Legislature(2015 - 2016)HOUSE FINANCE 519
03/29/2016 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB74 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 74 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 29, 2016
1:34 p.m.
1:34:12 PM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 1:34 p.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
Representative Scott Kawasaki
ALSO PRESENT
John Skidmore, Director, Criminal Division, Department of
Law; John Boucher, Deputy Commissioner, Department of
Administration; Janey Hovenden, Director, Division of
Corporations, Business and Professional Licensing,
Department of Commerce, Community and Economic Development;
Jon Sherwood, Deputy Commissioner, Medicaid and Health Care
Policy, Department of Health and Social Services; Vicky
Wilson, Director, Division of Pioneer Homes, Department of
Health and Social Services; Karen Forrest, Deputy
Commissioner, Department of Health and Social Services;
Jeff Jessee, Chief Executive Officer, Alaska Mental Health
Trust Authority; Stacie Kraly, Chief Assistant Attorney
General, Human Service, Department of Law; Senator Pete
Kelly, Sponsor.
SUMMARY
CSSB 74(FIN) am
MEDICAID REFORM;TELEMEDICINE;DRUG DATABASE
CSSB 74(FIN) am was HEARD and HELD in committee
for further consideration.
Co-Chair Thompson discussed the meeting agenda.
CS FOR SENATE BILL NO. 74(FIN) am
"An Act relating to diagnosis, treatment, and
prescription of drugs without a physical examination
by a physician; relating to the delivery of services
by a licensed professional counselor, marriage and
family therapist, psychologist, psychological
associate, and social worker by audio, video, or data
communications; relating to the duties of the State
Medical Board; relating to limitations of actions;
establishing the Alaska Medical Assistance False Claim
and Reporting Act; relating to medical assistance
programs administered by the Department of Health and
Social Services; relating to the controlled substance
prescription database; relating to the duties of the
Board of Pharmacy; relating to the duties of the
Department of Commerce, Community, and Economic
Development; relating to accounting for program
receipts; relating to public record status of records
related to the Alaska Medical Assistance False Claim
and Reporting Act; establishing a telemedicine
business registry; relating to competitive bidding for
medical assistance products and services; relating to
verification of eligibility for public assistance
programs administered by the Department of Health and
Social Services; relating to annual audits of state
medical assistance providers; relating to reporting
overpayments of medical assistance payments;
establishing authority to assess civil penalties for
violations of medical assistance program requirements;
relating to seizure and forfeiture of property for
medical assistance fraud; relating to the duties of
the Department of Health and Social Services;
establishing medical assistance demonstration
projects; relating to Alaska Pioneers' Homes and
Alaska Veterans' Homes; relating to the duties of the
Department of Administration; relating to the Alaska
Mental Health Trust Authority; relating to feasibility
studies for the provision of specified state services;
amending Rules 4, 5, 7, 12, 24, 26, 27, 41, 77, 79,
82, and 89, Alaska Rules of Civil Procedure, and Rule
37, Alaska Rules of Criminal Procedure; and providing
for an effective date."
1:35:12 PM
JOHN SKIDMORE, DIRECTOR, CRIMINAL DIVISION, DEPARTMENT OF
LAW, spoke to the fiscal note from the Department of Law
(DOL) for SB 74. He detailed the bill asked for a couple of
positions to be placed into the Medicaid Fraud Unit of the
DOL Criminal Division. The department had initially
contemplated placing the positions in the Civil Division
because it would be dealing with civil work; however, DOL
had elected to move the positions into the Medicaid Fraud
Unit because the unit had 75 percent federal match for 25
percent state funds. Therefore, the work could be done at a
lower cost to the state. He believed the note had changed
slightly since its last version to indicate the fund source
was General Fund (GF) with federal match instead of GF
only.
Co-Chair Thompson noted that the committee was addressing
fiscal note OMB Component Number 2203 dated 3/18/16.
1:37:37 PM
AT EASE
1:38:26 PM
RECONVENED
Co-Chair Thompson reiterated that the committee was
addressing the DOL fiscal note.
Vice-Chair Saddler remarked the note included a cost of
$365,000. He asked if DOL anticipated any recovery of
Medicaid fraud proceeds that would help diminish the fiscal
note.
Mr. Skidmore in the affirmative. He detailed it was
difficult to tell what the recoveries would be because the
cases had not yet been received. Based on recoveries in
past years, the department anticipated recoveries from the
False Claims Act to more than cover the positions and 25
percent state cost listed in the fiscal note.
Vice-Chair Saddler asked for clarification. He wondered if
the fiscal note included the anticipated recoveries. He
asked if the $365,000 per year was after or before
recoveries.
Mr. Skidmore answered that because the $365,000 was based
on General Funds and there were not funds going directly to
DOL, he did not know if the note reflected DOL's
anticipation that recoveries going into the General Fund
would exceed the $365,000. The change in revenues should be
reflected in the $500,000 figure listed in the "change in
revenues" row. The $500,000 exceeded the $365,000 in the
fund source and operating expenditure.
Vice-Chair Saddler asked for verification DOL anticipated
recovering $500,000, while the fiscal note showed $365,000
in expenditures. He surmised there would be a net of
$135,000.
Mr. Skidmore answered in the affirmative.
Representative Wilson referred to the last paragraph on
page 2 of the fiscal note related to the proposed Medical
Assistance False Claim and Reporting Act and provision on
seizure and forfeiture of real property require involvement
of DOL. She asked for verification the bill would give the
department authority it did not currently have on the civil
side.
Mr. Skidmore answered in the affirmative. He explained the
department believed the False Claims Act would allow the
department to pursue civil cases it was not currently able
to pursue; it was currently only able to pursue criminal
cases.
Representative Wilson asked if the bill added fines and
forfeiture.
Mr. Skidmore answered that the False Claims Act allowed the
state to pursue claims of fraudulent billing into the
medical system (i.e. restitution or forfeiture). The state
would have the ability to collect the funds that should not
have been collected in the first place.
1:42:23 PM
Representative Guttenberg pointed to the second to last
paragraph on page 2 of the DOL fiscal note related to the
barring of certain actions including actions based on
evidence known to the state. He wondered if a situation was
considered known to the state if someone knew about a
fraudulent action with a provider and a state employee was
complicit in the act.
Mr. Skidmore answered that the term "known to the state"
meant the information was known to the lawyers that would
be prosecuting the case; the term did not refer to a state
employee who may be involved in the fraud.
Representative Guttenberg asked if a whistle blower would
be precluded from being party to the situation if the
lawyers were aware of the situation but had not yet brought
the case. He asked for further clarification.
Mr. Skidmore replied that the section addressed
circumstances in which there may already be a criminal
investigation ongoing. For example, if a person came
forward with information that Doctor A was fraudulently
billing Medicaid and the department already had
investigators working on the case, the department would
inform the person it was already pursuing the issue. The
person would be barred from pursing the issue.
Representative Guttenberg spoke to the 75 percent federal
funding. He asked if there was a division of the rewards
when the department took action and prevailed. Mr. Skidmore
answered that the funds were divided 50/50 between the
state and the federal government in terms of the recovered
funds.
1:45:30 PM
Representative Guttenberg asked how fraudulent funds were
divided when returned. He wondered how the formula was
different from the rewarding of the attorneys.
Mr. Skidmore spoke to the federal Medicaid program that
provided funding to the state for distribution. There was a
Medicaid Fraud Unit that was funded 75 percent with federal
funds and 25 percent state funds. When fraud occurred
within Medicaid distributions and the state acted to
recover the funds, anything recovered by the state was
split 50/50 with the federal government. He referred to
page 1 of the fiscal note and explained the intake of
$500,000 represented the state's portion.
Representative Guttenberg explained his assumption that not
all of the money was federal; there was a federal/state
match. He relayed Mr. Skidmore had answered his question.
Co-Chair Thompson noted Representative Gara had joined the
meeting.
Representative Munoz asked about the existing penalties for
a civil fraud violation. Mr. Skidmore asked for
clarification.
Representative Munoz asked if there were penalties in
current law for Medicaid fraud. Mr. Skidmore was not aware
of any existing penalties; however, he did not handle most
civil cases. He did not believe the state had the ability
to go after individuals for false claims the way the bill
would establish; the provision established in the bill was
new.
Representative Munoz asked for the distinction between
criminal and civil fraud cases. Mr. Skidmore answered that
a person did not receive a criminal conviction for which
they could potentially go to jail; because the penalty did
not occur there was also a lower burden of proof associated
with a civil case, which would be a preponderance of the
evidence instead of beyond a reasonable doubt.
Vice-Chair Saddler read from page 7, lines 17 through 20 of
the legislation:
A beneficiary of an intentional or inadvertent
submission of a false or fraudulent claim under the
medical assistance program who later discovers the
claim is false or fraudulent shall disclose the false
or fraudulent claim to the state not later than 60
days after discovering the false claim.
Vice-Chair Saddler asked if someone disclosing within the
60-day time period was still subject to any interest or
penalties for overpayment.
1:50:09 PM
Mr. Skidmore was happy to look into the question and would
follow up.
Co-Chair Thompson asked for the information in writing. He
noted Representative Gattis had joined the meeting. He
asked the Department of Administration (DOA) to address its
fiscal note.
JOHN BOUCHER, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, relayed that DOA's role in the legislation
appeared in Section 40 of the bill. The section required
DOA in collaboration with the legislative finance
committees to procure a study to determine the feasibility
of creating a health care authority that could coordinate
health care plans; and consolidate purchasing effectiveness
for retired state employees, teachers, medical assistance
recipients, the University of Alaska, state corporations,
and school district employees. The study must be completed
before June 2017. The primary reason for the study was to
determine the feasibility for the authority to study the
needs to understand a current suite of benefits, cost-
sharing, and payment for all employees and individuals
whose health care benefits were funded directly or
indirectly by the State of Alaska. The study would require
evaluation of a number of health care benefit delivery
programs funded directly and indirectly by the state. He
expounded that when the department had done research on
similar type studies (e.g. the Hay study from several years
ago with $350,000) it estimated the cost of the study could
be up to $700,000 to complete. The project would be
ambitious and would require a project staff manager for
slightly over one year including the three-month period
following June 2017 in order to wrap up the study,
coordinate, review the input and output from the proposed
review and comment period, and guide the agency on the next
steps.
Representative Wilson asked for the financial figures
listed on the fiscal note. The note also indicated one
person would be hired.
Mr. Boucher replied that the amount was $834,600 in FY 17
and $33,600 in FY 18. The FY 17 cost represented one-
quarter of the staff cost (i.e. funding for the position
for three months in FY 18).
Co-Chair Thompson noted that the committee was addressing
fiscal note OMB Component Number 45 dated 3/6/16.
Vice-Chair Saddler referred to Mr. Boucher's testimony
about studies that had been conducted. He asked if the
study would be ab initio or whether the department had
developed prior information that would be a useful
foundation.
Mr. Boucher answered the bill included specific direction
to try to leverage previous studies including the Hay
study. The provision included such a broad group of
programs, the department believed it would still require a
significant amount of data collection.
1:54:30 PM
Representative Guttenberg asked if department anticipated
doing the study in-house or contracting it out. Mr. Boucher
replied that it would be a contract.
Co-Chair Thompson relayed the committee would address the
fiscal notes from the Department of Commerce, Community and
Economic Development (DCCED) [Note: Co-Chair Thompson
originally relayed the committee would hear from the
Department of Health and Social Services (DHSS); however,
he corrected they would hear from DCCED first].
JANEY HOVENDEN, DIRECTOR, DIVISION OF CORPORATIONS,
BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, addressed
fiscal note OMB Component Number 2360. The bill impacted
the division in two ways. First, it expanded the
Prescription Drug Monitoring Program (PDMP), which would
require pharmacists or practitioners dispensing controlled
substances to submit to the board for inclusion in the PDMP
on a weekly basis; pharmacists or practitioners prescribing
or dispensing controlled substances would be required to
register with the PDMP in a format established by the Board
of Pharmacy; required the notification of other boards; and
allowed the practitioner or pharmacists to delegate access
to the PDMP to employees on their behalf. The expansion of
the PDMP would require a program coordinator at a range 18
(on the state pay scale) to be located in Juneau, which
would include the expanded registrations, reporting,
collaborations, engagement with the state opioid control
program, grant writing and reporting, vendor solicitation,
and other. Second, the bill expanded telemedicine for
medical and social workers, professional counselors,
psychologists, psychological associates, marital and family
therapists. She relayed that after the limited expansion in
2014, the department understood the volume expansion
increased licensure; therefore, DCCED anticipated the need
of two additional occupational licensing examiners to
review the increases, as well as two additional
investigators. The fiscal note included $3,000 for travel
for the new program coordinator to attend Board of Pharmacy
meetings; it also included some regulation and legal costs
and printing and postage for $12,000. The department
anticipated there would probably be extra legal costs and
investigations in future years due to the increase. She
explained that it was a bit more costly to conduct
investigations across state lines related to telemedicine.
The fiscal note included $560,000 in the first year [FY 17]
for the two different sections she had spoken about and the
five additional employees.
1:59:35 PM
Co-Chair Neuman observed DCCED would accept federal funds
related to the PDMP. He asked if any other federal
regulations came with the funds. He remarked there was
generally a "carrot stick" attached to federal funds.
Ms. Hovenden did not believe there were any other carrots
related to the PDMP. She did not know for certain.
Co-Chair Thompson noted they would follow up on the issue.
Representative Guttenberg pointed to language in the first
paragraph on page 2 of the fiscal note: "the bill allows
licensed practitioners and licensed pharmacists to delegate
access to the PDMP on their behalf to an agent or employee
of the practitioner." He observed a licensed practitioner
or pharmacist could delegate authority to an office
clerical worker with no experience. He asked how far out it
left a pharmacist or practitioner in their licensing
requirements.
Ms. Hovenden replied that the licensee's license would be
held liable for any misuse or misconduct by the employee
they delegated authority to.
Representative Guttenberg asked if it was a common practice
for pharmacists and practitioners to delegate authority to
people without a license or certificate.
Ms. Hovenden answered that employees regularly had access
to patient files and databases. She explained it was the
licensee's license that would be in jeopardy for misuse.
2:02:38 PM
Vice-Chair Saddler asked if any other professional
licensing boards allowed delegation of authority to access
information about an individual to others. He suspected the
Board of Medicine did, but he wondered about psychiatrists,
social workers, physical therapists, or others.
Ms. Hovenden was not aware of any, but she would follow up.
Vice-Chair Saddler asked if the anticipated expenditure of
$607,400 would be matched by the revenues generated from
license fees charged to licensees. He asked for
verification the cost would be a net zero to the state; the
fees would be passed along to licenses.
Ms. Hovenden answered in the affirmative; the funds came
from receipt supported services paid by all licensees. The
fiscal note would give the division spending authority over
the funds.
Vice-Chair Saddler understood that a large part of the
increase was expected to be the cost of licensing and
verifying the qualifications for telehealth practitioners.
However, the fiscal note only included $3,000 for travel.
He wondered if the cost would come out of the services or
travel lines on the fiscal note if it were necessary to
travel outside of Alaska to investigate the fitness of a
telehealth provider.
Ms. Hovenden did not anticipate that investigators would
need to travel out of state to conduct any investigations.
There were already licensees outside of the state and the
division had certain tools it could utilize to cooperate
with other states. The $3,000 was merely for the program
coordinator to travel to the Board of Pharmacy [meetings].
2:05:06 PM
Representative Wilson asked for verification that the
fiscal note did not contain federal funds. Ms. Hovenden
answered that the funding was not guaranteed [into the
future], but currently the PDMP was currently paid for with
a federal grant through a reimbursable services agreement
(RSA) with DHSS.
Representative Wilson asked if the database would continue
after there were no federal funds in the future. Ms.
Hovenden replied in the negative. She elaborated there had
been discussion about creating a registration fee that
would help sustain the PDMP in the long-term, but she did
not believe it was in the current bill version.
Representative Wilson believed a corrected fiscal note was
needed because she wanted to understand current and
potential federal funds being provided. She referred to the
five new positions and wondered how many professionals
would be required to register to access the database.
Ms. Hovenden asked for clarification.
Representative Wilson explained the department was
proposing to hire five additional employees due to the
database and telehealth portions of the bill. She referred
to Ms. Hovenden's remark about considering how much to
charge for registration once the federal funds were no
longer available. She asked how many individuals would have
to register in the system. She wondered if only Medicaid
providers or all professionals would have to enter
prescriptions.
Ms. Hovenden answered that she did not have the number. She
referred to the Board of Nursing, optometrists, and
veterinarians and believed there were approximately 8,000
individuals with the licensed ability to prescribe.
Representative Wilson requested an updated fiscal note if
there was federal and other funding that the state may have
to backfill. She wanted to know how many providers the
state may have to charge to maintain the system.
Co-Chair Thompson replied his office would follow up with
the information.
2:08:41 PM
Co-Chair Neuman referred to the second to last paragraph on
page 3 of the fiscal note related to the PDMP. He noted
there had been plenty of discussions about federal Medicaid
reform. He detailed the cost would be covered by Board of
Pharmacy licensees in absence of federal funds. He asked if
the Board of Pharmacy or pharmacists around the state had
been asked about the fact that they may have to pay for the
funds in the future.
Ms. Hovenden replied that the Board of Pharmacy was aware
of the issue and it made them nervous. She explained that
when the PDMP had been put under the Board of Pharmacy it
had been a concern; it was the distinct intent the licensee
of the Board of Pharmacy would not have to pay for the
program. Thus far, the licensees had not been responsible
for paying the cost. The fiscal note reflected the cost
without any federal grant funding to the program because
there was no guarantee for future federal grants.
Co-Chair Neuman noted that for past three years the
legislature had been chosen not to fund the PDMP. He
detailed the department had chosen not to abide by the
request of the legislature and had found its independent
funding for the program. He stated the department had been
instructed not to fund the program. He furthered the
legislature heard all of the "budget restraints and a lot
of crying and screaming from the department about how
you're cutting and reducing our budget, but they can find
other money for programs that the legislature said we don't
want funded."
Representative Gattis asked if the state had to abide by
federal criteria in order to receive the federal funds
related to the PDMP. She wondered if the state would not
receive the money if it did not follow the requirements.
Ms. Hovenden was not aware of any, but she would follow up.
Representative Gattis stated in her experience it had been
necessary to abide by requirements in order to get the
money.
2:12:14 PM
Co-Chair Thompson asked if the pharmaceutical tracking and
information gathered [in the PDMP] was shared with the
federal government.
Ms. Hovenden answered she would follow up during the
meeting the following day and would be accompanied by the
PDMP manager.
Representative Gara referred to the provision requiring
pharmacists to take part in the PDMP. He asked if it
applied to all physicians for all prescriptions or only to
Medicaid services.
Ms. Hovenden answered the provision applied to all
physicians.
Vice-Chair Saddler looked at page 3 of the fiscal note and
observed that $108,600 for legal costs and appeals was a
precise number. He asked if the number was based on the
experience of other boards or was specific to the Board of
Pharmacy.
Ms. Hovenden replied that there was a formula, which was
probably based on past practice. She would follow up with
her administrative officer to determine how the figure had
been calculated. She reminded the committee the provision
impacted other many other boards apart from the Board of
Pharmacy. She believed it represented an accumulation of
past investigations, but she needed to confirm that
information.
Vice-Chair Saddler remarked it was a new expansion of the
range of services and how they were provided by
telemedicine. He did not know if the existing standard
formulas would apply.
Representative Gara asked if there was a separate hearing
on the database.
Co-Chair Thompson replied that the hearing was the
following day.
2:15:07 PM
Co-Chair Thompson relayed the committee would address
fiscal notes from DHSS.
JON SHERWOOD, DEPUTY COMMISSIONER, MEDICAID AND HEALTH CARE
POLICY, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, addressed
a summary document from the department titled "DHSS Fiscal
Impacts for CSSB074(FIN)am, version UA" dated March 21,
2016 (copy on file). He detailed there were many DHSS
fiscal notes; some of the provisions impacted more than one
component and some components reflected the impact of
multiple provisions. He relayed it was difficult to get a
big picture of the bill's impact merely by looking at the
individual fiscal notes. He pointed to the first table at
the top of the document showed the fund sources. He
specified the bill would result in a net reduction in GF in
FY 17 of $31.6 million, which would increase to over $113
million by FY 22. The bill would also result in total fund
reductions beginning in FY 19 and growing through FY 22.
The second table showed permanent and long-term non-
permanent positions: 15 positions were added in FY 17
including 4 to work on enhanced tribal claiming; and 8
three-year non-permanent positions intended to help the
Divisions of Health Care Services and Senior and
Disabilities Services with the transitions involved in the
numerous program changes - the state portion of the
positions was funded by the Alaska Mental Health Trust
Authority (AMHTA). Position reductions were anticipated to
begin in FY 19; the positions would peak at 17 in FY 18 and
would gradually be reduced to 5 as efficiencies were
achieved as a result of reform.
Mr. Sherwood addressed the third table showing capital
budget costs, which totaled $10.4 million. Most of the
costs were around making Medicaid Management Information
System (MMIS) changes to implement various program changes.
Page 2 of the document included a table showing savings
measures and associated summaries. The table did not
include every provision in the bill that impacted the
department; therefore, it did not perfectly match the fund
source table on page 1. The largest reduction came from the
implementation of the federal tribal claiming policy. He
pointed out that savings were also included in budgets
currently before the two legislative houses.
Co-Chair Thompson acknowledged the bill sponsor, Senator
Pete Kelly in the committee room. He noted that
Representative Pruitt had joined the meeting.
Mr. Sherwood noted that bill included provisions to develop
a more effective integrated behavioral health system
through an 1115 demonstration waiver. The department did
not project direct behavioral health savings, but it did
expect substantial savings and positive impacts throughout
state and local government once the new system was in
place. The biggest impacts would be to the criminal justice
system, but there would be possible savings to child
protection and public assistance programs as well. He
underscored that a specific savings for those programs had
not yet been identified. He relayed that several weeks
earlier AMHTA had met and committed to help finance
Medicaid reform. The department's fiscal notes reflected
some of the contributions and other contributions would be
provided as direct support from the trust. The department
deeply appreciated the support from AMHTA.
Co-Chair Thompson referred to the first fiscal note from
DHSS, OMB Component Number 2671. Mr. Sherwood confirmed it
was the first note he would address.
Vice-Chair Saddler referenced the summary document provided
by DHSS and noted he was interested in the expenditures
compared to savings in the table. He asked if the capital
budget costs represented a particular year or the entire
six-year period. He wondered if the costs tended to be
frontend-loaded if they reflected the six-year period.
Mr. Sherwood answered the costs in the chart were intended
to cover capital costs throughout the six years of the
project. Most of the costs would involve expenditures
beginning in year one or two of the program.
Vice-Chair Saddler asked if the savings measure on page 2
incorporated into the grand total chart at the top of page
1. Mr. Sherwood replied in the affirmative.
Representative Gara surmised that it looked as if roughly
85 percent of the savings ($103 million) in FY 22 came from
a combination of the federal tribal policy program and the
1915 waivers. He remarked that many legislators had
accidentally referred to the federal tribal policy as a
waiver; however, it was the program that let the state get
full reimbursement for certain treatment of Indian Health
Service (IHS) and Medicaid-eligible patients. He asked for
the accuracy of his statement.
2:22:51 PM
Mr. Sherwood replied in the affirmative. The change in
policy did allow certain services provided by non-tribal
providers could receive 100 percent federal funds through a
tribal referral.
Representative Gara asked for verification that the federal
tribal policy was a combination of travel and treatment of
IHS patients in a non-IHS facility. He noted the state had
previously paid for the services.
Mr. Sherwood replied in the affirmative. He detailed that
travel and services received by Medicaid and IHS-eligible
individuals resulting from a referral to a non-tribal
provider from a tribal provider would be covered under the
new policy (provided certain conditions were met).
Representative Gara asked for verification the coverage
would be 100 percent and had previously been paid by the
state.
Mr. Sherwood replied in the affirmative. He specified the
services typically would have been matched at 50 percent
federal.
Representative Gara surmised the federal coverage had
increased from 50 to 100 percent. Mr. Sherwood replied in
the affirmative.
Co-Chair Neuman pointed to page 2 of the DHSS summary
document. He asked if the text shown in red represented a
decrement or savings to the state. He asked if the $33
million in FY 17 was a decrement or an expected savings.
Mr. Sherwood answered that the number represented savings
to the state. He detailed the $33 million represented a
decrease in the department's budget.
Co-Chair Thompson asked if the savings went to the state's
Undesignated General Fund (UGF). Mr. Sherwood answered in
the affirmative.
Co-Chair Neuman asked for clarification that the numbers
[shown in red] represented expected UGF savings to the
state. Mr. Sherwood answered in the affirmative. The red
numbers shown in parenthesis represented savings to the
state. He noted some of the items in the early years had an
initial startup cost.
2:25:40 PM
Mr. Sherwood addressed OMB Component Number 2671 related to
the Division of Alaska Pioneer Homes dated 3/17/16. Section
35 of the legislation required Pioneer Home residents to
provide proof of application to Medicaid in the decision
letter regarding their Medicaid application in order to
receive payment assistance. With the proposed change in
law, the division estimated it would increase Medicaid
revenues shown as interagency receipts and decrease GF
expenditures by slightly over $1 million per year. The
switch showed as a fund source change, but not as a change
in expenditures. He elaborated there would be a switch from
GF to interagency receipts in the amount of $1,066,700
annually.
Vice-Chair Saddler for verification that level-3 [Pioneer
Home] residents required the lowest level of care. Mr.
Sherwood responded that level-3 was the highest and most
intensive level of care.
Vice-Chair Saddler believed more people were moving towards
the need for level-3 care. He observed the fiscal note
showed the same dollar amount over multiple years. He asked
if there was an expectation of more Medicaid coverage over
time as more people progressed to level-3.
Mr. Sherwood deferred the question to a colleague.
VICKY WILSON, DIRECTOR, DIVISION OF PIONEER HOMES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, replied that the
division expected there would be increases in the level-3
residents, but the division did not feel it could make an
accurate calculation. She detailed the numbers had held
pretty steady throughout the years, although there had been
increases and decreases from year-to-year; it had been
difficult to make a projection.
2:28:49 PM
Mr. Sherwood addressed OMB Component Number 2665 related to
the Division of Behavioral Health dated 3/17/16. He relayed
that the bill called on DHSS to coordinate with AMHTA to
manage a comprehensive and integrated behavioral health
system. The department would plan and implement significant
behavioral health reforms and would apply for an 1115
waiver as part of the process. As a result of the changes
made to the behavioral health systems, together with the
anticipated use of an administrative services organization
to perform many of the functions required for the 1115
waiver, the division expected to be able to reduce staff
beginning in FY 18. He continued that staff would be
reduced by two in FY 18 and four in subsequent years, which
produced a reduction of $226,700 in FY 18 and $453,400 in
FY 19 going forward (half of the reduction was in GF).
Representative Wilson remarked that page 2 of the fiscal
note addressed how savings would be realized in the
Department of Corrections (DOC), Department of Public
Safety (DPS), the Alaska Court System, and the Office of
Children's Services (OCS). She asked for detail.
Mr. Sherwood thought the savings being referred to were the
benefits accrued to the state as a result of reforming the
behavioral health system and the implementation of the 1115
demonstration waiver for behavioral health. The actual
reductions in the fiscal note only related to the
behavioral health administration. He referred to his
earlier testimony that DHSS did not feel it could predict
or specify savings the state would achieve in the other
areas as a result of the improvements.
2:30:56 PM
Representative Wilson clarified that her question pertained
to how the reductions would affect the agencies the fiscal
note language referred to. She cited OCS as an example. She
believed most of the OCS families were in the Medicaid
system and most services received were delegated by OCS.
She surmised the families were directed where to go for
service. She wondered how the waiver changed the system and
produced any savings.
KAREN FORREST, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH
AND SOCIAL SERVICES, answered that the department was
looking forward to expanding access to mental health
counseling and substance abuse treatment services across
the state. As the ability for Alaskans to access the
services expanded, the department anticipated it would have
a significant impact on other sectors of the state's
communities. For example, particularly for parents dealing
with substance abuse issues through OCS and working to get
into treatment to meet requirements in order to keep their
children at home. The more the state was able to expand
access and have a robust continuum of care for Alaskans it
would impact other service sectors across the state.
Representative Wilson asked for data pertaining to how long
parents were waiting to access services required in order
to get their children back from state custody. She listed
services such as counseling, drug treatment, and other.
Ms. Forrest thought the requested data would be very
helpful and she looked forward to working with OCS and the
Division of Behavioral Health in order to see if the
information was something that could be gathered.
Co-Chair Thompson asked if Ms. Forrest could provide the
data to his office for distribution to the committee. Ms.
Forrest answered in the affirmative.
2:33:09 PM
Co-Chair Neuman referred to page 2 of the fiscal note,
which included language about the addition of a new
subsection in Section 30 of the bill requiring the
department to seek 1115 demonstration waivers from the
federal government, Centers for Medicare and Medicaid
Services (CMS). He asked if it required the department to
seek the waivers or to obtain them. He wondered what would
happen if the waivers were or were not obtained.
Ms. Forrest explained the bill required DHSS to seek the
waiver, which was a negotiation with CMS. The department
would have to meet certain criteria in order to have its
application approved and DHSS was dedicated and willing to
do the work in order to reach some agreement. She felt
strongly based on consultation DHSS had received that it
would put forward a strong application. The department
recognized the behavioral health system needed reform and
that doing so through the waiver with legislative support
was very important.
Co-Chair Neuman asked about the criteria that Ms. Forrest
mentioned. Ms. Forrest answered that one of the important
things DHSS had to meet was budget neutrality. As the
department looked to more innovative ways of serving the
behavioral health population, the federal government did
not want the department to spend more than the federal
government was already spending. Additionally, it was
necessary to create an efficient and effective health care
system. For example, DHSS would have to demonstrate health
outcomes. There was a whole host of requirements the
department would have to meet, but essentially DHSS had to
prove it was increasing access, improving the quality, and
improving health outcomes.
2:35:28 PM
Co-Chair Neuman understood DHSS had to meet budget
neutrality. He did not know if federal funds had to meet
state funds if acquired or if DHSS had to meet certain
budget goals within a plan established by the department.
He wondered if it was possible that it would cost the state
more money in the future if the goals were not met.
Ms. Forrest answered in the negative. Through budget
neutrality DHSS had to provide extensive information five
years back and projections five years forward, which would
receive significant analysis by DHSS and CMS. In terms of
state funding, DHSS understood its budget would not be
increasing and that the state was moving more towards a
Medicaid-based system versus a grant-based system.
Co-Chair Neuman wanted to learn more about what 1115
demonstration waivers were. He understood they related to
IHS components, but did not know what they were for
behavioral health and how much they cover. He was uncertain
about what the state was stepping into.
Ms. Forrest answered that some of the policy decisions
would be made through the negotiations as the department
looked at the costs going forward. She would provide
further information about the 1115 waiver to Co-Chair
Neuman's office.
Vice-Chair Saddler referred to $291,000 in MHTAAR [Mental
Health Trust Authority Authorized Receipts] money for each
of the three years. He referenced a budget sheet in
committee packets provided by AMHTA titled "Alaska Mental
Health Trust Authority Medicaid Reform Implementation
Support" dated 3/16/16 (copy on file) and observed the
MHTAAR funds requested were $308,300 [for health care
services staffing needs]. He asked about the difference.
Mr. Sherwood asked for clarification.
Vice-Chair Saddler pointed to $291,000 under fund source
MHTAAR for FY 17 through FY 19. He realized he was looking
at a different fiscal note and withdrew his question.
Mr. Sherwood moved on to fiscal note OMB Component Number
242 for the Division of Health Care Services. The medical
assistance administration section included many of the
administrative and support components for the Medicaid
program. He detailed many parts of the bill impacted the
section including fraud and abuse prevention, primary care
case management, health homes, emergency room reduction
project, and the coordinated care demonstration. The
largest portion of the fiscal note was for personal
services and two positions would be added to work on the
primary care case management in managed care sections of
the bill (i.e. health homes, telemedicine sections, the
emergency room demonstration projects) - those positions
would be 50 percent federally funded. In FY 17 through FY
19 the state match would come from AMHTA and for FY 20 and
beyond the match would be GF, it would be the point at
which the programs would all be demonstrating savings. The
department also proposed adding four long-term non-
permanent positions for FY 17 through FY 19 with state
match provided by AMHTA to assist with the startup of the
behavioral health related system changes to the MMIS to
handle the increased workload related to fraud and abuse
provisions and to work on the hospital emergency room
demonstration.
Mr. Sherwood continued to address fiscal note OMB Component
Number 242. The services line had been increased by $75,000
per year to accommodate the higher appeal volume associated
with the fraud and abuse provisions, which would be
included in funds going to the Office of Administrative
Hearings. The fiscal note totaled $697,600 in FY 17,
$679,900 in FY 18 and FY 19, and $316,200 in FY 20 through
FY 22. There was minimal GF cost in FY 17 through FY 19 due
to the contribution from AMHTA; the cost would be $57,700
the first year and $48,900 in FY 18 and FY 19. Beginning in
FY 20 the GF cost was 50 percent or $158,100 per year.
2:42:17 PM
Vice-Chair Saddler pointed to a reference that provisions
in the bill would authorize DHSS to assess interest and
penalties on overpayments (page 2, paragraph 1 of the
fiscal note). He asked about anticipated revenue from
interest and penalties on overpayments. He assumed the
language meant overpayments to a provider.
Mr. Sherwood answered in the affirmative. He asked for
verification Vice-Chair Saddler was interested in the
amount that would be recovered.
Vice-Chair Saddler explained he did not know if it would
cost the state much in foregone penalties or interest if
the bill included some provision to give forgiveness to
providers for disclosing an overpayment and repaying the
amount within 60 days.
Mr. Sherwood answered he could address the information on
recoveries associated with the provisions in the health
care Medicaid services fiscal note later in the meeting.
Representative Wilson asked for verification that the DHSS
could seize property from medical assistance providers.
Mr. Sherwood answered that under the bill DHSS would have
the authority to seize assets of a provider (in order to
protect the state from the provider dispersing the assets
prior to fully adjudicating the case) after going to court
and establishing a credible case of fraud.
Representative Wilson asked for verification that the
authority pertained to civil cases. Mr. Sherwood answered
that he would have to review the statute. He detailed the
authority applied to criminal cases, but he was uncertain
it applied to civil cases.
Co-Chair Thompson interjected he was getting an indication
from an attorney in the audience that the authority did not
apply to civil cases.
Mr. Sherwood agreed that a state attorney in the room had
confirmed the authority only applied to criminal cases.
Representative Wilson thought the language on the second
page of the fiscal note "...impose civil fines, and seize
property of medical assistance providers..." was confusing.
She thought the information would have been in a DOL fiscal
note. She was surprised DHSS would be the department
responsible for taking the cases to court.
Mr. Sherwood apologized for the confusion. He clarified
that the lead-in language was generally covering the
provisions of the bill addressing fraud and abuse and did
not necessarily mean to imply there would be an explicit
expense in the current fiscal note for each of those
activities.
2:45:59 PM
Co-Chair Neuman referred back to a presentation from the
Menges Group [heard in the 3/29/16 morning meeting and
titled "Medicaid Reform Options" dated March 29, 2016 (copy
on file)]. He mentioned the report was full of acronyms and
noted primary case management was not recommended in the
Menges Group presentation. However, he pointed to language
on page 2 of the fiscal note "Section 29, pp. 28-29, direct
the department to implement the Primary Care Case
Management system..." He thought the Menges Group
recommended against the Medicaid case management.
Mr. Sherwood replied that the Menges Group was not
recommending broad-based implementation of primary care
case management to the total Medicaid population. The bill
required the department to target certain individuals
including individuals with higher hospitalization, which
was very similar if not identical to the Menges Group
recommendation to look at doing care management for people
with a high volume of hospitalizations. He believed it was
a case of semantics - primary care case management could be
done broadly or in a more targeted way. The bill was
possibly not as targeted as the Menges Group recommended,
but not as broad-based as what it had recommended against.
Co-Chair Neuman replied that was what he thought, but he
did not believe it was what the committee had been hearing.
He remarked that the Menges Group had heard concerns about
the issue, but the fiscal note specified the department
would go ahead with the work. He wondered about the purpose
of hiring consultants if the state did not do as they
recommended. He asked for the difference between the Menges
Group report recommendations compared to the information in
the DHSS fiscal note. He requested the specific location
the issue was addressed in the Menges Group report.
Mr. Sherwood would follow up with the explanation.
2:49:00 PM
Mr. Sherwood spoke to the fiscal note OMB Component Number
2696 related for the DHSS Office of Rate Review. The Office
of Rate Review was responsible for setting most of the
Medicaid rates; Sections 28, 30, and 31 of the legislation
all contain provisions that would require payment reform or
innovative payment methods. Under Section 30 the department
would need to apply for an 1115 demonstration waiver
focused on innovative payment models. The department
assumed it would issue a one-time contract for $500,000 in
FY 17 to analyze and implement the payment models and a
continuing $100,000 contract in subsequent years for
ongoing actuarial work updating and maintaining the rates.
Section 31 of the bill required an annual actuary report on
the coordinating care demonstration projects. The
department had increased the ongoing actuarial contract by
$100,000 to reflect the additional work; therefore, the
combined cost of ongoing actuarial services would be
$200,000 per year from FY 18 going forward. The costs would
be $500,000 in the first year and $200,000 in subsequent
years, which would be made up of split 50/50 between
federal funds and GF.
Vice-Chair Saddler referred to the last paragraph on page 2
of the fiscal note related to contracting with a third-
party actuary to review the demonstration projects. He
asked about the thought process that determined mostly
separate people on the project review committee and having
the actuary recommend the program description. He wondered
if there was any continuity between the two review bodies.
Mr. Sherwood believed the purpose of the actuary was to do
the independent evaluation. He detailed when a change such
as the one under discussion was implemented it was compared
to a baseline to determine its effectiveness, which
typically involved an actuarial assessment. The idea was
the process would inform DHSS and the legislature about how
effective the demonstrations were.
Vice-Chair Saddler surmised the policy work would be done
when the demonstration projects were designed and the
actuary would look at the numbers to see how well it
worked. He believed the actuary would be required to accept
the policy assumptions that had already been made and would
make tweaks to the finances. He asked if his statement was
accurate.
Mr. Sherwood replied that he was uncertain about how the
actuary would approach the process. He agreed the actuary
would not be expected to speculate on an alternative design
in terms of evaluating the project as it was implemented
and as the data became available to determine whether it
was achieving its intended outcomes.
2:53:26 PM
Mr. Sherwood spoke to the fiscal note OMB Component Number
237 related to fraud investigation by the Division of
Public Assistance pertaining to Sections 24 and 31 of the
legislation. Under Section 24 the division would need to
contract with a third-party to provide a computerized
system of income asset and identity verification to deter
and avoid fraud in Public Assistance benefits. The system
would have to be cost-effective and save more than it cost.
There was a startup cost of $650,000 in FY 17, which
included $250,000 to make changes to the ARIES [Alaska's
Resource for Integrated Eligibility Services] system to
enable integration with the new system in the current work
processes; and $400,000 for associated implementation costs
such as documentation, user acceptance, testing, training,
and support. The work was almost all state funded. He
furthered that savings were expected beginning in FY 18 as
certain aspects duplicated, somewhat different, but similar
verification systems already built into the ARIES system
and paid for by the federal government. He elaborated the
division estimated it would have the ability to reduce its
fraud investigation staff by one half of a position by
deterring and identifying fraud upfront before there was an
individual receiving benefits; potentially fraudulent
applicants would be screened out - as a result the number
of investigations would decline. The department anticipated
a $46,000 reduction in personal services beginning in FY 18
composed of 50/50 federal funds and state GF.
Mr. Sherwood relayed that Section 31 of the bill required
DHSS to refer Medicaid recipients to community resources,
the Department of Labor and Workforce Development (DLWD),
and universities for education and career opportunities.
The department expected the requirement to have a one-time
expense of $30,000 in FY 17 to create notices within the
eligibility system to support the referrals, which would be
funded 75 percent with federal funds and 25 percent state
GF.
Representative Wilson asked if it was the same program DHSS
could use for [emergency room (ER)] super-utilizers to
determine the number of times they visit the ER.
Mr. Sherwood replied in the negative. He explained that it
was a different system that looked at a variety of private
databases, which would give the department additional
information about whether a person was residing in another
state, shielding assets, or having unidentifiable sources
of income, when making eligibility determinations for
Medicaid and other assistance programs.
Representative Wilson believed the system was capable of
providing many different pieces of information. She
wondered why the program could not keep track of super-
utilizers and prescription billing. She noted prescriptions
were all billed to Medicaid.
Mr. Sherwood answered that he was not familiar with the
capabilities of the systems in terms of tracking medical
expenses. He elaborated it was not the department's
understanding that tracking medical expenses was the bill
sponsor's intent; therefore DHSS had not looked into the
issue. The department could search for additional
information about the ability to do some of those things;
DHSS had other systems that integrated its health care
spending information and it may not be cost-effective to
try to incorporate health care spending information from
another system into the system focused on individuals'
financial eligibility.
Representative Wilson recalled when the system had been
introduced, the legislature had been told how amazing it
would be and all of the things it could do. She reasoned it
made sense to determine whether the existing system could
do much of the work before considering spending even more
money. She thought it may save money versus costing more.
2:58:43 PM
Representative Gattis requested a side-by-side comparison
of the systems and databases compiled in the bill to
determine where there may cross over.
Mr. Sherwood addressed fiscal note OMB Component Number
2663 related to the Division of Senior and Disability
Services. Section 30 of the bill required the department to
apply for 1915(i) and 1915(k) options, which would increase
the federal funds received to provide home and community-
based services. The Division of Senior and Disabilities
Services anticipated implementing a new assessment tool for
use in its existing waivers and for the 1915(i) and 1915(k)
options. The department anticipated the need to add
positions to plan, develop, and manage the two options; it
would add one permanent position in FY 17 to begin the work
and two additional positions in FY 18 as the options began.
The department believed it was important to get the design
and implementation of the options right; while they
generate considerable GF savings it was paramount for the
department to ensure eligibility requirements and service
limits were well designed and strictly enforced in order to
achieve savings. Additionally, AMHTA had agreed to fund the
state's share of four non-permanent positions in FY 17
through FY 19 to assist in developing the data
capabilities, provider certification, quality assurance,
and policy development around the efforts. He continued
that in addition to the position costs there would be costs
associated with modifying the automated services plan (the
division's management information system).
Mr. Sherwood relayed the department estimated a cost of
$550,000 to be spread out over the first three years, which
would be 90 percent federal funded (reflected in the
services line of the fiscal note). In FY 18 and FY 19 the
services line included costs totaling $346,900 for
assessing individuals for the 1915(i) option. He elaborated
the individuals would be coming from grant programs to the
new Medicaid option and did not currently receive that
level of assessment; the costs were one-half GF. The cost
of implementing a new assessment tool would be $2,575,000
(50 percent would be paid with federal funds and 50 percent
would be paid by AMHTA). The total FY 17 costs were
$3,157,500, but only $71,100 would be GF. The FY 18 cost
was $1,034,900 with about $297,000 GF. He relayed
expenditures would continue to fall - costs in FY 20
through FY 22 would be $343,200 annually with about 171,600
in GF.
Co-Chair Neuman asked for the OMB Component Number of the
fiscal note under discussion. Mr. Sherwood answered that he
was referring to OMB component 2663.
3:03:29 PM
Vice-Chair Saddler looked at the $146,800 MHTAAR funds for
FY 19 compared to $213,000 at the top of page 3 on the
document provided by the AMHTA ["Alaska Mental Health Trust
Authority Medicaid Reform Implementation Support" dated
March 16, 2016 (copy on file)]. He asked about the
discrepancy between the numbers.
JEFF JESSEE, CHIEF EXECUTIVE OFFICER, ALASKA MENTAL HEALTH
TRUST AUTHORITY, answered he would have to confirm the
information with the department. He relayed when the
overall package had been negotiated they had been working
with estimates for some of the costs, which was the data he
had taken to the AMHTA board on the 19th [of March]. There
had not been ample time for DHSS to fine tune the numbers;
therefore, the actual numbers were coming in slightly under
those approved by the trust. He relayed the additional
funds would be restricted and deposited back into the
trust.
Representative Gara referred to the three annual AMHTA
contributions of $2.15 million in the first year, which
increased to approximately $3 million in the third year. He
did not want to see money shuffled around to serve one
group of people but not another. He asked if the
contributions would displace services for any other trust
beneficiaries. He reasoned there was a finite amount of
money coming out of the trust.
Mr. Jessee requested to defer the question until after the
completion of the fiscal notes. He planned to provide an
overall vision of the trust's philosophy later in the
meeting.
3:06:32 PM
Mr. Sherwood spoke to OMB component 2875 related to general
relief/temporary assisted living. The fiscal note was the
first of three consecutive notes reflecting the reduction
of 100 percent GF funding home and community-based services
as a result of the implementation of the 1915(i) option in
Section 30 of the legislation. The expenditures would be
offset in a later Medicaid fiscal note where the expense
would be 50 percent GF and 50 percent federal. The current
note was for general relief/temporary assisted living
program, which paid for assisted living homecare for
vulnerable adults who did not qualify for Medicaid home and
community-based waivered services. With the implementation
of the 1915(i), Medicaid would be able to pay for a
substantial amount of the services covered under the
program. Beginning in FY 19 the program would be reduced by
almost $4.7 million GF annually.
Co-Chair Neuman observed some of the fiscal notes did not
include money for travel (e.g. OMB Component Numbers 2875
and 2663). He read from the last sentence on page 2 of the
current fiscal note "changes to the State Plan and
regulations are required to implement the new option and
would involve extensive public comment." He remarked
generally when things involved significant public comment
it cost the state money. He wondered about the cost.
Mr. Jessee replied that when he addressed the AMHTA package
later in the meeting it would show the trust had agreed in
a number of instances to fund the public process; it would
be more efficient and cost-effective for the trust to do
off budget.
Mr. Sherwood addressed OMB Component Number 2787 for senior
community based grants, the second of three similar notes
showing reductions to a 100 percent GF program as a result
of adding the 1915(i) option under Section 30 of the bill.
The senior grants paid for adult daycare, in-home services,
and other, which could be covered by the 1915(i) option for
Medicaid eligible individuals. Beginning in FY 19 the
grants would be reduced by $735,200 GF per year to reflect
a certain number of individuals would receive the services
through the 1915(i) option.
3:10:09 PM
Co-Chair Neuman referred to language in the second
paragraph on page 2 of the fiscal note: "Section 28, p. 25
lines 27-29 charge the Department with 'reducing the cost
of...senior and disabilities services provided to
recipients of medical assistance under the state's home and
community-based services waiver.'" He asked what would
happen if the other waivers were not received and the
department was still directed to reduce costs. He asked
about the backup plan if things did not work as
anticipated.
Mr. Sherwood answered that the department did not see a
substantial barrier to getting the 1915(i) option approved;
however, if a barrier was encountered the department would
have to look at different ways to control utilization
within the program. In absence of the ability to use the
tools in the bill, the natural way to reduce cost would be
to look at controlling utilization as much as possible to
get the optimal benefit for the services the state was
paying for. He noted the division director was available
for further detail.
Co-Chair Neuman expressed consternation that the bill
required cost reductions in senior disability services, but
the department did not know which services would be reduced
or by how much.
Mr. Sherwood addressed OMB Component Number 309 related to
community developmental disabilities grants, the last of
three similar notes showing reductions to a 100 percent GF
program as a result of adding the 1915(i) option under
Section 30 of the bill. The grants provided home and
community-based services to support individuals with
developmental disabilities. The department projected it
would begin the 1915(i) option for the group mid-way
through FY 18 and would reduce grants annually by
$11,635,800 GF in FY 19 through FY 22; the reduction would
be $5,817,900 GF in FY 18. The community developmental
disabilities grants were the largest grant program that
would be refinanced by the 1915(i) option. He detailed in
terms of priority, due to the large size, the department
had been advised to not do all of the work at one time.
They had selected services that would provide the most
savings to start on January 1 of FY 18.
3:14:10 PM
Vice-Chair Saddler recalled the legislature's budget
included a 5 percent reduction to the grant line. He asked
for verification the funding assumed FY 17 as a baseline;
it would be a replacement of state money with waiver money
at the same level of service.
Mr. Sherwood believed so. He detailed the funds would be to
replace the GF in the grant line with the federal and GF in
the Medicaid option.
Representative Wilson noted in reference to the last three
fiscal notes, the waivers were temporary for a period of
five years with the possibility of renewal. She for
verification that after the five-year period the issue
would come before the legislature for approval of GF.
Mr. Sherwood replied that the options did not have a
specific time limit. He detailed that with the 1915(i)
option if benefits were targeted to specific groups it
required re-approval of the targeting every five years. As
optional services they were not subject to the routine
renewal the way a waiver would be.
Representative Munoz asked if the change would result in
the same level or expanded services for the specific user
population.
Mr. Sherwood replied that it was the department's goal to
provide the same level of service to the same individuals
currently receiving service, but through a different
mechanism.
3:16:23 PM
Mr. Sherwood addressed OMB Component Number 317 for the
Commissioner's Office. Section 40 of the legislation
directed DHSS to conduct feasibility studies on privatizing
the Alaska Pioneer Homes, certain Division of Juvenile
Justice facilities, and the Alaska Psychiatric Institute
(API). To conduct the three studies, the department
estimated a cost of $735,000 GF in FY 17. Section 38
required the department to implement the new federal policy
on tribal Medicaid reimbursement. The fiscal note included
the creation of a new tribal federal liaison section to
aggressively move forward to implement the policy in order
to maximize the enhanced federal claiming in the minimum
amount of time. The section would be responsible for
working with CMS, tribal providers, and non-tribal
providers on the development of implementation of
referrals, care plans, and claiming for services provided
to tribal members by non-tribal providers. Once
implemented, the section would also provide oversight to
the processes to ensure the department continued to meet
the requirements for claiming the enhanced funds. The work
included four positions at an annual cost of $579,400 (50
percent federal funds and 50 percent GF). He noted the
positions were also included in the House and Senate
budgets.
Vice-Chair Saddler believed the cost of the positions were
accounted for in the operating budget and in the bill. He
asked if there was double dipping.
Mr. Sherwood answered that the addition had been included
as a result of discussions with the Senate Finance
Committee. The amount was not included in the governor's
budget; therefore, it had not seemed appropriate to include
the amount in the "included in governor's FY2017 request"
column on the fiscal note. The department wanted the
expenditure to be recognized as part of the package. He
elaborated the department appreciated and had tried to
identify there was potential duplication, which was
something that needed to be watched in the final budget
process to ensure there was no double dipping and that
reductions were not taken twice in the service category
(those savings were shown in both locations as well).
Vice-Chair Saddler pointed to the first paragraph on page 2
of the fiscal note related to Section 40 of the legislation
asking DHSS to conduct a study analyzing select facilities
of the Division of Juvenile Justice for privatization. He
wondered if the language was referring to any particular
facilities.
Mr. Sherwood answered the department understood the issue
to be its call. He believed there were some logical choices
to look at in terms of utilization and support. He deferred
the question to Ms. Forrest for further detail.
Ms. Forrest echoed Mr. Sherwood's response. She stated that
the language left the issue to DHSS to decide how to
procure for the feasibility study. There were eight
juvenile facilities: four were combined treatment and
detention facilities and the remaining four were smaller
and located in rural areas. She detailed it would be
necessary to look at balancing the needs between rural and
urban as well as at the utilization numbers.
3:21:08 PM
Representative Munoz thought the department had solicited
for letters of interest regarding privatization management
of the Alaska Pioneer Homes. She asked for detail.
Mr. Sherwood replied that DHSS had initiated a request for
letters of interest regarding assumption of some or all of
the responsibilities of operating the Pioneers Homes and
had received four responses. One of the responders had been
looking at very limited management, one was interested
primarily in one of the homes and potentially other homes,
and two were entities from out-of-state operating assisted
living facilities in other places. He detailed none of the
responders was willing to take on the responsibility
without substantial continued support from the state. There
was some interest, but he believed there was probably not
interest in assuming as much responsibility as some people
may envision or the interest had not been seen as of yet.
He continued the homes operated with a substantial state
subsidy and included provisions ensuring people's ability
to pay did not keep them from receiving services in the
home. As of yet, no one was willing to step up to offer to
take over that responsibility.
Representative Gara spoke to Section 40 of the bill that
requiring studies on many state facilities. He provided a
scenario where the state wanted to privatize the
facilities. In that scenario, he wondered why the state
would spend money on a study. He asked why the state would
not merely invite prospective entities to provide
information on what they were willing to do.
Mr. Sherwood answered that conducting a feasibility study
was a requirement in the department's current bargaining
agreements.
Representative Gara asked why the department would not just
wait to see if an entity was interested prior to conducting
a study. He wondered why the state should spend the money
on a study before knowing whether it was needed.
Mr. Sherwood answered that one of the challenges, which
DHSS had experienced with the letters of interest, in order
to get down to the detail required it meant asking people
to invest significant money upfront to do the analysis and
prepare a proposal of what it would look like for the
entity to take over. He specified if the state was not
certain it would pass the feasibility test, there may not
be the interest from people and the willingness to invest
if the feasibility study had not yet been conducted.
3:25:17 PM
Representative Gara remarked that privatization had been
discussed numerous times and recalled that the former Palin
Administration had considered the issue. He asked if the
state had spent money on feasibility studies on privatizing
the Pioneer Home in the past.
Mr. Sherwood answered that he was not aware of an instance
where the state had spent money on a study related to
privatization in the past.
Representative Gara asked what efforts had been made to
look at privatizing the Pioneer Homes when the issue had
arisen under the Palin Administration.
Mr. Sherwood replied in the negative. He relayed the
department would follow up on the question.
Representative Gara remarked that Representative Munoz
spent time at the Juneau Pioneer Home and other legislators
with homes in their districts also spent time in the
facilities. He stressed the idea of privatization caused
significant angst for the residents in the homes. He
believed it caused substantial nervousness every time the
issue arose, which was frequent. He was concerned about the
provision.
Co-Chair Thompson commented that the overall budget had
caused consternation across the entire state in areas such
as Department of Transportation and Public Facilities,
University, and the Department of Education and Early
Development. He understood Representative Gara's comments.
Mr. Sherwood addressed fiscal note OMB Component Number
2660. The fiscal note was the first of three consecutive
notes related to Medicaid services. The current note
applied to behavioral health and reflected two different
parts of the legislation. First, it applied to Sections 28
and 30 to manage a comprehensive integrated behavioral
health program and to do an 1115 demonstration project.
Second, the provision in Section 38 of the bill, which
would implement the new federal policy on 100 percent
federal claiming on tribal services. There were several
different types of expenses related to the behavioral
health redesign and 1115 waivers. He detailed there were
increases to the grants and benefits line to reflect the
increase in Medicaid expenditures related to filling the
gaps in the state's behavioral health system and eventually
covering larger substance abuse treatment facilities under
the 1115 waivers. The note included a blended match rate
for different Medicaid populations whose federal match rate
varied between 50 and 100 percent. The waiver would begin
in FY 18 and grow over time. There were increases to the
service line in FY 18 to reflect the cost of paying an
administrative services organization to develop and manage
a network of providers; manage utilization; monitor
outcomes; and audit for fraud, waste, and abuse. The
state's share was paid by the AMHTA through FY 19;
subsequent to FY 19 the cost would be 50 percent federal
and 50 percent state GF. There was a two-year cost in FY 17
and FY 18 for consulting contracts in the services line, to
assist DHSS in designing and implementing the managed
behavioral health care system and developing the waivers.
There was also a contract in FY 17 and FY 18 to develop a
prospective payment system for certified community
behavioral health centers - the state's share would be paid
by AMHTA.
Mr. Sherwood pointed out the expenses were all summarized
in a table on page 3 of the fiscal note. The note reflected
a capital need of $2,348,000 for one-time MMIS changes (90
percent federal/10 percent AMHTA). The fiscal note also
reflected the change in federal policy around claiming 100
percent federal funds for services provided to tribal
beneficiaries. The department estimated shifting some of
the behavioral health services, particularly residential
psychiatric treatment services to 100 percent claiming from
50 percent federal claiming. While the particular change
did not impact total expenditures, it impacted fund sources
for behavioral health Medicaid, reducing GF and increasing
federal funds. The table at the bottom of page 3 of the
fiscal note showed the department's projections related to
the shift for behavioral health services. The total FY 17
appropriation request was $850,000 with no GF. The note
showed the FY 17 tribal claiming fund shift in the column
for the governor's request as the portion had already been
included in the governor's budget. In FY 18 the
administrative services organizations and the 1115 waiver
services expenditures would begin showing up in operating
expenditures at almost $5 million; the expenditures would
be almost $10 million in FY 19, slightly over $14 million
in FY 20, and just over $19 million in FY 21 and FY 22.
Mr. Sherwood relayed the fund sources for FY 18 and beyond
showed the savings in the tribal claiming more than offset
the increase in GF expenditures until FY 20, when GF
expenditures would increase by $396,000; the GF increase in
FY 21 and FY 22 was about $1.2 million. However, as a
result of the 1115 waiver, DHSS expected benefits to accrue
to other divisions within the department, the criminal
justice system, the courts, DPS, and DOC. He noted those
benefits were not quantifiable at present.
3:31:45 PM
Vice-Chair Saddler pointed to the first paragraph on page
2. He discussed previous presentations by the Menges Group
and Health Management Associates regarding the inability of
other states to require Medicaid recipients to avail
themselves of employment assistance as a condition of
receiving Medicaid services. He referenced language in the
fiscal note related to managing an integrated behavioral
health program including housing, employment, and criminal
justice. He asked if it was appropriate for the bill to
include the guidance for the behavioral services plan to
address employment.
Mr. Sherwood answered that the particular reference in the
fiscal note [OMB Component Number 2660] was related to
supportive services that could help people with behavioral
health issues to either obtain or sustain a program. As
opposed to a requirement for a person to be employed to
receive services, the language referred to supports
provided to people addressing their behavioral health
issues in order to help them attain or maintain their
employment.
Mr. Sherwood addressed OMB Component Number 2077 related to
health care Medicaid services. He explained that it was the
most complex of the fiscal notes. The note included impacts
from the numerous fraud and abuse provisions; the reform
provisions including primary care, health homes,
telehealth, health information infrastructure, emergency
room project, coordinated care demonstrations; and the
transportation component of the tribal claiming policy.
Several sections of the bill contained the provider fraud
and abuse provisions including the False Claims Act, the
ability to assess interest on audit recoveries, providers
self-review to identify overpayments, the authority to
issue civil fines, and the ability to invoke civil
forfeiture against fraudulent providers. The provisions
resulted in enhanced recoveries and abatements and were
summarized on pages 2 and 3 of the fiscal note.
Mr. Sherwood relayed Section 28 of the bill provided for
electronic distribution of an explanation of benefits (EOB)
to Medicaid recipients. The department intended to use the
My Alaska portal for the electronic distribution. He
detailed there was an initial setup cost of $707,500 in FY
17 and ongoing costs of $93,500 for user license and
maintenance fees (50 percent GF and 50 percent federal).
The section also directed DHSS to provide for stakeholder
involvement in setting annual targets for quality and cost-
effectiveness. The department estimated an annual cost of
$5,000 for consultant services to facilitate meetings and
compile a report; the cost would be funded by AMHTA from FY
17 through FY 19. Section 29 directed DHSS to implement a
primary care case management system. He specified DHSS
would contract with an administrative services organization
(ASO) for a monthly per-member, per-month fee beginning in
the second quarter of FY 18.
Mr. Sherwood communicated DHSS projected primary care case
management would reduce many services but would increase
physician services as well as incur fees to the ASO. The
net impact would be a $596,400 reduction in FY 17, which
would increase to a reduction exceeding $9.5 million in FY
22. Section 30 directed the department to implement the
Health Homes two years later, which would bring a net
savings of $3,430,000. He detailed the program provided
more intensive care management for individuals with chronic
conditions. There would also be startup costs for MMIS and
ongoing operations. The startup capital costs would be $1
million for the primary care case management and Health
Homes projects (90 percent federal funds and 10 percent
GF). The ongoing operation cost would be $65,000 for each.
Mr. Sherwood relayed Section 30 directed the department to
provide incentives for telehealth including increasing
capabilities for and reimbursement of telehealth. The
department had included a $5,000 contract in the services
line in FY 17 to convene a workgroup and identify the
barriers and potential, which would be paid for by AMHTA.
The department projected savings in telehealth beginning in
FY 18 starting at $1.3 million and growing to $13.3 million
in FY 22. Section 31 authorized DHSS to support private
initiatives to reduce ER usage. The department's role would
include data sharing support for the PDMP, support for
electronic health record sharing, and development of a
shared savings model. He furthered DHSS anticipated
implementing the shared savings model beginning in FY 19.
For the purposes of estimating cost DHSS had assumed one-
time expenses to interface the PDMP and connect pharmacies
with the health information exchange at a cost of $765,000
in FY 17 (90 percent federal funds and 10 percent GF); it
had also assumed $20,000 in annual operating costs. The
department anticipated a one-time cost of $1 million for
MMIS changes (90 percent federal funds and 10 percent GF)
and $65,000 in annual operating costs.
3:38:25 PM
Mr. Sherwood continued to address the fiscal note OMB
Component Number 2077. The department expected net savings
to the state (after shared savings with providers) of
$2,240,000 annually. Section 31 authorized DHSS to contract
with one or more coordinated care projects. The note
reflected DHSS's assumption the projects would be
implemented in FY 19 and the expectation of an annual net
savings of $1.5 million GF. There would be startup costs
for technical development and consulting with $3,885,000 in
capital costs (90 percent federal funds and 10 percent GF)
and ongoing maintenance costs reflected in the service line
of $318,000 for provider outreach and support (50 percent
federal funds and 50 percent GF). Section 38 directed DHSS
to implement the federal policy on Medicaid tribal
reimbursement. The department estimated the health care
Medicaid services component would see a shift from GF to
federal funds for travel and ambulance services; it merely
a change in fund source and not a change in total
expenditures. With aggressive startup efforts DHSS
estimated it would begin with a $26.7 million shift in FY
17, which would eventually grow to $44.2 million in FY 21
and FY 22 (illustrated in a table on page 6 of the fiscal
note).
Mr. Sherwood relayed Section 39 directed DHSS to implement
a health information infrastructure plan to support
transformation of the health care system in Alaska. The
department estimated a one-time services cost of $5,000 in
FY 17 for a consultant to facilitate meetings and compile a
report of recommendations to be funded by AMHTA; it also
estimated capital costs of $775,000 (90 percent federal
funds and 10 percent GF) to fund requirements for a
development road map and gap analysis and design and
engineering implementation plan with phases and achievement
goals. The combined impact of all of the changes in the
fiscal note was an increase in expenditures in the FY 17
appropriation request of $337,200 with a $20.2 million
reduction in the GF match. The fiscal note also showed the
FY 17 impacts of the tribal policy change, which were
already included in the governor's proposed budget. There
was a decrease of almost $3.8 million in total expenditures
in FY 18 and a reduction in GF match exceeding $35 million.
In FY 19, when most of the projects would have started,
there was a net reduction of over $16 million in total
operating expenditures and a $45 million reduction in GF
match; the reduction continued to grow until it exceeded
over $60 million in GF match by FY 22. Combined capital
costs for all of the projects included in the fiscal note
were $6.9 million (90 percent federal funds and 10 percent
GF).
3:41:52 PM
Representative Wilson referred to civil forfeiture
recoveries on page 3 of the fiscal note. She remarked the
department had repeatedly stated it was not civil
forfeiture. However, she observed the note showed an annual
recovery from civil forfeiture of $282,500. She wondered
where the money would come from. She noted DHSS could not
currently "do it now."
Mr. Sherwood answered that the forfeiture essentially
allowed the department to protect assets of a provider
while it pursued criminal cases against them. Currently the
state may receive judgements against providers; however,
they had no assets left by the time the criminal conviction
occurred. The provision would enable the department to
"seize and freeze" or restrict providers' access to their
assets while the case was underway; if the state prevailed
it would recover against any assets. The $282,500
represented increased recovery by preserving the provider
assets.
Representative Wilson asked how the specific $282,500
figure had been derived.
3:44:15 PM
Mr. Sherwood replied the calculation was described in the
fiscal note based on historic overpayments and restitution
amounts due from providers who may be subject to civil
forfeiture. The department estimated there was
approximately $2.8 million annually that would be subject
to the provision, but DHSS estimated only about 10 percent
of the total would be recoverable through civil forfeiture.
Representative Wilson asked for verification that in a
criminal case there was no way through the criminal process
to freeze any assets whatsoever and that it had to be done
in the civil process.
Mr. Sherwood replied the question would be best directed to
an attorney in terms of what aspects fell under criminal
versus civil law. He detailed the provision allowed the
state to preserve the assets prior to a criminal
conviction. The process was referred to as civil forfeiture
because it came before the criminal conviction had been
obtained.
3:46:05 PM
STACIE KRALY, CHIEF ASSISTANT ATTORNEY GENERAL, HUMAN
SERVICE, DEPARTMENT OF LAW, addressed the question by
Representative Wilson. She agreed with Mr. Sherwood's
response. There was currently no mechanism to seize
property through a criminal prosecution; therefore, the
Department of Law (DOL) had asked for the bill to create a
separate process, which would be done through a civil
forfeiture. The provision would enable the state petition
the court and show probable cause that criminal fraud had
occurred; if the court agreed it would grant authority to
place liens or to seize certain assets identified by the
state. At the end of the proceeding, should an individual
be convicted of the fraud, the state would provide the
court with the amount owed to the state to request
permission to have the assets forfeited to the state to
offset the criminal fraud.
3:47:57 PM
Representative Wilson asked for verification that currently
the state's criminal attorneys could not freeze the assets
of individuals. She found it hard to believe.
Ms. Kraly replied there were very limited seizure
provisions under existing state statute. She was most
familiar with the statute enabling the state to seek
seizure and forfeiture of fishing gear in response to fish
and game violations. There was broad federal authority for
seizure and forfeiture of assets related to the commission
of a crime for things such as drug arrests; the similar
authority did not exist in state statute. The provision
provided a very limited capture of assets for forfeiture
for individuals convicted of Medicaid fraud. She explained
that a Mr. Peterson had convicted a number of individuals
for Medicaid fraud, some of which were corporations or
businesses. She detailed that when the department had moved
to recover the hundreds of thousands of dollars it had
identified in fraudulent payments, all of the assets had
been dissipated - there were no assets remaining to go
after. She continued the offenders had transferred interest
in their homes, cashed out their bank accounts, sold boats
and RV's and other. The previous DHSS commissioner Bill
Streur had been interested in determining a way to make the
state whole. One of the ways to make the state whole was to
seek seizure and forfeiture in the narrow circumstances
where criminal Medicaid fraud had been established.
Representative Wilson corrected that the individuals had
not yet been convicted. She stated the provision applied to
cases where individuals had not yet been convicted. She
clarified she did not want anyone to commit fraud, but she
believed freezing a person's assets while they waited for
the case to be decided could ruin that person's life. She
referred to fish and game cases where people had been found
not guilty but had not been able to get their things back.
She stated that the provision could have negative
consequences on providers because the [legal] system was
not as fast as it should be related to criminal cases. She
was nervous about taking the situation down to a lower
threshold. She was unconvinced there was not another way of
recouping the state's cost.
3:50:58 PM
Vice-Chair Saddler asked about interest charged to a
Medicaid provider who may find out they had inadvertently
overpaid and repaid the amount within 60 days (as per the
bill). He asked if someone under the scenario was likely to
be subject to interest and penalties.
Mr. Sherwood answered in the negative. He explained
intention was to start the clock on interest when the state
had come to the conclusion of an audit process (either when
the final audit was issued and not disputed or the appeal
of an audit had come to conclusion). The provision was not
intended to address self-reporting of overpayments when a
timely repayment was made or a repayment plan was worked
out.
Vice-Chair Saddler asked for verification someone in the
scenario was not subject to interest. Mr. Sherwood agreed.
Vice-Chair Saddler asked where he would find documentation
that interest would only begin at the end of an audit. He
noted he was starting on page 7, line 17 of the bill.
Mr. Sherwood referred to page 23, lines 2 through 7 of the
bill. He relayed that the interest was referring to the
state's audit statute AS 47.05.020. The section addressed
the date interest would start. He read from the section
which governed when the audit would begin: "the date of
issuance of the final agency decision is the later of the
department's written notification of the decision and the
provider's appeal rights or if timely appealed by the
provider the final agency decision." Provisions on lines 21
and 22 made clear that the interest in penalties did not
apply to the section regarding self-identified
overpayments.
3:54:25 PM
Mr. Sherwood spoke to OMB Component Number 2662 related to
the impact on the senior and disabilities Medicaid services
component for the addition of the 1915(i) and 1915(k)
Medicaid options and the impact of the tribal claiming
policy change. Section 30 of the bill directed DHSS to
apply for the 1915(i) option for home and community-based
services and shifted coverage of services from other
programs with 100 percent GF to Medicaid (50 percent
federal funds). The shifts had been outlined in the
previous fiscal notes he had discussed. The actual Medicaid
expenditures appeared in the current fiscal note (50
percent federal and 50 percent GF); the GF increase had
been offset in other fiscal notes. Section 30 also directed
the department to implement the 1915(k) option for home and
community-based services, which would cover personal care
services currently provided to Medicaid 1915(c) waiver
recipients; however, the 1915(k) services came with an
additional 6 percent federal match. He detailed the federal
match for the services had changed from 50 percent to 56
percent. The department expected the shift to reduce GF
match by slightly over $2.5 million per year in FY 18. The
implementation of the two options would require a capital
cost of $1.2 million to make changes to the MMIS (90
percent federal and 10 percent GF).
Mr. Sherwood relayed Section 38 of the bill directed DHSS
to implement the new federal policy on tribal claiming,
which would shift some nursing home and home and community-
based services presently claimed at 50 percent federal
funds to 100 percent federal funds. Implementation would
begin with nursing homes in FY 17 and would expand to home
and community-based waiver services in FY 19. He explained
the delay was to give a chance for some of the other
federal changes occurring with the home and community-based
services providers. The shift would grow from $2.9 million
in FY 17 to over $42 million in FY 22. The combined impact
of the provisions for FY 17 was a zero dollar change in
operating costs with a $2.9 million shift in GF match to
federal funds in the governor's request. The fund source
shifts continued in FY 18 with the addition of the 1915(k)
option; increased spending would begin associated with the
1915(i) option halfway through the year. The expenditure
increase in FY 18 was slightly over $5.6 million, but the
net reduction in GF was almost $4.8 million. In FY 19 and
beyond, when the 1915(i) had been fully implemented, annual
expenditures would increase to about $17 million, but due
to growth in tribal claiming for long-term care services,
the GF match continued to reduce for the remaining years of
the fiscal note for a net reduction of almost $17.2 million
in FY 19, growing to almost $36.6 million in FY 22.
3:58:35 PM
Vice-Chair Saddler referred to a one-time capital
expenditure of $1.2 million for MMIS changes on page 3 of
the fiscal note. He asked if the MMIS would be ready to
handle benefits of the reform in the bill.
Mr. Sherwood replied in the affirmative. He detailed the
changes were not easy and it would be necessary to do them
in stages.
Co-Chair Thompson asked if the MMIS was federally
certified. Mr. Sherwood replied in the negative. He stated
that the department was scheduled to have its certification
review in June 2016.
Mr. Jessee addressed the document titled "Alaska Mental
Health Trust Authority Medicaid Reform Implementation
Support" (copy on file). He discussed that the AMHTA
trustees had testified early on in the SB 74 process that
they believed Medicaid reform was the most important thing
that had happened to the beneficiaries and the trust since
its creation in 1995. He detailed the current Medicaid
program was unsustainable and the state's behavioral health
system did not provide comprehensive care in an efficient
and effective manner, which left many beneficiaries
unserved. The trustees had signaled early in the process
they intended to step forward and provide some financial
assistance to the state as the trust had on many other
initiatives over the years (i.e. the trustees had spent
nearly $16 million in trust funds over a seven-year period
on the Bring the Kids Home initiative in order to allow the
legislature to repurpose well over $30 million in GF from
out-of-state programs into in-state services).
Mr. Jessee continued that when the trust had begun to look
at the development of the bill, much of the focus had been
on substantive provisions. At the point when fiscal notes
started to be discussed it was clear there were certain
areas that were more difficult for the Senate Finance
Committee and presumably the House Finance Committee to
fund, given the state's fiscal gap and the different
directives to try to be efficient and effective with state
resources. For example, one of the things that came out
early on were all of the new positions required to do the
work - the non-permanent positions necessary to do the work
or backfill the jobs of people currently at the department
so they can use their specialized expertise to get the
things underway. The trust understood why it had been the
case - adding state employees at state expense in the
current environment was certainly problematic. The trust
had then asked the department how it was going to get the
work done because failure was not an option. The answer had
been the department would work longer, harder, smarter, and
faster. He stated that the trust believed DHSS already
worked fast, smart, hard, and long; therefore, it had not
seemed like an efficacious strategy. The document showed
areas where the trust had stepped forward acknowledging it
was necessary to have people to get the job done.
Mr. Jessee relayed the trust had stepped forward to help
with travel expenses. He remarked the state was a long way
from the places that had already accomplished a significant
number of the results it was looking for. The trust had
learned over the years with programs like Housing First and
Bring the Kids Home that doing site visits and taking
groups of individuals to places that had successfully done
the types of things the state was trying to do was very
valuable. Not only because seeing was believing and
connecting with peers with a similar perspective could be
helpful, but also because teams would have several days
together to start to gain a common understanding of the
goal. Currently additional state funds for out-of-state
travel was not looked upon very favorably, but it was
something the trustees were willing to provide.
Mr. Jessee relayed there were a number of one-time expenses
the trust would fund that it felt were essential to get
done on time. He pointed out the process of getting the
substantive elements in the bill was what created the
necessary questions including what the state was trying to
accomplish and how fast it needed to work to accomplish the
goals. When the fiscal notes had initially been submitted
they had not anticipated all of the steps required to meet
each of the substantive requirements in the timeline. The
trust had sat down with Charlie Currie's associate
Stephanie Colston [Medicaid consultants] and the department
to determine exactly what was necessary in each of the
steps in order to get the work done on time and where the
resources would come from.
4:05:33 PM
Mr. Jessee began on page 1 of the AMHTA document. He
relayed items 1 through 4 were built around the 1115 waiver
process. Item 1 related to the Division of Behavioral
Health capacity assessment and development. The department
had discussed that the division's role would change in FY
17 and FY 18 with an administrative services organization -
eventually there may be fewer people at the division. He
furthered there needed to be an assessment of the
knowledge, skills, and abilities of current staff compared
to what the division's job would have to be in the future
and how to get from here to there.
Representative Gara noted it was up to other committee
members, but he felt the fiscal notes and MHTAAR portions
had been covered already. He was interested in the overall
question about the AMHTA approach, but he believed the
committee understood the individual fiscal notes.
Mr. Jessee explained that the trust investments were not
included in the fiscal notes. The expenditures represented
additional resources AMHTA was making available outside of
the state budget. He moved to item 2 related to provider
capacity, what they needed to do in the future, and how to
provide technical assistance to providers to ensure they
were ready to implement the new system. Item 3 related to
the waiver and was represented in the fiscal notes. He
relayed the actuarial analysis was funded in the fiscal
notes.
Vice-Chair Saddler looked at item 2 and asked what "CCG"
stood for. Mr. Jessee replied that it was referring to the
Charlie Currie Group.
Mr. Jessee addressed item 4: the ASO. The trust had stepped
forward to fund travel costs. He referred to the note
addressing travel for three DHSS staff, one AMHTA staff,
and one consultant and remarked the item was flexible and
may not be the precise makeup of the team. The funding for
travel acknowledged the need to see some of the ASOs and
how they operate. Additionally, the trustees had agreed to
pick up the cost of the ASO state match for FY 18 and FY 19
that directly supplanted GF in the fiscal notes. He moved
to item 5 on page 2 of the document related to primary care
integration. One of the things needed for a waiver was to
demonstrate the state was implementing evidence-based
practices which would increase the program's effectiveness.
The item would support pilot programs to screen brief
intervention referral and treatment in two hospital ERs. He
detailed many ER visits were a result of substance abuse
(e.g. from driving while intoxicated or other accidents).
He furthered that evidence showed screening and brief
intervention in the ER for the substance abuse issues was
an effective strategy to reduce drinking and subsequent ER
visits. Additionally, AMHTA would fund a standardized
screening and assessment instrument in three federally
qualified health centers and behavioral health centers. He
spoke to the need to begin standardizing assessment
instruments, which the trust would fund off budget.
4:09:51 PM
Mr. Jessee addressed item 6 related to funds for a
prospective payment pilot with a substance abuse or a
substance abuse and mental health provider. Item 7 related
to funding for data. He discussed the need to hook
providers up to the health information exchange. Initially,
the thought had been rather than ask for the money in a
fiscal note, the cost would be left to the providers as an
unfunded mandate. He noted it was not a substantial amount
of money, but he reasoned the state was asking providers to
do a significant amount in terms of changing their entire
system and how they operate in many ways. The trustees had
agreed to cover the cost of the connectivity. Item 7 would
enhance AKAIMS [Alaska's Automated Information Management
System] to full capacity. Currently the provider had to
enter all of their information into AKAIMS and then had to
reenter all of the data in the health information exchange.
He reasoned that process was ridiculous and was part of
what drove up administrative costs. The trust was willing
to fund work that would enable the data to automatically
populate the health information exchange when entered into
AKAIMS, which should significantly reduce the
administrative burdens on nonprofits.
Vice-Chair Saddler remarked on "the principle that you
don't put bald tires on a new car" in relation to the
proposal to enhance the health information exchange. He
asked about the assessment of the program. He asked for
detail on the program's age, how it operated, and whether
it was an appropriate vehicle to add utility to.
Alternatively, he wondered if it should be replaced.
Mr. Sherwood replied that the health information exchange
had been created as a nonprofit through legislation about
six years earlier; it was up and running and was continuing
to bring additional providers on board. He relayed that it
did not yet have the ideal level of participation;
therefore, some of the funds in the fiscal notes were meant
to encourage participation. He detailed the program did
have the capabilities to allow providers to share
information as appropriate. The program was funded by
provider assessment and DHSS. The department had also
accessed some federal funds to maintain the program over
the years.
4:12:59 PM
Vice-Chair Saddler asked if the program was managed,
operated, and owned by DHSS or owned by a private nonprofit
organization.
Mr. Sherwood answered the health information exchange was a
nonprofit with an independent board, which was a decision
made by the legislature when it had established the
program. The department had frequent meetings with the
organization related to planning and budgeting.
Vice-Chair Saddler remarked that he would have numerous
technical questions related to the PDMP and the health
information exchange regarding control and privacy measures
when the items were discussed more in depth.
Mr. Jessee addressed item 8 on page 2, which included a
relatively small allocation to assist DHSS with running a
couple of workgroups. He moved to page 3 (item 9) of the
document and remarked that trust beneficiaries included
more than just behavioral health. In senior and
disabilities services the 1915(i) and 1915(k) options were
also critical to beneficiaries. He referred to Vice-Chair
Saddler's statement about not putting bald tires on a new
car and stated the assessment tool listed was "that type of
an initiative." He elaborated the current assessment tool
was inadequate in several important respects. First, the
tool was primarily a deficit-based model - it looked at
people's deficits and not their assets. He reasoned that
costs could be reduced when helping people maximize what
they could do instead of focusing on what they could not do
and throwing money at trying to solve their problems.
Second, the tool had very poor interrater reliability. He
detailed if two people used the same tool to evaluate the
same person they may come to very different answers. There
were now more advanced tools that solved most of those
problems. He communicated the department had found it
difficult to fit a new assessment tool into its fiscal
notes due to the current fiscal climate and effort to be
frugal with resources. The trustees understood that a
state of the art assessment tool was needed if the system
was going to be built around the state plan amendments and
waivers and had therefore agreed to pay for it.
Mr. Jessee relayed item 9 also included funding for four
long-term non-permanent positions, expansion of the Aging
and Disability Resources Centers to four additional sites
(one of the core way services would be delivered), national
best practice site visits, and outreach for consumers and
provider engagement. Community involvement in the processes
was critical to the trust. He referenced an earlier
presentation [from the morning meeting] from Agnew::Beck,
which showed over 500 citizens had been involved in the
process funded by the trust in order to ensure the broadest
possible input. Item 10 related to health care services
staffing needs was also included in the fiscal notes - the
trust had committed funds to pay for two new staff
positions.
4:16:38 PM
Mr. Jessee addressed item 11 on page 3, which included two
items not directly related to Medicaid reform, but were
included in AMHTA's funding package. First, funding would
be appropriated for the [federal] ABLE Act, which allowed
people with disabilities to create what amounted to a
health savings account that would not be considered an
asset for purposes of public benefit - he noted it was a
tremendous piece of legislation. Second, funding would be
appropriated for a technical assistance contract for
providers. He stated that many of the state's providers
were not as proficient at billing Medicaid as needed.
Mr. Jessee spoke to how the trust would pay for all of the
items totaling almost $10 million over three years. He
discussed that when Medicaid expansion had been going
through, because of the timing exigency, the trustees had
gone into the trust's budget reserve in order to fund part
of the initiative. He characterized the move as an
extraordinary step on the part of the trustees and not one
they intended to make a common practice. In order to
determine how the trust would come up with the $10 million
it had reviewed all of its prior allocations. He detailed
trust authority allocations were good four 4 years; every
year one of the allocations lapsed and rolled forward into
future years. The money was typically left "out there" to
account for unexpected events that may require additional
resources in the specific areas. He referred to the
exercise as sweeping "under the seat cushions," which
included almost all of the prior year allocations from 2013
to 2015.
Mr. Jessee relayed the action would have two consequences
for the trust: 1) it would reduce the trust's flexibility
as it moved forward because the funds would not be
available if unforeseen issues arose with current
strategies; and 2) the trustees would have somewhat lower
revenue to spend in future years because the funds would
not be lapsing in future years. The trust would have to
tighten its belt moving forward. Additionally, the trust
had looked at current FY 16 to determine what was
classified as essential work to meet its two major
priorities including Medicaid reform and criminal justice
reform. The trust had determined areas where funding had
not already been committed for FY 16 or if there were
programs where it could claw back some money prior to the
year-end. The trust had also gone through all of its focus
areas for FY 17 to identify places it could shift funds to
forward the effort under SB 74, particularly in areas where
something was not already planned. For example, the
substance abuse prevention and treatment focus area still
had a considerable amount of unallocated money for FY 17.
He reasoned what better place to utilize some of the funds
than in reforming the state's Medicaid system. The trust
would look a little different going forward but it had been
faced with prioritizing and rethinking its strategies in
order to commit nearly $10 million over 3 years to assist
with Medicaid reform.
4:20:46 PM
Representative Wilson spoke to an earlier question related
to OCS. She remarked Mr. Jessee had relayed the trust would
talk to providers. She stated sadly enough many people
involved in OCS probably did not even know they qualified
for Medicaid. She asked if AMHTA would have a better idea
about which services were missing that may be causing
children to be out of the home longer because parents were
on waitlists trying to get services.
Mr. Jessee replied in the affirmative. He it was something
the state's behavioral health system should be working
hand-in-glove with OCS to ensure that every parent running
into trouble due to a behavioral health problem was getting
treatment or support for recovery as quickly and as
comprehensively as possible. He continued it would drive
down foster home placements and adverse childhood
experiences.
Representative Wilson would greatly appreciate if one of
the trust's focus groups could reach out to parents to help
them better understand the options available. She noted she
would participate in the work as much as she was permitted.
Mr. Jessee thanked Representative Wilson for the
suggestion.
Vice-Chair Saddler thanked AMHTA for allocating a
significant amount of money for the projects. He understood
the trust had reworked its finances to dedicate resources
to the effort, which gave him increased confidence in the
worthwhile nature of work.
Representative Gara remarked sometimes AMHTA would fund
things so the state did not have to pay for them and when
AMHTA was no longer able to fund the items the state picked
up the expenses. He spoke to the importance of some of the
efforts. He asked if the trust's contributions (of
approximately $10 million) to the fiscal notes would reduce
AMHTA's contributions to other state services and grants in
the budget.
Mr. Jessee did not believe any MHTAAR had been negatively
impacted in FY 16. The trust had already made those
commitments to the state and would not renege on the
contribution. The belt tightening had been in authority
grants AMHTA administered itself and not in what it had
already committed to the state.
4:24:09 PM
Representative Gara noted that administrative belt
tightening was fine. He asked if there were services the
trust could not give to its beneficiaries as a result of
its contribution to the cost of SB 74.
Mr. Jessee answered with an example related to substance
abuse prevention and treatment in FY 17. The specific area
had several hundred thousand dollars for undeveloped
strategies to reduce the substance abuse problems in the
state. A project that had not yet been developed would lose
funding; however, the trust had considered the highest and
best use for the funds and had determined it would be
better to contribute to the bill's effort of Medicaid
reform, which was critical and would provide far more
services to the same beneficiaries for generations to come.
Representative Gara asked how much on average the trust
spun off in the past few years in terms of assets spent on
beneficiaries through the budget. Mr. Jessee replied that
the trustees had about $24 million to $25 million per year,
which funded the trust administrative budget, the Trust
Land Office under the Department of Natural Resources,
funds that went through state government as MHTAAR, and
authority grants administered by the trust.
Representative Gara asked if the trust's MHTAAR
contribution to the budget would decrease as a result of
providing funds for items in the bill. Mr. Jessee answered
that a sizeable amount of the funding was in the fiscal
notes and would go through the state. He believed it would
have been allocated between MHTAAR and authority grants
about the same way if funds were not directed at the bill
package. He added MHTAAR and authority grant expenditures
were generally pretty evenly balanced.
Representative Gara remarked he had a feeling he was
chasing something he would not get on the record.
CSSB 74(FIN) am was HEARD and HELD in committee for further
consideration.
Co-Chair Thompson addressed the schedule for the following
meeting.
ADJOURNMENT
4:27:58 PM
The meeting was adjourned at 4:27 p.m.