Legislature(2013 - 2014)HOUSE FINANCE 519
01/22/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Fy 15 Governor's Budget Overview: Department of Health and Social Services | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
January 22, 2014
8:34 a.m.
8:34:00 AM
CALL TO ORDER
Co-Chair Austerman called the House Finance Committee
meeting to order at 8:34 a.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Lindsey Holmes
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Pete Higgins, District 5; William Streur,
Commissioner, Department of Health and Social Services;
Sana Efird, Assistant Commissioner, Finance and Management
Services, Department of Health and Social Services.
SUMMARY
FY 15 GOVERNOR'S BUDGET OVERVIEWS:
Department of Health and Social Services
^FY 15 GOVERNOR'S BUDGET OVERVIEW: DEPARTMENT OF HEALTH AND
SOCIAL SERVICES
8:34:12 AM
Co-Chair Austerman explained that the Department of Health
and Social Services (DHSS) would testify on the interim
subcommittee processes. He noted that Vice-Chair Neuman
would chair the DHSS meetings. He stated that he would
attend upcoming leadership meetings and turn the gavel over
to Vice-Chair Neuman. He invited Representative Pete
Higgins to the committee table for the discussion.
8:36:42 AM
Vice-Chair Neuman noted that Commissioner Streur would
provide a basic overview during the committee hearing. He
noted that a five-year budget was a primary topic of the
subcommittee's summer meetings. He wished for further
discussion with the department regarding the future and
Alaska.
8:37:54 AM
WILLIAM STREUR, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES, introduced himself and his staff. He
commented that the summer's meetings were productive and
allowed for better understanding for the department and
legislators. He stated that interim progress would continue
this session due to the urgency of the situation.
Commissioner Streur introduced the PowerPoint presentation
"FY 15 Departmental Overview (copy on file)."
8:40:22 AM
Commissioner Streur began with slide 1: "Alaska Department
of Health and Social Services Organization Chart." He
introduced the staff listed on the slide and in the room.
He noted that many staff changes occurred during the
interim.
Commissioner Streur continued with slide 2: "Summary of
Summer Meetings."
· Opportunity for Division-level deep dive into the
budget
· Process evolved from meeting to meeting
· Concluded with a better understanding of the budgetary
development challenges
8:43:01 AM
Vice-Chair Neuman stated that the subcommittee requested
that interim meetings be held in the Office of Children's
Services (OCS) for the summer meetings in an effort to meet
many of the employees and evaluate their very difficult
work. He stated that the discussions and meetings were
favorable as they had the responsibility of making budget
cuts that affect real people.
8:44:29 AM
Commissioner Streur continued with slide 4: "Financial
Report." He noted that the annual report was commonly
distributed to legislative offices. He encouraged the
members to read through the report and bring pertinent
questions to the department. He noted that the first chart
discussed the budget allocation by type. The general fund
was 3 percent while the other funds were an additional 3
percent. He stated that further detail would be provided
later in the presentation.
Vice-Chair Neuman asked about projections or patterns
involving federal contributions.
Commissioner Streur responded that the federal
contributions were status-quo. He expected reductions
following sequestration. He pointed out some small budget
increases. He noted that sequestration had its expected
effects. He noted that Alaska's budget would continue to
move in a conservative manner regardless of the federal
contributions. The state must weigh all availability of
federal dollars against state dollars.
Vice-Chair Neuman assumed that a five-year budget would
show zero growth on federal levels.
Commissioner Streur agreed with the assumption, but noted
that for every dollar of federal money, the state must
contribute one dollar. He did not expect growth in state
revenue.
8:48:09 AM
Commissioner Streur suggested that efficiency was the key.
Representative Gara asked about the term sequestration. He
asked if the newly passed federal budget was now relevant.
He wondered if the numbers put forth by the department
reflected the new budget or the sequestered budget numbers.
Commissioner Streur replied that the new budget numbers
were reflected. He clarified that certain public assistance
program funding was subject to change. He explained that
the federal government allocated an amount of money, but
the allocation process was incomplete. The departments
within the federal government could further portion the
allocations.
8:49:29 AM
Representative Gara discussed Medicaid expansion and noted
that for every nine dollars received from the federal
government the state must contribute one dollar.
Commissioner Streur replied that his figures were not quite
as favorable as those cited by Representative Gara.
Commissioner Streur continued with slide 6: "Health and
Wellness Across the Lifespan." He introduced results-based
budgeting as a budget based on outcome. He prioritized a
different view of the budget for the department. He
commented on his private sector work for the Sisters of St.
Joseph. He recalled a quote from that experience, "to do
good we have to do well." He noted that with state
government, to "do well we have to do good." Further
funding relied on good performance. Every dollar received
mush show a proven return. He noted that the three
priorities were:
1. Health and Wellness Across the Lifespan
a. Core Service; Protect and Promote the Health of
Alaskans
b. Core Service; Provide Quality of Life in a Safe
Living Environment for Alaskans
2. Health Care Access Delivery and Value
a. Core Service; Manage Health Care Coverage for
Alaskans in Need
b. Core Service; Facilitate Access to Affordable
Health Care for Alaskans
3. Safe and Responsible individuals, Families and
Communities
a. Core Service; Strengthen Alaska Families
b. Core Service; Protect Vulnerable Alaskans
c. Core Service; Promote Personal Responsibility and
Accountable Decisions by Alaskans
Vice-Chair Neuman asked about slide 5. He asked which
division had the largest potential for growth.
Commissioner Streur replied that expanded growth was
expected in the Alaska Pioneer Homes and with Medicaid
services. He stated that the Affordable Care Act changed
the processes of health care with legislation. Changes
within the state Medicaid system would also take time to
alter. He pointed out that the greatest need for health
care was in the last seven years of a person's life.
8:56:07 AM
Vice-Chair Neuman expressed concern about expected growth
in the department's divisions.
Representative Wilson asked the connection between DHSS and
Department of Education and Early Development (DEED). She
noted that the interim DEED task force encountered much
talk about social issues encountered by the schools. She
advocated for greater cross-over between departments.
Commissioner Streur replied that DHSS did not collaborate
enough with other departments. He explained that OCS
involvement in the school, with teachers should be a normal
activity. He noted that the identification of children that
might encounter the juvenile justice system was also
crucial.
8:58:01 AM
Representative Gara thanked the chair and commissioner for
their significant contributions to improving these crucial
state systems. He asked about Medicaid and mentioned
anecdotal stories about use of emergency medical care for
relatively small medical issues. He asked about an
alternative method of addressing the use of high-utilizers
of emergency room medical care. He proposed Medicaid
adjustments enforcing recipients to seek medical care from
an urgent care clinic in the name of cost-savings.
Commissioner Streur agreed that some Medicaid recipients
used the emergency room as their primary care provider. He
noted that a program addressing these high-utilizers was in
place. He advocated for engaging Medicaid recipients in
their care. He suggested that health care was a three-
legged stool; payer, patient and provider.
9:00:53 AM
Representative Costello thanked the commissioner for his
time. She followed up on Representative Wilson's question
and addressed the needs of school nurses who tended up to
70 children's medical needs every day. School nurses were
often the primary care providers for children. She wondered
if the cost of school nurses could be taken by DHSS instead
of DEED.
Commissioner Streur replied that neither department had
developed a method of billing Medicaid for recipients in
the school systems.
9:02:16 AM
Commissioner Streur explained slide 7: "Total Budget by
Priority." He pointed out that 53 percent was spent on
priority number one; "Health and Wellness Across Lifespan."
He opined that priorities must shift. A change in health
care delivery required an adjustment toward prevention. He
hoped for a shift toward priority number three; "Safe and
Responsible Individuals, Families and Communities."
9:03:55 AM
Commissioner Streur discussed slide 8: "Primary Service
Population." The graph depicted the age distribution among
focused dollars. The greatest spending occurred in early
and late periods of a recipient's life. He explained that
the aging population utilized more services.
Vice-Chair Neuman clarified that a compilation of figures
showed that some Alaskans were served multiple times. He
asked for an example of a service displayed in the graph.
Commissioner Streur replied that services included well-
baby visits, immunizations and high-risk babies.
Vice-Chair Neuman asked which recipient received multiple
services most often.
Commissioner Streur replied that children were seen most
frequently.
9:06:26 AM
Vice-Chair Neuman stressed the need for prevention,
especially where children were concerned.
Representative Holmes asked about a non-duplicated numbers
of state recipient services.
Commissioner Streur replied that the actual client index
was a work in progress. He hoped to have the information to
the committee in the near future.
9:07:53 AM
Commissioner Streur discussed slide 9: "Division Spending
by Priority Including Medicaid." The slide divided the
department's priorities by division. Each division's report
reflected a plan to address the three priorities. The
evolution of the practice would provide the outputs and
outcomes of the exercise.
Commissioner Streur discussed slide 10: "Highlights of FY
15 Budget." He stated that the FY 14 management plan budget
was $2,665.9 million while the FY 15 request was $2,669.5
million. He pointed out that the totals were very close
when comparing the management plan versus the Governor's
request.
Vice-Chair Neuman noted that a struggle was ahead due to
competing needs among state departments. He realized that
budget cuts touched people's lives.
9:10:33 AM
Representative Gara recalled the governor stating that
salary increases would be covered within the new budget. He
expressed concerns that increased salaries would lead to
program cuts.
Commissioner Streur replied that he could not guarantee the
protection of any program. He stressed that all programs
were vulnerable. He noted that his priority programs were
the highlight of his solutions.
9:13:13 AM
Representative Wilson asked about the $8.4 million
increase. She asked if the increase was due to backfilling
or new programs.
Commissioner Streur replied that increased Medicaid costs
would require increased contributions of $8.4 million. The
state must contribute approximately 40 percent of the
offset to the federal contribution. The issue was not a
decrease in federal funding but the increased costs in
Medicaid.
Representative Wilson asked if there was an increase in the
number of Medicaid recipients. She wondered if the entire
system was growing because of costs.
Commissioner Streur replied yes. He noted that the Medicaid
budget report showed an increase in recipients.
Representative Guttenberg joined the meeting.
9:14:55 AM
Vice-Chair Neuman discussed a summary of contributions from
the Office of Management and Budget (OMB). The proposed 10-
year plan listed the FY 15 state portion of the federal
Medicaid program as approximately $700 million. The figure
was projected to increase in an annual rate of over $7.2
percent. By 2014, the fund was projected to require a $1.3
billion contribution from the state's general fund. He
asked how general fund spending could be capped at $5.6
billion and account for a $600 million projected increase.
Commissioner Streur disagreed with the cited numbers. He
thought that the 7.2 percent average was excessive. He
wished for an opportunity to share his department's five-
year plan, which differed from the projections delivered by
OMB. He stated that the 7.2 percent projected by OMB
differed from the approximately 4 percent projection
offered by DHSS.
9:17:25 AM
Vice-Chair Neuman stressed that DHSS operating budget
proposals were of great importance. He explained his tactic
of reaching out to the Health Commission and the Mental
Health Trust Authority to collaborate toward a solution. He
stated that his goal was to reduce the cost of healthcare
in Alaska overall. He hoped to assist industry, businesses
and individuals in the state at the same time.
9:20:02 AM
Commissioner Streur discussed slide 11: "Highlights of FY
15 Budget." He explained that he had included the slide to
display his proposed changes. He pointed out that the
budget in FY 15 was similar to that of FY 05. He suggested
that the information presented "low-hanging fruit" to
flatten the curve. He understood that the state must find a
way to do more with less. He felt that he had submitted
lean budgets during his time as commissioner.
Representative Costello asked about potential savings if
clients eligible for Indian Health Service (IHS)
reimbursement of 100 percent were served by IHS rather than
by the state.
Commissioner Streur responded $200 billion in savings was
possible with the proposed change.
Vice-Chair Neuman stated that $200 billion was a lot of
money.
Commissioner Streur stated that approximately 40 percent of
health care delivered to Alaska Natives was delivered
within the Native Health System. He cited negotiations with
Clinical Nurse Specialists (CNS) for additional services at
100 percent. He discussed the expense of medevac services
in Alaska and his request for CNS coverage at 100 percent.
He noted that most medevac services were from the Bush and
most of the village members were Native Alaskans. He
pointed out that some complex medical services would not be
eligible for a move to IHS.
Vice-Chair Neuman planned to discuss the matter further
during upcoming subcommittee meetings. He understood that
the commissioner was working with the Tanana Chiefs to
enable greater efficiency within their system.
Representative Guttenberg asked how DHSS increases compared
to other department increases.
9:24:50 AM
Commissioner Streur responded that his department and the
Department of Transportation and Public Facilities (DOT/PF)
were similar because of their federal funding. He noted
that DOT/PF had a larger percentage of federal money, while
DHSS was split evenly between state and federal funding.
Representative Guttenberg asked about internal management
of the department. He wondered about efficiencies within
the departments.
Representative Gara understood that IHS was allotted a
fixed amount of funding. An exhaustible amount of money was
not available for every qualified patient. He asked how the
shift could occur to IHS for 100 percent reimbursement.
Commissioner Streur replied that Medicaid was an
entitlement program, while the money from IHS was funded
with approximately $600 million of additional Medicaid
funding. He stated that the more Native Alaskans enrolled
in Medicaid, the more funding was received by the state and
state savings of general fund dollars. He explained that if
a tribal member received services in a non-native facility,
the state paid 50 percent of the Medicaid bill. If services
were received in a tribal facility, the state received 100
percent reimbursement from the federal government for the
same service.
Representative Gara asked if the resources would eventually
expire.
Commissioner Streur replied that the funding would not
expire.
9:28:00 AM
Representative Munoz thanked the chair and commissioner for
their work during the interim. She asked about the variety
of medical service costs in Alaska. She wondered if
Medicaid had a published rate of services or were they
subject to the wide range of costs within the state. She
asked if the state would benefit from a published rate of
services.
Commissioner Streur replied that the rate paid by the state
for physician services was a certain percentage above
Medicare. Alaska utilized its own rate. He stated that
payment for physician services was largely based on a
percentage above Medicare. He furthered that the average
Medicaid reimbursement across the nation was approximately
67 percent of Medicare, while Alaska paid approximately 140
percent. Most providers participated because of the
desirable rate.
Representative Munoz asked if opportunities for savings
existed in the area of provider payment and reimbursement.
Commissioner Streur replied that the issue would be
addressed in future years. He mentioned other areas with
opportunities for savings including a transition of patient
care to primary care providers. He suggested that
prevention occurred best in the hands of the primary care
provider.
SANA EFIRD, ASSISTANT COMMISSIONER, FINANCE AND MANAGEMENT
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES,
addressed slides 13 and 14; graphs prepared by the
Legislative Finance Division (LFD). Slide 13 showed the
department's total general fund growth over the past 10
years. She detailed that growth decreased in 2009 and 2010
due to enhanced Federal Medical Assistance Percentage
(FMAP). The general fund then increased when the FMAP
rebalanced to 50 percent.
Vice-Chair Neuman highlighted the department's total FY 14
general fund budget equated to approximately $4 thousand
per resident worker. He stated that nearly $7 billion was
spent in Alaska on healthcare annually. He mentioned that
pharmaceuticals in Alaska cost $1 million per week.
Representative Guttenberg asked how the graph would be
altered with the inclusion of seasonal workers in Alaska.
Ms. Efird deferred the question to LFD. She moved on to
slide 14: "Highlights of FY 15 Budget. The top color in the
bar graph represented federal funds. The next portion
represented other funds, designated general funds and
unrestricted general funds.
Commissioner Streur turned to slide 15 titled:
"Departmental Updates."
· MMIS System Upgrade
· ARIES EIS System Upgrade
· Sequestration
· Affordable Care Act
Commissioner Streur planned to have a representative from
Xerox explain the Medicaid Management Information System
(MMIS) system upgrade, but the weather delayed the proposed
testifier in Ketchikan. He stated that much of the system
representative's testimony would prove relevant to the
topic.
Commissioner Streur assumed full responsibility for the
difficulties with the MMIS system upgrade. He explained
that he signed an original contract in 2007 with Alaska
Communication System (ACS), and then Xerox purchased ACS.
He acknowledged that the system had challenges and the
department was doing everything possible to mitigate the
damage. Many advances to providers were honored by the
state to offset cash flow issues. Certain groups and
residential facilities have been hit harder than others.
Dental providers had experienced the greatest financial
loss during the transition. He stated that Oregon made no
payments for approximately 7 months. Idaho suffered a
similar fate and Maine was delayed in their payments for
nearly one year.
9:37:15 AM
Commissioner Streur continued to discuss the department's
efforts to mitigate problems with the MMIS system. He
stated that utilizing preferred providers would ease the
challenges. Some providers were at 50 percent of what they
had billed. He noted that providers were reluctant to take
advances with worries about tracking claims. He understood
the sentiment and would have avoided taking an advance when
working in the private sector.
REPRESENTATIVE PETE HIGGINS, stated the Health and Social
Services (HSS) committee would meet with the commissioner
and Xerox in another open hearing with providers testifying
on the subject. He trusted the commissioner that all issues
would be resolved in the future. He expressed
disappointment in the upgrade, and understood that the
commissioner was doing all that he could to remedy the
situation. He opined that transparency was of the upmost
importance.
Vice-Chair Neuman asked how health care providers should
respond to the delays. He noted that provider payments were
increasing.
Commissioner Streur replied that providers should continue
billing for services. The department would inform providers
about all changes. Prior to the system change, the state
generated a weekly payment of approximately $27 million per
week. He cited the average payment in October 2013, after
the system upgrade of $14 million per week; nearly a 50
percent decrease. The amount continued to rise to the
current $33 million. He stated that hospital payments were
simpler, as a hospital could better absorb the payment
delays.
Representative Gara stated that a physician contacted him
about the delayed Medicaid reimbursements. He asked if he
should work directly with the department on the issue.
Commissioner Streur replied that contact with he or other
members of the department was the proper process. He stated
that Deputy Commissioner Christensen and Director Brodie
were good department contacts. He stressed that advances
were available and no clinic or provider should question
their business viability.
9:43:51 AM
Representative Higgins asked about claim filing delays. He
suggested refiling outstanding claims, but the advice from
the department was to abstain from refiling claims.
Commissioner Streur did not believe that reposting a claim
was a good solution. He stated that timely filing would not
be an issue with regards to the Medicaid claiming process.
Vice-Chair Neuman thought that the department made the
required updates for needed efficiency. The implementation
of the system was faulty, but Xerox was the real culprit.
He stated that the director of the division was responsible
for provider related questions, while the fault was with
Xerox. He opined that the division's director ought to be
available to her staff rather than addressing health care
providers.
9:47:30 AM
Commissioner Streur took responsibility for the system's
problems. He stated that even with delays, the Soft Service
Portal was operational. He noted that the public assistance
programs were listed in the new system. The Medicaid
Management Information System was new, but other states
were using it successfully.
9:49:45 AM
Commissioner Streur stated that sequestration would be
addressed further in future meetings. He detailed the
various expenses including Meals on Wheels, which cut 364
meals per week.
Representative Guttenberg asked if a comparable shift of
costs was seen through the Meals on Wheels program. He
asked if the issue was traceable.
Commissioner Streur replied that his examples were
anecdotal. He provided an example where a Meals on Wheels
driver found an elderly woman who had fallen and was in
great distress.
9:53:01 AM
Vice-Chair Neuman noted that combined Meals on Wheels
programs increased efficiency. Kitchen improvements with
capital budget funding also added to the process and
program.
Commissioner Streur noted that sequestration cuts were
active, and approximately 80 percent of the cuts delivered
under sequestration were eliminated in the budget cycle.
9:54:34 AM
Commissioner Streur discussed the Affordable Care Act. He
pointed out that Alaska declined the expansion of Medicaid.
He stated that 3000 people selected Market Place plans and
83 percent of those qualify for federal subsidy. He stated
that the high percentage would require further discussion.
Vice-Chair Neuman planned to delve into the topic with
further future discussion. He noted that a new advisor on
health policy was hired by the governor. He hoped to hear
from the administration and their advisors about the
subject.
Representative Holmes asked about new Medicaid enrollment
resulting from the Affordable Care Act.
Commissioner Streur replied that the 1100 new enrollments
were routed in a flat file from the Federal Exchange. The
Medicaid portion of the Federal Exchange had not yet been
automated and some data was missing as a result.
9:57:30 AM
Representative Gara agreed that the state contribution to
the Affordable Care Act was debatable. He stated that
Alaskans without Medicaid or private subsidies would
suffer. He asked the cost savings for families entering the
Federal Exchange rather than Medicaid.
Vice-Chair Neuman asked if questions regarding the
Affordable Care Act could be tabled to a later date.
9:59:44 AM
Commissioner Streur pointed out that between 100 and 133
percent of the poverty level were eligible for the Federal
Exchange. The people between 133 and 175 percent of poverty
level would not be eligible for Medicaid.
Vice-Chair Neuman concluded that the subcommittee allowed
the department to transfer funds within the department to
cover unanticipated shortfalls. Deficit and sequestration
effects were unknown.
Representative Wilson asked about the connection between
the different departments and their budgets. She opined
that a cut in one department could affect another. She
advocated for greater communication among departments to
allow for increased efficiency.
Commissioner Streur agreed that other departments could
collaborate, but he stated that he was unable to do more.
Representative Wilson understood the dilemma. She hoped for
alignment of budgets; for a solution of department
integration.
10:05:25 AM
Vice-Chair Neuman suggested that an expansion of broadband
would benefit all agencies and their budgets. He asked the
Alaska Mental Health Trust to research the necessary
broadband capacity for Alaskans in both the private and the
public sector. He wondered if private industry might be
interested in investing money for the installation of the
necessary broadband and an amortization of their
investment.
10:08:38 AM
Representative Wilson wondered why services such as
broadband were not shared among state departments. She
wondered what the savings of such collaboration might lead
to.
Vice-Chair Neuman shared a story about foster children and
the administrative needs of the department. He stressed
that the inefficiencies of employee turn-over within the
department was another important issue.
ADJOURNMENT
10:11:00 AM
The meeting was adjourned at 10:11 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2014 DHSS Lead-in Presentation.pdf |
HFIN 1/22/2014 8:30:00 AM |
DHSS Overview HFIN |
| 1-21-14 DHSS 10-Year Plan Graphs.pdf |
HFIN 1/22/2014 8:30:00 AM |
HFIN DHSS Overview |