Legislature(2005 - 2006)HOUSE FINANCE 519

01/26/2005 02:00 PM House FINANCE


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02:17:11 PM Start
03:21:44 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed from 1:30 PM --
Overview: Senior Health Care Program
                   HOUSE FINANCE COMMITTEE                                                                                      
                      January 26, 2005                                                                                          
                         2:17 P.M.                                                                                              
                                                                                                                                
                                                                                                                                
 CALL TO ORDER                                                                                                                
                                                                                                                                
 Co-Chair Chenault called the House Finance Committee meeting                                                                   
 to order at 2:17:11 PM.                                                                                                      
                                                                                                                                
                                                                                                                                
 MEMBERS PRESENT                                                                                                              
                                                                                                                                
 Representative Mike Chenault, Co-Chair                                                                                         
 Representative Kevin Meyer, Co-Chair                                                                                           
 Representative Bill Stoltze, Vice-Chair                                                                                        
 Representative Richard Foster                                                                                                  
 Representative Jim Holm                                                                                                        
 Representative Reggie Joule                                                                                                    
 Representative Mike Kelly                                                                                                      
 Representative Carl Moses                                                                                                      
 Representative Bruce Weyhrauch                                                                                                 
                                                                                                                                
                                                                                                                                
 MEMBERS ABSENT                                                                                                               
                                                                                                                                
 Representative Eric Croft                                                                                                      
 Representative Mike Hawker                                                                                                     
                                                                                                                                
                                                                                                                                
 ALSO PRESENT                                                                                                                 
                                                                                                                                
 Joel Gilbertson, Commissioner, Department of Health & Social                                                                   
 Services; John Sherwood, Staff, Office of the Commissioner,                                                                    
 Department of  Health  &  Social  Services; Steve  Atkins,                                                                     
 Director, Division  of  Senior  &  Disabilities  Services,                                                                     
 Department of Health & Social Services                                                                                         
                                                                                                                                
                                                                                                                                
 GENERAL SUBJECT(S):                                                                                                          
                                                                                                                                
            Overview: Senior Health Care Program                                                                              
                                                                                                                                
The following overview was taken in log note format.  Tapes                                                                     
and handouts will be on file with the House Finance                                                                             
Committee through the 24th Legislative Session, contact 465-                                                                    
6814. After the 24th Legislative Session they will be                                                                           
available through the Legislative Library at 465-3808.                                                                          
                                                                                                                                
                                                                                                                                
 TIME        SPEAKER         DISCUSSION                                                                                     
 2:17:30 PM Co-Chair         Convened the House Finance Committee to                                                          
             Chenault        take testimony from Commissioner                                                                 
                            Gilbertson of the Department of Health                                                              
                            & Social Services regarding the Senior                                                              
                            Health Care Program.                                                                              
                                                                                                                                
                            OVERVIEW:SENIOR HEALTH CARE PROGRAM                                                             
2:18:36 PM JOEL             Provided Committee members with a                                                                 
            GILBERTSON,     handout regarding the "Comparison of                                                                
            COMMISSIONER,   Qualifications and Benefits - Beginning                                                             
            DEPARTMENT OF   January 2006".  (Copy on File).  He                                                                 
            HEALTH &        introduced his staff John Sherwood, who                                                             
            SOCIAL          would answer Committee questions about                                                              
            SERVICES        the program.                                                                                        
                            Commissioner Gilbertson noted that the                                                              
                            Governor had submitted a bill, HB 106,                                                              
                            which will address the Senior Care                                                                  
                            initiative effort throughout the State                                                              
                            of Alaska.  One piece of that                                                                       
                            legislation establishes a cash                                                                      
                            assistance benefit drug subsidy for                                                                 
                            low-income seniors.                                                                               
2:19:27 PM Commissioner     The proposed legislation builds off the                                                           
            Gilbertson      federal Medicaid benefit and efforts                                                                
                            done last session.                                                                                
2:20:12 PM Commissioner     The cost of prescriptive drugs has                                                                
            Gilbertson      skyrocketed and inflation rates have                                                                
                            rose as high as 27% in one year.                                                                  
2:20:38 PM Commissioner     The Governor's proposal provides for                                                              
            Gilbertson      enhancement of the Senior Care drug                                                                 
                            benefit and will interact will with the                                                             
                            federal Medicaid benefit.                                                                           
                            Medicare consists these parts:                                                                      
                               · Part A - virtually all seniors are                                                             
                                 in Part A, and covers in patient                                                               
                                 service and hospital care;                                                                     
                               · Part B is the Medicare component                                                               
                                 for seniors when they receive out                                                              
                                 patient services;                                                                              
                               · Part C is not available in Alaska                                                              
                                 and deals with Medicare plus (+)                                                               
                                 choice plans or Medicare managed                                                               
                                 care;                                                                                          
                               · Part D will begin in Alaska in                                                                 
                                 January 2006 and it will allow                                                                 
                                 seniors to enroll in Part D and                                                                
                                 receive Medicare drug assistance.                                                            
2:21:40 PM Commissioner     Advised that Seniors pay a premium when                                                           
            Gilbertson      they are in Part D and when they                                                                    
                            enroll, they will have to pay another                                                               
                            premium for the prescription drugs.                                                                 
                            Additionally, they will have a new                                                                  
                            deductible.  The federal government                                                                 
                            does have a sliding scale and seniors                                                               
                            below 135% have no cost sharing. The                                                              
                             sliding scale moves to about 175% for                                                              
                             when they receive assistance.                                                                    
 2:22:33 PM Commissioner     HB 106 clarifies that beginning in                                                               
             Gilbertson      January 2006, when the benefit begins,                                                             
                             the State Senior Care program will be                                                              
                             converted to a drug assistance program.                                                            
                             The State will pay for out of pocket                                                               
                             costs for senior's premiums or                                                                     
                             deductible up to an income level 300%                                                              
                             of poverty.                                                                                        
                             He pointed out the chart (Attachment                                                               
                             #1), which better clarifies the                                                                    
                             Governor's intent.  Cash assistance                                                                
                             will continue.  Under the previous                                                                 
                             Senior care proposal, the seniors under                                                            
                             135% poverty level, an annual income                                                               
                             for a single senior of about $15,700                                                               
                             dollars per year and a couple with                                                                 
                             $21,000 dollars income per year.  They                                                             
                             currently receive $120 per month and it                                                            
                             will continue.  Those seniors will have                                                            
                             access without paying a premium or                                                                 
                             deductible.                                                                                      
 2:23:57 PM Commissioner     Continued, the Senior care cash                                                                  
             Gilbertson      assistance is for seniors above 135%                                                               
                             poverty and up to 300% poverty level,                                                              
                             which for an Alaska senior would be up                                                             
                             to $34,800 dollars income per year.                                                                
                             There would be an asset limit and the                                                              
                             benefit would be $670 dollars per year.                                                            
                             The premium would be $40 per month.                                                              
 2:24:35 PM Commissioner     Noted that the Department expects to                                                             
             Gilbertson      serve approximately the same number of                                                             
                             individuals, 7,000.  Any senior that                                                               
                             enrolls in Part D will have to pay a                                                               
                             deductible in order to receive                                                                     
                             assistance.                                                                                      
 2:25:25 PM Commissioner     Clarified that.  He referenced                                                                   
             Gilbertson      Attachment #1:  Under the old senior                                                               
                                                                  st                                                            
                             drug proposal from last session, the 1                                                             
                             $2,500 spent, would amount to a $1,000                                                             
                             subsidy per individual.  Under HB 106,                                                             
                             the seniors expense will be reduced to                                                             
                             a little over $450 dollars.                                                                      
 2:26:14 PM Commissioner     Noted the senior care benefit component                                                          
             Gilbertson      and Medicare care benefit.  The goal of                                                            
                             the legislation is to guarantee that                                                               
                             not a single senior in Alaska is unable                                                            
                             to pay out of pocket costs.                                                                      
 2:26:49 PM Commissioner     He clarified what this would mean for                                                            
             Gilbertson      "real Alaskans".  He referenced Page 2,                                                            
                             Attachment #1, which provides examples                                                             
                             of savings within the program                                                                    
                            highlighting a couple and individual.                                                             
2:28:05 PM Commissioner     Stated that the program is an effort to                                                           
            Gilbertson      guarantee that seniors, particularly                                                                
                            low income seniors, have needed access.                                                             
                            He addressed what would happen to                                                                   
                            seniors who have access to drug                                                                     
                            benefits under a retirement program.                                                                
                            There would be a capped amount that the                                                             
                           State pays.                                                                                        
2:28:45 PM Representative Noted the he receives a lot of district                                                             
            Joule           correspondence regarding the cash                                                                   
                            assistance program.  The information                                                                
                            required for the program is                                                                         
                            complicated.  He reiterated that some                                                               
                            people registering for the program are                                                              
                            uncertain what is requested of them.                                                                
                            It has become a hardship for those                                                                  
                            seniors.                                                                                            
                            He requested that a system be made,                                                                 
                            such as a follow-up call, to help keep                                                              
                            seniors "in the loop".                                                                            
2:31:39 PM Commissioner     Addressed the out-reach concerns of                                                               
            Gilbertson      Representative Joule.  He stressed that                                                             
                            the Governor has been adamant that                                                                  
                            there should be a "clearing house" for                                                              
                            senior information and there will be a                                                              
                            (800) number and a website where                                                                    
                            seniors can call to help find                                                                       
                            appropriate providers.  He added that a                                                             
                            staff would be added to the Senior                                                                  
                            Office.  He warned that the next twelve                                                             
                            months will be the most confusing and                                                               
                            challenging times for the seniors.                                                                  
                            They will be receiving mailings from                                                                
                            the federal government asking them to                                                               
                            enroll and will be complex information                                                              
                            determining which plan to enroll in.                                                              
2:33:41 PM Commissioner     The federal as well as the State                                                                  
            Gilbertson      applications will be going out.  It is                                                              
                            the "unknown" group, the group that is                                                              
                            not currently receiving benefits that                                                               
                            are worrisome.  He reiterated that it                                                               
                            will be a challenge.                                                                              
2:34:07 PM JOHN SHERWOOD, Spoke to the issue regarding the review                                                             
            STAFF, OFFICE   and the number of individuals that are                                                              
            OF THE          lost each year due to that paperwork.                                                               
            COMMISSIONER,   Over the years, the process has been                                                                
            DEPARTMENT OF   simplified and in the federal needs                                                                 
            HEALTH &        based payment, the State no longer                                                                  
            SOCIAL          requires the individual review.                                                                     
            SERVICES        He  noted that there are two notices                                                                
                            sent out as reminders.  There to date,                                                              
                            has not been a practice of calling                                                                
                                                 st                                                                             
 2:37:55 PM STEVE ATKINS,    Stated that on July 1, 2004, the U.S.                                                            
             DIRECTOR,       government required that any procedure                                                             
             DIVISION OF     codes used by the State for Medicaid                                                               
             SENIOR &        waiver services, need to be uniform                                                                
             DISABILITIES    statewide.  That process worked well                                                               
             SERVICES,       for three of the four senior programs.                                                             
             DEPARTMENT OF   The codes had to be converted to the                                                               
             HEALTH &        waiver program used by the Senior                                                                  
             SOCIAL          Center.                                                                                            
             SERVICES        A problem exists under the Medicaid                                                                
                             waiver for mental retardation and                                                                  
                             developmental disabilities (D.D.).                                                                 
                             They do not have a database that can                                                               
                             convert the old procedure codes into                                                               
                             the new ones.  The value was not                                                                   
                             transferring over. He acknowledged                                                                 
                             trouble with the D.D. side of business                                                             
                             for paying Medicaid bills.                                                                         
                             By the end of this month, Mr. Atkins                                                               
                             claimed that the Department would be                                                               
                             converting the D.D. program into the                                                               
                             same type database used for the other                                                              
                             waivers.                                                                                         
 2:40:16 PM Commissioner     Noted the follow-up happening in Vice                                                            
             Gilbertson      Chair Stoltze district.                                                                          
 2:40:43 PM Co-Chair         Questioned how sustainable the proposed                                                          
            Chenault        program would be over time, pointing                                                                
                            out the size of the fiscal note.                                                                    
                            Commissioner Gilbertson acknowledged                                                                
                            that is a concern for the Department                                                                
                            for it to be sustainable.  He added                                                                 
                            that providing for prescription drug                                                                
                            coverage is expensive.  There is a                                                                  
                            balance in the Senior Care program                                                                  
                            fund.  The Department was concerned                                                                 
                            with using only that fund to get                                                                    
                            through the first year and then                                                                     
                            experiencing a huge due amount each                                                                 
                            year.  He claimed that the program                                                                  
                            would cost between $17 & $18 million                                                                
                            dollars per year.                                                                                 
2:42:29 PM Co-Chair Meyer  Asked how much of the original amount                                                              
                            of $26 billion dollars was remaining.                                                             
2:42:52 PM Commissioner     Replied that as of January 1, 2006,                                                               
            Gilbertson      when the Medicare benefit begins, there                                                             
                            would be no expense for the first half                                                              
                            of the fiscal year; the remaining                                                                   
                            balance would be $7.7 million dollars.                                                            
2:43:21 PM Co-Chair Meyer Inquired why there was money left over.                                                             
                            Commissioner Gilbertson explained that                                                              
                            the Department was very conservative in                                                             
                            their estimates and the eligibility                                                                 
                            calculations were higher.  It difficult                                                             
                            to predict the number of seniors based                                                              
                            on economic data.                                                                                 
2:44:44 PM Commissioner     Added that it was initially difficult                                                             
            Gilbertson      to get seniors enrolled.  The old                                                                   
                            Senior care proposal was out dated from                                                             
                            that of the Governor's intent.                                                                    
2:45:01 PM Commissioner     Spoke of the cash subsidies for seniors                                                           
            Gilbertson      below poverty level and a prescription                                                              
                            drug subsidy for seniors between 135%-                                                              
                            150% level of poverty.  He stated that                                                              
                            it has been difficult to access that                                                                
                            group; there is an effort happening in                                                              
                            the next few weeks to raise awareness                                                               
                            within that group.                                                                                  
                            He emphasized that has been a complex                                                               
                            issue for seniors.  The assistance is                                                               
                            only now being provided for the drug                                                                
                            assistance.  Last year, the federal                                                                 
                            government provided a drug assistance                                                               
                            card, which ended up being very                                                                     
                            confusing.  He stressed that there had                                                              
                            been a number of issues confusing                                                                   
                            seniors.  The enrollment is far lower                                                               
                            than the Administration wants and                                                                   
                            consequently, the Department has spent                                                              
                            time educating Alaska Association of                                                              
                             Retired Persons (AARP) and working with                                                            
                             appropriate organizations to educate.                                                            
 2:46:31 PM Co-Chair Meyer  Asked if the estimated $18 million                                                                
                             dollar number was correct.                                                                         
                             Commissioner Gilbertson replied that                                                               
                             the Department has to date not missed                                                              
                             by much.  He recommended that Mr.                                                                  
                             Sherwood address comments.                                                                       
 2:47:33 PM Co-Chair Meyer Commented on how the costs would be                                                                
                             paid during the next five years.                                                                   
                             Commissioner Gilbertson pointed out                                                                
                             that the costs were indicated in the                                                               
                             fiscal note, through FY2011.  It should                                                            
                             be included in the general fund                                                                    
                             requests during those years.                                                                       
                             Co-Chair Meyer inquired who would                                                                  
                             qualify to receive the allocated funds.                                                            
                             Commissioner Gilbertson referred to the                                                            
                             handout, pointing out that those below                                                             
                             the 135% poverty level.                                                                          
 2:49:20 PM Co-Chair         Noted members who came into the meeting                                                          
             Chenault        late.                                                                                            
 2:49:52 PM Representative Asked how married couples would file.                                                              
             Joule           Mr. Sherwood replied that the couple                                                               
                             would have to file together as a couple                                                            
                             and that there would be no choice.                                                               
 2:51:03 PM Representative Asked about the difference in costs                                                                
             Kelly           between that program and the Longevity                                                             
                             Bonus in FY06.                                                                                     
                             Commissioner Gilbertson explained that                                                             
                             he did not have the analysis for the                                                               
                             Longevity Bonus for 2006 and offered to                                                            
                             look it up.                                                                                        
                             Representative Kelly inquired how                                                                  
                             Alaska compares to other states.                                                                   
                             Mr. Sherwood pointed out that each                                                                 
                             state varies a lot.  Each state                                                                    
                             attempts to determine the best method                                                              
                            for them.                                                                                           
                             Commissioner Gilbertson reiterated that                                                            
                             regarding delivery Alaska is unique.                                                             
 2:54:02 PM Commissioner     Responded to a question by                                                                       
             Gilbertson      Representative Kelly regarding the                                                                 
                             relationship between administrative                                                                
                             costs and direct benefits.                                                                         
                             Commissioner Gilbertson stated that in                                                             
                             FY06, the administrative costs would be                                                            
                             $450 thousand dollars.                                                                           
 2:56:25 PM Mr. Sherwood     Added that he would need to research                                                             
                             the difference between those costs.                                                              
 2:57:06 PM Representative Inquired how many seniors would                                                                    
             Holm            actually receive the benefit and what                                                              
                             was the goal of the new program.                                                                 
2:57:56 PM Commissioner     Referred to the Governor's message that                                                           
            Gilbertson      the Department focuses on the needs-                                                                
                            based population.  The program will                                                                 
                            serve 40% of the 40,000 seniors in                                                                  
                            Alaska.                                                                                             
                            Commissioner Gilbertson continued that                                                              
                            7,000 seniors would receive cash                                                                    
                            assistance.  He stressed that there                                                                 
                            have been tremendous gaps in the                                                                    
                            Medicare program for a number of years.                                                             
                            Representative Holm observed that 40%                                                               
                            was too large of an amount.                                                                         
                            Commissioner Gilbertson advised that                                                                
                            the program was not developed with the                                                              
                            intent to serve 40% of the seniors.                                                                 
                            The program was designed by actual                                                                  
                            incomes.  The Department believes that                                                              
                            the appropriate place to draw the line                                                              
                            is at the 135% poverty level income per                                                             
                            year.                                                                                               
                            Representative Holm interjected that                                                                
                            was generous.                                                                                     
3:01:43 PM Representative Asked why seniors are not signing up                                                                
            Holm            for the program.                                                                                    
                            Commissioner Gilbertson responded that                                                              
                            the State has a pretty good                                                                         
                            penetration.  It has been difficult to                                                              
                            reach seniors between the 135% and 150%                                                             
                            poverty level income.  He reiterated                                                                
                            efforts of the Department being taken                                                               
                            to enroll seniors from that group.  He                                                              
                            addressed integrating the process with                                                              
                            federal agencies.                                                                                   
                            Representative Holm noted appreciation                                                              
                            for the Department's efforts in                                                                     
                            administering the monies.                                                                         
3:05:32 PM Representative Questioned if there was any "double                                                                 
            Kelly           dipping" occurring such as with the                                                                 
                            Indian Health Service (IHS).                                                                        
                            Commissioner Gilbertson replied there                                                               
                            was not.                                                                                            
                            Representative Kelly suggested revising                                                             
                            the sensitivities.                                                                                
3:06:51 PM Commissioner     Explained that there was considerable                                                             
            Gilbertson      questioning through the federal agency                                                              
                            regarding individuals with dual                                                                     
                            eligibility.  The issue is not for the                                                              
                            beneficiaries but rather the agency                                                                 
                            responsible for paying for the services                                                             
                            to determine which fund source to use                                                               
                            to pay for the service.                                                                           
3:07:53 PM Mr. Sherwood     Explained that there are no                                                                       
                            discriminations against the IHS                                                                   
                             beneficiaries.  There will be no                                                                   
                             discriminations for the Alaskan people.                                                            
                             Commissioner Gilbertson added that many                                                            
                             decisions need to be determined about                                                              
                             who is eligible.  He said that about                                                               
                             40% of the population is dual eligible.                                                            
                             In response to Representative Kelly,                                                               
                             Commissioner Gilbertson noted that it                                                              
                             is a matter of processing claims so not                                                            
                             to expend general funds.                                                                           
                             Representative Kelly voiced his                                                                    
                             opposition to any discrimination within                                                            
                             such a program.                                                                                    
                             Commissioner Gilbertson assured him                                                                
                             that discrimination is not                                                                         
                             intentionally occurring in any of the                                                              
                            programs.                                                                                         
 3:11:40 PM Co-Chair         Asked about rank and average.                                                                    
             Chenault        Commissioner Gilbertson acknowledged                                                               
                             that he is concerned about the State's                                                             
                             ability to continue funding the                                                                    
                             program.  He agreed that it will be a                                                              
                             tremendous financial burden, but                                                                   
                             indicated that the Department is                                                                   
                             committed to continued funding for the                                                             
                             program.                                                                                         
 3:13:42 PM Vice-Chair       Questioned if eligibility would be                                                               
             Stoltze         based on an "honor" system.                                                                        
                             Commissioner Gilbertson explained that                                                             
                             would be difficult at first, but as the                                                            
                             program matures, the reporting                                                                     
                             requirements will be drastically                                                                   
                           increased.                                                                                         
 3:15:16 PM Representative Asked about the 50% not included in the                                                            
             Kelly           budget and the odds of attaining that                                                              
                             amount.                                                                                            
                             Commissioner Gilbertson replied that is                                                            
                             up to the U.S. Congressional delegation                                                            
                             and will require extensive work.  The                                                              
                             Department is optimistic.                                                                        
 3:18:09 PM  Co-Chair Meyer Asked what options were available to                                                              
                             seniors if the program is not passed.                                                              
                             Commissioner Gilbertson replied that in                                                            
                             January 2006, seniors who receive cash                                                             
                             assistance will see that go away;                                                                  
                             seniors currently receiving                                                                        
                             prescriptive drug assistant will see                                                               
                             that go away; any senior receiving any                                                             
                             benefit will receive none.  What they                                                              
                             will get instead would be their                                                                    
                             traditional Medicare prescription drug                                                             
                             assistance for seniors below the 135%                                                              
                             poverty.                                                                                         
                            Mr. Sherwood pointed out that penalties                                                             
                            would be added if seniors do not enroll                                                             
                            when they become eligible.                                                                          
                            Commissioner Gilbertson added that was                                                              
                            consistent with Medicare, Part B, the                                                               
                            payback.                                                                                          
3:21:44 PM Co-Chair Meyer Requested materials on the various                                                                  
                            poverty level determinations.                                                                       
                            Commissioner Gilbertson stated that the                                                             
                            Department has done that work and will                                                              
                            submit it to Committee members.                                                                   
            Co-Chair        ADJOURNMENT                                                                                       
            Chenault                                                                                                            
                            The meeting was adjourned at 3:22 P.M.                                                            
                                                                                                                                
                                                                                                                                

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