, some has been  spent to fund                                                               
federal  jobs that  are  blocking development  in  some areas  of                                                               
Alaska.   She acknowledged  the committee  may want  to cooperate                                                               
and  collaborate regarding  Federal  Emergency Management  Agency                                                               
(FEMA) issues;  however, she has  observed "a  greater dependency                                                               
on moving  the funds  from the  State of  Alaska to  fund federal                                                               
10:13:54 AM                                                                                                                   
CHAIR STEDMAN said that is a  good point that should be passed on                                                               
to a future chair.                                                                                                              
10:14:06 AM                                                                                                                   
CHAIR STEDMAN  asked if  there was any  further objection  to the                                                               
motion  to approve  RPL 10-9-5001,  DNR, Exxon  Valdez Oil  Spill                                                               
Outreach as presented.  There being none, it was so ordered.                                                                    
^APPROVAL OF SPECIAL AUDIT REQUEST                                                                                              
               APPROVAL OF SPECIAL AUDIT REQUEST                                                                            
10:14:14 AM                                                                                                                   
CHAIR STEDMAN announced that the  next order of business would be                                                               
the approval  of a special  audit request -  Medicaid Eligibility                                                               
and Recertification.                                                                                                            
10:14:28 AM                                                                                                                   
RANDY   RUARO,  Staff,   Senator  Bert   Stedman,  Alaska   State                                                               
Legislature, addressed  the special audit request,  which he said                                                               
was dated October  3, 2018, and developed with  the assistance of                                                               
the  auditor, with  subject matter  relating  to eligibility  and                                                               
recertification  of  individuals   for  Medicaid  and  Children's                                                               
Health Insurance Program  (CHIP) benefits.  He  related that this                                                               
is  a large  program with  a  great number  of beneficiaries  and                                                               
enrollees.   He stated,  "Alaska also has  a very  high migratory                                                               
population, so we have ...  tens of thousands of residents moving                                                               
in and  tens of thousands of  people coming in every  year, which                                                               
is important to track and  make sure the program's being provided                                                               
to those ... who are truly eligible."                                                                                           
MR. RUARO advised that the purpose  of the audit is to delve into                                                               
how the department  is doing in terms  of determining eligibility                                                               
and  recertification to  check whether  the department's  actions                                                               
are timely and  proper documentation is being done.   He said the                                                               
fifth bullet  point in the audit  extends to best practices.   He                                                               
said   he  learned   from  those   with  expertise   in  Medicaid                                                               
eligibility  that  there  is   a  significant  disparity  between                                                               
"states that do a very good  job in terms of Medicaid eligibility                                                               
and states  that have larger  error rates and maybe  aren't using                                                               
the best practices."  He suggested  the audit would look not only                                                               
at the  numbers related  to how  agencies are  doing but  also at                                                               
what  best practices  are working  to  keep error  rates down  in                                                               
other states and how DHSS could  use that information.  The audit                                                               
serves  the  legislatures  oversight  and  should,  in  the  end,                                                               
provide  helpful information  for the  department to  comply with                                                               
the  federal audit.   He  said errors  found through  the federal                                                               
audit can result in penalties levied against the state program.                                                                 
10:17:25 AM                                                                                                                   
REPRESENTATIVE   SEATON  offered   his   understanding  that   20                                                               
positions were added  in the last year to deal  with backlog.  He                                                               
asked  if the  audit would  reflect  prior to  and following  the                                                               
addition of those positions.                                                                                                    
MR. RUARO  responded that he thinks  that would be a  good way to                                                               
proceed with the  audit, and he said the language  of the request                                                               
is broad enough to do so.                                                                                                       
10:18:35 AM                                                                                                                   
KRIS  CURTIS, Legislative  Auditor,  Legislative Audit  Division,                                                               
Legislative Agencies and Offices, stated  her intent to "start in                                                               
the spring  of next year."   She would be looking  at fiscal year                                                               
2019 (FY 19).  She said, "I  would like to coordinate it with our                                                               
federal compliance  requirement and  testing that program  to get                                                               
the most maximum benefit from the  audit."  She said the division                                                               
would be  looking at  FY 19  perhaps going  back to  FY 18.   She                                                               
stated that the intent would not  be to look at whether the added                                                               
positions affected the error rate.   She said she is not sure the                                                               
division could ever  really identify that as a  cause and effect.                                                               
Instead,  the division  would be  looking at  sampling and  would                                                               
contract out  that sample work to  an expert.  It  would also ask                                                               
the expert  to look at  best practices of  well-performing states                                                               
and  apply those  to the  State of  Alaska.   Further, the  audit                                                               
would   come  up   with  error   rates   regarding  funds   spent                                                               
inappropriately  or  inaccurately  on  ineligible  recipients  to                                                               
quantify the impact  to the state.  She said  unless she received                                                               
specific  direction,  she  would  not  focus  on  the  impact  of                                                               
specific position control numbers (PCNs) to the error rate.                                                                     
REPRESENTATIVE SEATON  said he thinks  it would be  important for                                                               
the committee  to know whether  the extra positions  created were                                                               
effective in "timeliness compliance."                                                                                           
MS.  CURTIS said  she  thinks the  audit  would indicate  whether                                                               
there has been improvement in  terms of addressing the backlog of                                                               
work,  and  the  division  would be  doing  inquiries  and  "know                                                               
whether it's  making a  difference," but she  does not  think the                                                               
division would have enough time  to quantify the difference.  She                                                               
said the audit report certainly  would include whether or not the                                                               
department is moving in the right direction.                                                                                    
10:23:05 AM                                                                                                                   
REPRESENTATIVE JOHNSTON remarked that  best practices would be in                                                               
the audit.   She said  Code for America  has chosen the  State of                                                               
Alaska  as one  of  its five  pilot states  for  benefits and  is                                                               
"currently working here with the  department on this."  She asked                                                               
Ms. Curtis if  the Legislative Audit Division  would be assessing                                                               
the value that [Code for  America] is bringing to the department,                                                               
as  well   as  assessing   "the  department's   coordination  and                                                               
participation  with Code  for America"  to determine  whether the                                                               
state  is "getting  the best  of  what we  can out  of the  whole                                                               
process."   In response  to Ms. Curtis,  she explained  that Code                                                               
for America  has "changed [the]  application process  from 'this'                                                               
to an iPhone."   She added, "In doing so,  they've also increased                                                               
the accountability,  the efficiency,  and [the]  effectiveness of                                                               
the  whole program."   She  indicated  that she  was involved  in                                                               
bringing [Code  for America] to Alaska.   She said she  wanted to                                                               
raise awareness of this as  the auditor considers best practices,                                                               
and she  wants "to  make sure  that ...  the division  is working                                                               
well in being part of this opportunity."                                                                                        
10:25:23 AM                                                                                                                   
REPRESENTATIVE  SPOHNHOLZ  said  she knows  that  recommendations                                                               
come  out of  an audit.   Nevertheless,  she said  she wanted  to                                                               
state  the  obvious  that  there are  challenges  ahead  and  the                                                               
committee  looks  to  the recommendations  from  the  Legislative                                                               
Audit Division  as to  whether objectives are  not being  met and                                                               
what can be done about that.                                                                                                    
10:26:21 AM                                                                                                                   
SENATOR MACKINNON  said she  supports the  request for  an audit,                                                               
but  she  has concerns.    She  said  DHSS  has not  always  been                                                               
cooperative  in   allowing  auditors  access  to   information  -                                                               
sometimes  that  has  been  because   a  change  in  systems  was                                                               
occurring and  "it was difficult for  them to react."   She asked                                                               
Ms. Curtis  if she thinks  the division will get  the cooperation                                                               
it  needs in  order to  "appropriately  look at  the issues  that                                                               
we're trying to quantify."                                                                                                      
10:27:11 AM                                                                                                                   
MS. CURTIS answered that she  expects 100 percent compliance from                                                               
the  department.   She said  the division  is currently  auditing                                                               
Medicaid and  CHIP and all  the other major federal  programs for                                                               
FY 18, and the division has had no issues with DHSS.                                                                            
SENATOR  MACKINNON asked  if  DHSS was  the  department that  was                                                               
responsible for the Legislative Audit  Division not being able to                                                               
report to the federal government on time last year.                                                                             
MS. CURTIS responded  that issues faced last year had  much to do                                                               
with outside auditors.                                                                                                          
SENATOR MACKINNON asked, "Are we certified?"                                                                                    
MS. CURTIS  said she has  been told that  the State of  Alaska is                                                               
certified,   although   she  does   not   know   if  the   actual                                                               
documentation has  yet been received.   She suggested that  is an                                                               
excellent question for the department.                                                                                          
SENATOR MACKINNON said the committee  has been told before by the                                                               
department  that  it  was  in  compliance  and  waiting  for  the                                                               
paperwork, only to then receive a  list of five to fifteen errors                                                               
pending.  She said there is  a 5-10 percent rebate that the state                                                               
is looking  for as  it does the  Medicaid expansion,  "with those                                                               
numbers  of having  100  percent coverage  from  those who  might                                                               
access ...  from our  tribal communities."   She  said that  is a                                                               
dollar amount that the committee  should be watching for which is                                                               
in  the millions  -  "a small  rebate for  the  efforts that  the                                                               
governor and  this administration put forward  in expanding those                                                               
services out."  She concluded,  "There's a rebate that you should                                                               
be looking for  in the millions of dollars if  they are, in fact,                                                               
complying, and it  was a request that they had  to make for [the]                                                               
standing of the system."                                                                                                        
10:29:57 AM                                                                                                                   
CHAIR STEDMAN suggested the committee  could send a formal letter                                                               
to [DHSS] so  it would get a  formal response.  He  said both the                                                               
House and Senate Finance Committees would want that information.                                                                
SENATOR MACKINNON  proffered, "Part  of the  problem is  that the                                                               
legislature - from the department's  position - short-funded them                                                               
$50 million."   She  expressed concern that  some members  in the                                                               
Senate expected  the department  to reduce  its spending  by that                                                               
amount.   She said  she has seen  something from  the Legislative                                                               
Finance Division  regarding the  shortfalls that  the legislature                                                               
will face based  on the administration.  She  urged Chair Stedman                                                               
to  send the  letter.   She offered  her understanding  that [the                                                               
committee]  had  been  waiting  three   years,  not  four.    She                                                               
acknowledged  there  are  challenges.     She  talked  about  the                                                               
challenges  of keeping  up with  information technology  (IT) and                                                               
switching systems.   She indicated that  it is "a hidden  cost to                                                               
everything we do."                                                                                                              
10:31:52 AM                                                                                                                   
SENATOR VON  IMHOF stated that  with Medicaid expansion  of 2015,                                                               
followed by a 2016-2017 economic  recession, the role of Medicaid                                                               
expanded  to  over  220,000 people,  and  the  backlog  worsened;                                                               
therefore, she  opined it  is important  to address  the backlog.                                                               
She pointed out that there are two  types of audits.  There is an                                                               
audit in arrears to determine what  has been going on in 2018 and                                                               
in  the past,  and there  are "audits  potentially that  can move                                                               
forward."    She  explained  that  Alaska is  not  alone  in  its                                                               
Medicaid  eligibility  backlog.    She said  the  Foundation  for                                                               
Government  Accountability  developed  draft  legislation  a  few                                                               
years ago  related to eligibility  verification called  "the Hope                                                               
Act."   The States  of Oklahoma,  Mississippi, and  Missouri have                                                               
passed legislation  under which they hire  third-party vendors to                                                               
help clean up their Medicaid  eligibility backlog; they negotiate                                                               
"pay  for  performance"  contracts.     The  third-party  vendors                                                               
process  all  files, and,  during  the  process, they  audit  the                                                               
files, ensure they  are complete, and then hand them  back to the                                                               
state for  final approval.   Senator Von  Imhof said  this allows                                                               
the state to  focus on offering services  to Medicaid recipients.                                                               
She  said other  states have  reported tens  of millions,  if not                                                               
hundreds of millions, in savings.                                                                                               
SENATOR VON  IMHOF questioned whether 20  employees were actually                                                               
added in  the area of Medicaid  eligibility.  She said  she knows                                                               
20  employees were  added to  the Office  of Children's  Services                                                               
(OCS) case  management.  She  said she had  the list at  hand and                                                               
could provide that information in  a few minutes.  She questioned                                                               
if  it made  sense to  do two  audits, one  audit in  arrears and                                                               
another audit looking  forward in the event  that the legislature                                                               
wants  to look  Medicaid eligibility.   She  asked, "Would  we be                                                               
killing two birds with one  stone by doing a moving-forward audit                                                               
instead of an in arrears audit or doing both for that matter?"                                                                  
10:35:01 AM                                                                                                                   
CHAIR  STEDMAN opined  that the  in arrears  audit would  be more                                                               
applicable.   He mentioned Senator Von  Imhoff's having expressed                                                               
that  the issue  may  be  ripe for  discussion  in  front of  the                                                               
legislature,   in  terms   of   possible   statute  changes   and                                                               
restructuring and "to work with  the audit process and figure the                                                               
audit outcome."  He continued:                                                                                                  
     I mean, when  there's legislation that winds  up with a                                                                    
     particular audit  problem, ...  the probability  of the                                                                    
     legislation   going  through   the  system   builds  up                                                                    
     substantially.   So,  ... my  recommendation  is we  go                                                                    
     down the  pathway of dealing  with this audit;  we have                                                                    
     discussion  of  a  potential  structuring  and  try  to                                                                    
     coincide the  analytical work with  the outcome  of the                                                                    
     audit, because  it's going  to take  some time  for the                                                                    
     audit and take some time  to actually do the bill work,                                                                    
     so  we have  ... a  higher  likelihood that  we have  a                                                                    
     successful outcome, whatever that outcome is.                                                                              
MS.  CURTIS said  she thinks  one of  the potential  downfalls of                                                               
moving forward with an audit in  arrears is that "people may want                                                               
to just stop and simply wait  for the audit results before moving                                                               
forward,  thereby  delaying  action   on  this  very  significant                                                               
backlog problem," which would result  in people continuing to not                                                               
be  eligible for  Medicaid and  the  state paying  for those  who                                                               
should not  be eligible.  Waiting  for the audit to  finish could                                                               
potentially  cause  a delay  of  a  year  or more.    Conversely,                                                               
choosing a  forward-looking audit and using  a third-party vendor                                                               
would  lessen the  chance of  the argument  stating, "We  need to                                                               
address  this sooner  rather than  later,  and this  is our  best                                                               
CHAIR STEDMAN opined that "we  should move forward with the audit                                                               
and then continue  this discussion on how we're going  to come up                                                               
with a  solution."  He  said it  is difficult to  get legislation                                                               
through the system; therefore, the  more the problem and solution                                                               
are lined up,  the higher the probability is in  coming up with a                                                               
solution rather than just holding  "internal discussion that goes                                                               
nowhere in the legislature."                                                                                                    
10:37:26 AM                                                                                                                   
SENATOR MACKINNON  offered her understanding  that two  years ago                                                               
legislation was  passed which directed  the department to  hire a                                                               
contractor "to  do exactly  what Senator  Von Imhoff  is saying."                                                               
She continued:                                                                                                                  
     If we're going to write  a letter to the department, we                                                                    
     should ask  them the status  on that, because  ... [an]                                                                    
     inquiry during last session  [revealed that] they still                                                                    
     had not brought  on that contractor and  still were not                                                                    
     doing what the legislature had directed them to do.                                                                        
SENATOR MACKINNON  said she  had heard  the name  Maximus [Health                                                               
Care], and  she cautioned that hiring  outside contractors "looks                                                               
really  nice  up front,"  and  contractors  tell the  state  that                                                               
hiring  will  result in  savings,  "and  then  you look  at  what                                                               
happened when we  inserted something like that  several years ago                                                               
in  the   permanent  fund."     She   said  the   Permanent  Fund                                                               
[Corporation] has  been doing  a good job  managing the  fund and                                                               
looking for fraud,  "and so, the money that we  invested with the                                                               
contractor  did not  reap  the  benefits that  were  sold to  the                                                               
legislature in putting in that  contractor."  She said paying for                                                               
performance,  as mentioned  by  Senator Von  Imhoff,  would be  a                                                               
different tack than the legislature  has taken in previous years.                                                               
She  recommended  looking  at  the budget  from  two  years  ago,                                                               
because  the   department  has  not  hired   the  contractor  the                                                               
legislature asked it to hire.                                                                                                   
SENATOR STEDMAN said  the committee would send the  letter to the                                                               
department  to   "flush  that  issue  out,"   then  continue  the                                                               
discussion  to find  a fruitful  outcome.   He surmised  that the                                                               
language to  which Senator MacKinnon referred  would help Senator                                                               
Von Imhoff put  "a finer point on  what needs to be  done to move                                                               
10:39:50 AM                                                                                                                   
SENATOR  BISHOP said  he concurs  with everyone's  comments.   He                                                               
opined that  the audit needs to  go forward to develop  a working                                                               
relationship  with the  department.    He said  he  can also  see                                                               
another audit following this one  "for all the reasons that we've                                                               
talked about here."  He said  he thinks the audit would "help the                                                               
department streamline the execution of their mission."                                                                          
10:40:38 AM                                                                                                                   
CHAIR  STEDMAN, regarding  the previous  comments of  Senator Von                                                               
Imhoff,  recommended looking  at  the language  that  was in  the                                                               
budget a couple years ago  and then having discussions outside of                                                               
committee  on the  structure of  a forward-looking  audit, in  an                                                               
attempt  to  come  up  with  [a solution].    He  recognized  the                                                               
financial challenge  of a  delay.  He  opined that  "the intended                                                               
direction" is good, and he advised  the committee to "line up our                                                               
ducks and then execute."                                                                                                        
10:41:33 AM                                                                                                                   
SENATOR GIESSEL said she appreciates  the audit.  She said audits                                                               
take time,  and the committee gives  Ms. Curtis a huge  amount of                                                               
work  to do.   She  said the  issue to  which Senator  Von Imhoff                                                               
referred was discussed at a  national meeting about two weeks ago                                                               
"as  best  practices."   She  said  the  states that  have  hired                                                               
[Gundersen Health System] to  conduct surveillance of eligibility                                                               
are doing  well.  She  encouraged [the committee] to  put forward                                                               
legislation or  somehow move "in  that positive direction."   She                                                               
stated, "We don't  have to keep reinventing the  wheel when other                                                               
states  have found  answers to  these questions."   She  said she                                                               
supports  and  can  substantiate  "what Senator  Von  Imhoff  has                                                               
10:42:41 AM                                                                                                                   
REPRESENTATIVE  JOSEPHSON asked  Mr. Ruaro  if the  figure of  86                                                               
percent increase includes expansion  population or is independent                                                               
of it.                                                                                                                          
10:42:54 AM                                                                                                                   
MR. RUARO answered that it includes the expansion population.                                                                   
REPRESENTATIVE  JOSEPHSON  offered  his  understanding  that  the                                                               
state has  spent $20  million out  of the  general fund  (GF) for                                                               
Medicaid  expansion, and  the state  has  received $960  million,                                                               
which he called  "a great deal" that  has got to be  good for the                                                               
economy of  the state.   He asked Ms.  Curtis if the  audit would                                                               
"segregate  the numbers"  to make  apparent  whether "someone  is                                                               
ineligible  as  an  expansion  population vis  a  vis  a  regular                                                               
10:43:47 AM                                                                                                                   
MS. CURTIS  answered that it  had never crossed her  mind whether                                                               
there  would   need  to  be  any   distinction  between  Medicaid                                                               
expansion and  regular Medicaid.   She said, "The focus  would be                                                               
on the determination  of eligibility and whether  they were using                                                               
all the tools they're required  to use to determine eligibility,"                                                               
such as best  practice tools and timeliness.   Regarding Medicaid                                                               
expansion and regular Medicaid, she  said, "I don't anticipate us                                                               
differentiating the population."                                                                                                
REPRESENTATIVE JOSEPHSON  acknowledged that his  understanding of                                                               
this is  rudimentary.  He  proffered that in terms  of expansion,                                                               
"you're  looking  at just  importunity  and  inability to  afford                                                               
'Obama Care.'   In the other you might be  looking at disability.                                                               
And  so,   the  eligibility  determination  might   be  really  a                                                               
different thing."   He said he would like the  audit to "get into                                                               
MS.  CURTIS  said the  Legislative  Audit  Division could,  in  a                                                               
sample,  identify   different  factors   in  the   population  to                                                               
determine  whether there  are  any  correlations between  errors,                                                               
"the focus  being on  ... determinations by  [DHSS] staff  in the                                                               
obstacles and  challenges."   She added  that the  division could                                                               
try to find any other "nuances in the population."                                                                              
10:45:42 AM                                                                                                                   
REPRESENTATIVE  SEATON  noted  that the  National  Conference  of                                                               
State Legislatures  (NCSL) had just published  an article showing                                                               
that in those  states that have used  independent contractors for                                                               
enrolling, the  result was an increase  in the cost to  the state                                                               
by two  to three times.   He suggested  the need to  consider the                                                               
financial implications,  if the committee  were to get  into "the                                                               
conversation for legislation."                                                                                                  
10:47:09 AM                                                                                                                   
REPRESENTATIVE JOSEPHSON  moved that  the Legislative  Budget and                                                               
Audit Committee  approve the special  audit request  for Medicaid                                                               
eligibility as  presented.  There  being no objection, it  was so                                                               
10:47:25 AM                                                                                                                   
CHAIR  STEDMAN stated  that the  committee would  have discussion                                                               
about  applicable  legislation and  the  work  that can  be  done                                                               
toward a solution, as brought up by Senator Von Imhoff.                                                                         
^EXECUTIVE SESSION                                                                                                              
                       EXECUTIVE SESSION                                                                                    
10:47:54 AM                                                                                                                   
CHAIR STEDMAN announced that the  next order of business would be                                                               
executive session.                                                                                                              
10:48:04 AM                                                                                                                   
REPRESENTATIVE JOSEPHSON  moved that  the Legislative  Budget and                                                               
Audit Committee go  into executive session under  Uniform Rule 22                                                               
of the Alaska  Legislature and AS 24.20.301.  The  purpose of the                                                               
executive session  would be to  consider the final audits  of the                                                               
Department of Commerce, Community  & Economic Development (DCCED)                                                               
- Board of  Marine Pilots, sunset, and  the following preliminary                                                               
audits:    DCCED,  Board of  Barbers  and  Hairdressers,  sunset;                                                               
DCCED,  Board  of  Dental  Examiners,  sunset;  DCCED,  Board  of                                                               
Nursing, sunset; DCCED, Suicide  Prevention Council, sunset; DNR,                                                               
Matanuska   Maid    Property   Disposal;   and    Department   of                                                               
Administration (DOA),  Statewide Single  Audit, fiscal  year 2015                                                               
(FY 15), reissue.                                                                                                               
10:48:24 AM                                                                                                                   
CHAIR STEDMAN  named the following individuals  allowed to remain                                                               
in the room  for executive session:  the  legislative auditor and                                                               
staff;  necessary staff  for Legislative  Audit; any  legislators                                                               
not on the committee; and staff for members of the committee.                                                                   
[There  being  no objection,  the  Legislative  Budget and  Audit                                                               
Committee entered into executive session.]                                                                                      
10:48:58 AM                                                                                                                   
The committee took an at-ease from 10:49 a.m. to 11:33 a.m.                                                                     
11:32:46 AM                                                                                                                   
CHAIR STEDMAN brought the Legislative  Budget and Audit Committee                                                               
back to order  at 11:33 a.m.   Present at the call  back to order                                                               
were   Representatives   Seaton,   Spohnholz,   Johnston,   Ortiz                                                               
(alternate,  via  teleconference),  and  Josephson  and  Senators                                                               
MacKinnon, Bishop, Giessel, Von Imhof (alternate), and Stedman.                                                                 
^OTHER COMMITTEE BUSINESS                                                                                                       
                    OTHER COMMITTEE BUSINESS                                                                                
11:34:02 AM                                                                                                                   
CHAIR STEDMAN  announced that the  final order of  business would                                                               
be other committee business.                                                                                                    
11:34:16 AM                                                                                                                   
REPRESENTATIVE JOSEPHSON  moved that  the Legislative  Budget and                                                               
Audit Committee  approve the release  of the final audit  for the                                                               
Board of  Marine Pilots.   There  being no  objection, it  was so                                                               
11:34:35 AM                                                                                                                   
REPRESENTATIVE JOSEPHSON  moved that  the Legislative  Budget and                                                               
Audit Committee approve the release  of the following preliminary                                                               
audits to  the appropriate agencies  for response:  the  Board of                                                               
Barbers  and Hairdressers;  the  Board of  Dental Examiners;  the                                                               
Board of  Nursing; the Suicide Prevention  Council; the Matanuska                                                               
Maid Property  Disposal; and  the Statewide  Single Audit  for FY                                                               
15, re-issue.  There being no objection, it was so ordered.                                                                     
11:35:22 AM                                                                                                                   
CHAIR  STEDMAN said  the Legislative  Budget and  Audit Committee                                                               
would consider meeting in mid-December.                                                                                         
11:35:59 AM                                                                                                                   
There  being  no  further  business  before  the  committee,  the                                                               
Legislative Budget  and Audit Committee meeting  was adjourned at                                                               
11:36 a.m.                                                                                                                      

Document Name Date/Time Subjects