Legislature(2005 - 2006)HOUSE FINANCE 519
01/26/2005 02:00 PM House FINANCE
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* first hearing in first committee of referral
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HOUSE FINANCE COMMITTEE
January 26, 2005
2:17 P.M.
CALL TO ORDER
Co-Chair Chenault called the House Finance Committee meeting
to order at 2:17:11 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Richard Foster
Representative Jim Holm
Representative Reggie Joule
Representative Mike Kelly
Representative Carl Moses
Representative Bruce Weyhrauch
MEMBERS ABSENT
Representative Eric Croft
Representative Mike Hawker
ALSO PRESENT
Joel Gilbertson, Commissioner, Department of Health & Social
Services; John Sherwood, Staff, Office of the Commissioner,
Department of Health & Social Services; Steve Atkins,
Director, Division of Senior & Disabilities Services,
Department of Health & Social Services
GENERAL SUBJECT(S):
Overview: Senior Health Care Program
The following overview was taken in log note format. Tapes
and handouts will be on file with the House Finance
Committee through the 24th Legislative Session, contact 465-
6814. After the 24th Legislative Session they will be
available through the Legislative Library at 465-3808.
TIME SPEAKER DISCUSSION
2:17:30 PM Co-Chair Convened the House Finance Committee to
Chenault take testimony from Commissioner
Gilbertson of the Department of Health
& Social Services regarding the Senior
Health Care Program.
OVERVIEW:SENIOR HEALTH CARE PROGRAM
2:18:36 PM JOEL Provided Committee members with a
GILBERTSON, handout regarding the "Comparison of
COMMISSIONER, Qualifications and Benefits - Beginning
DEPARTMENT OF January 2006". (Copy on File). He
HEALTH & introduced his staff John Sherwood, who
SOCIAL would answer Committee questions about
SERVICES the program.
Commissioner Gilbertson noted that the
Governor had submitted a bill, HB 106,
which will address the Senior Care
initiative effort throughout the State
of Alaska. One piece of that
legislation establishes a cash
assistance benefit drug subsidy for
low-income seniors.
2:19:27 PM Commissioner The proposed legislation builds off the
Gilbertson federal Medicaid benefit and efforts
done last session.
2:20:12 PM Commissioner The cost of prescriptive drugs has
Gilbertson skyrocketed and inflation rates have
rose as high as 27% in one year.
2:20:38 PM Commissioner The Governor's proposal provides for
Gilbertson enhancement of the Senior Care drug
benefit and will interact will with the
federal Medicaid benefit.
Medicare consists these parts:
· Part A - virtually all seniors are
in Part A, and covers in patient
service and hospital care;
· Part B is the Medicare component
for seniors when they receive out
patient services;
· Part C is not available in Alaska
and deals with Medicare plus (+)
choice plans or Medicare managed
care;
· Part D will begin in Alaska in
January 2006 and it will allow
seniors to enroll in Part D and
receive Medicare drug assistance.
2:21:40 PM Commissioner Advised that Seniors pay a premium when
Gilbertson they are in Part D and when they
enroll, they will have to pay another
premium for the prescription drugs.
Additionally, they will have a new
deductible. The federal government
does have a sliding scale and seniors
below 135% have no cost sharing. The
sliding scale moves to about 175% for
when they receive assistance.
2:22:33 PM Commissioner HB 106 clarifies that beginning in
Gilbertson January 2006, when the benefit begins,
the State Senior Care program will be
converted to a drug assistance program.
The State will pay for out of pocket
costs for senior's premiums or
deductible up to an income level 300%
of poverty.
He pointed out the chart (Attachment
#1), which better clarifies the
Governor's intent. Cash assistance
will continue. Under the previous
Senior care proposal, the seniors under
135% poverty level, an annual income
for a single senior of about $15,700
dollars per year and a couple with
$21,000 dollars income per year. They
currently receive $120 per month and it
will continue. Those seniors will have
access without paying a premium or
deductible.
2:23:57 PM Commissioner Continued, the Senior care cash
Gilbertson assistance is for seniors above 135%
poverty and up to 300% poverty level,
which for an Alaska senior would be up
to $34,800 dollars income per year.
There would be an asset limit and the
benefit would be $670 dollars per year.
The premium would be $40 per month.
2:24:35 PM Commissioner Noted that the Department expects to
Gilbertson serve approximately the same number of
individuals, 7,000. Any senior that
enrolls in Part D will have to pay a
deductible in order to receive
assistance.
2:25:25 PM Commissioner Clarified that. He referenced
Gilbertson Attachment #1: Under the old senior
st
drug proposal from last session, the 1
$2,500 spent, would amount to a $1,000
subsidy per individual. Under HB 106,
the seniors expense will be reduced to
a little over $450 dollars.
2:26:14 PM Commissioner Noted the senior care benefit component
Gilbertson and Medicare care benefit. The goal of
the legislation is to guarantee that
not a single senior in Alaska is unable
to pay out of pocket costs.
2:26:49 PM Commissioner He clarified what this would mean for
Gilbertson "real Alaskans". He referenced Page 2,
Attachment #1, which provides examples
of savings within the program
highlighting a couple and individual.
2:28:05 PM Commissioner Stated that the program is an effort to
Gilbertson guarantee that seniors, particularly
low income seniors, have needed access.
He addressed what would happen to
seniors who have access to drug
benefits under a retirement program.
There would be a capped amount that the
State pays.
2:28:45 PM Representative Noted the he receives a lot of district
Joule correspondence regarding the cash
assistance program. The information
required for the program is
complicated. He reiterated that some
people registering for the program are
uncertain what is requested of them.
It has become a hardship for those
seniors.
He requested that a system be made,
such as a follow-up call, to help keep
seniors "in the loop".
2:31:39 PM Commissioner Addressed the out-reach concerns of
Gilbertson Representative Joule. He stressed that
the Governor has been adamant that
there should be a "clearing house" for
senior information and there will be a
(800) number and a website where
seniors can call to help find
appropriate providers. He added that a
staff would be added to the Senior
Office. He warned that the next twelve
months will be the most confusing and
challenging times for the seniors.
They will be receiving mailings from
the federal government asking them to
enroll and will be complex information
determining which plan to enroll in.
2:33:41 PM Commissioner The federal as well as the State
Gilbertson applications will be going out. It is
the "unknown" group, the group that is
not currently receiving benefits that
are worrisome. He reiterated that it
will be a challenge.
2:34:07 PM JOHN SHERWOOD, Spoke to the issue regarding the review
STAFF, OFFICE and the number of individuals that are
OF THE lost each year due to that paperwork.
COMMISSIONER, Over the years, the process has been
DEPARTMENT OF simplified and in the federal needs
HEALTH & based payment, the State no longer
SOCIAL requires the individual review.
SERVICES He noted that there are two notices
sent out as reminders. There to date,
has not been a practice of calling
st
2:37:55 PM STEVE ATKINS, Stated that on July 1, 2004, the U.S.
DIRECTOR, government required that any procedure
DIVISION OF codes used by the State for Medicaid
SENIOR & waiver services, need to be uniform
DISABILITIES statewide. That process worked well
SERVICES, for three of the four senior programs.
DEPARTMENT OF The codes had to be converted to the
HEALTH & waiver program used by the Senior
SOCIAL Center.
SERVICES A problem exists under the Medicaid
waiver for mental retardation and
developmental disabilities (D.D.).
They do not have a database that can
convert the old procedure codes into
the new ones. The value was not
transferring over. He acknowledged
trouble with the D.D. side of business
for paying Medicaid bills.
By the end of this month, Mr. Atkins
claimed that the Department would be
converting the D.D. program into the
same type database used for the other
waivers.
2:40:16 PM Commissioner Noted the follow-up happening in Vice
Gilbertson Chair Stoltze district.
2:40:43 PM Co-Chair Questioned how sustainable the proposed
Chenault program would be over time, pointing
out the size of the fiscal note.
Commissioner Gilbertson acknowledged
that is a concern for the Department
for it to be sustainable. He added
that providing for prescription drug
coverage is expensive. There is a
balance in the Senior Care program
fund. The Department was concerned
with using only that fund to get
through the first year and then
experiencing a huge due amount each
year. He claimed that the program
would cost between $17 & $18 million
dollars per year.
2:42:29 PM Co-Chair Meyer Asked how much of the original amount
of $26 billion dollars was remaining.
2:42:52 PM Commissioner Replied that as of January 1, 2006,
Gilbertson when the Medicare benefit begins, there
would be no expense for the first half
of the fiscal year; the remaining
balance would be $7.7 million dollars.
2:43:21 PM Co-Chair Meyer Inquired why there was money left over.
Commissioner Gilbertson explained that
the Department was very conservative in
their estimates and the eligibility
calculations were higher. It difficult
to predict the number of seniors based
on economic data.
2:44:44 PM Commissioner Added that it was initially difficult
Gilbertson to get seniors enrolled. The old
Senior care proposal was out dated from
that of the Governor's intent.
2:45:01 PM Commissioner Spoke of the cash subsidies for seniors
Gilbertson below poverty level and a prescription
drug subsidy for seniors between 135%-
150% level of poverty. He stated that
it has been difficult to access that
group; there is an effort happening in
the next few weeks to raise awareness
within that group.
He emphasized that has been a complex
issue for seniors. The assistance is
only now being provided for the drug
assistance. Last year, the federal
government provided a drug assistance
card, which ended up being very
confusing. He stressed that there had
been a number of issues confusing
seniors. The enrollment is far lower
than the Administration wants and
consequently, the Department has spent
time educating Alaska Association of
Retired Persons (AARP) and working with
appropriate organizations to educate.
2:46:31 PM Co-Chair Meyer Asked if the estimated $18 million
dollar number was correct.
Commissioner Gilbertson replied that
the Department has to date not missed
by much. He recommended that Mr.
Sherwood address comments.
2:47:33 PM Co-Chair Meyer Commented on how the costs would be
paid during the next five years.
Commissioner Gilbertson pointed out
that the costs were indicated in the
fiscal note, through FY2011. It should
be included in the general fund
requests during those years.
Co-Chair Meyer inquired who would
qualify to receive the allocated funds.
Commissioner Gilbertson referred to the
handout, pointing out that those below
the 135% poverty level.
2:49:20 PM Co-Chair Noted members who came into the meeting
Chenault late.
2:49:52 PM Representative Asked how married couples would file.
Joule Mr. Sherwood replied that the couple
would have to file together as a couple
and that there would be no choice.
2:51:03 PM Representative Asked about the difference in costs
Kelly between that program and the Longevity
Bonus in FY06.
Commissioner Gilbertson explained that
he did not have the analysis for the
Longevity Bonus for 2006 and offered to
look it up.
Representative Kelly inquired how
Alaska compares to other states.
Mr. Sherwood pointed out that each
state varies a lot. Each state
attempts to determine the best method
for them.
Commissioner Gilbertson reiterated that
regarding delivery Alaska is unique.
2:54:02 PM Commissioner Responded to a question by
Gilbertson Representative Kelly regarding the
relationship between administrative
costs and direct benefits.
Commissioner Gilbertson stated that in
FY06, the administrative costs would be
$450 thousand dollars.
2:56:25 PM Mr. Sherwood Added that he would need to research
the difference between those costs.
2:57:06 PM Representative Inquired how many seniors would
Holm actually receive the benefit and what
was the goal of the new program.
2:57:56 PM Commissioner Referred to the Governor's message that
Gilbertson the Department focuses on the needs-
based population. The program will
serve 40% of the 40,000 seniors in
Alaska.
Commissioner Gilbertson continued that
7,000 seniors would receive cash
assistance. He stressed that there
have been tremendous gaps in the
Medicare program for a number of years.
Representative Holm observed that 40%
was too large of an amount.
Commissioner Gilbertson advised that
the program was not developed with the
intent to serve 40% of the seniors.
The program was designed by actual
incomes. The Department believes that
the appropriate place to draw the line
is at the 135% poverty level income per
year.
Representative Holm interjected that
was generous.
3:01:43 PM Representative Asked why seniors are not signing up
Holm for the program.
Commissioner Gilbertson responded that
the State has a pretty good
penetration. It has been difficult to
reach seniors between the 135% and 150%
poverty level income. He reiterated
efforts of the Department being taken
to enroll seniors from that group. He
addressed integrating the process with
federal agencies.
Representative Holm noted appreciation
for the Department's efforts in
administering the monies.
3:05:32 PM Representative Questioned if there was any "double
Kelly dipping" occurring such as with the
Indian Health Service (IHS).
Commissioner Gilbertson replied there
was not.
Representative Kelly suggested revising
the sensitivities.
3:06:51 PM Commissioner Explained that there was considerable
Gilbertson questioning through the federal agency
regarding individuals with dual
eligibility. The issue is not for the
beneficiaries but rather the agency
responsible for paying for the services
to determine which fund source to use
to pay for the service.
3:07:53 PM Mr. Sherwood Explained that there are no
discriminations against the IHS
beneficiaries. There will be no
discriminations for the Alaskan people.
Commissioner Gilbertson added that many
decisions need to be determined about
who is eligible. He said that about
40% of the population is dual eligible.
In response to Representative Kelly,
Commissioner Gilbertson noted that it
is a matter of processing claims so not
to expend general funds.
Representative Kelly voiced his
opposition to any discrimination within
such a program.
Commissioner Gilbertson assured him
that discrimination is not
intentionally occurring in any of the
programs.
3:11:40 PM Co-Chair Asked about rank and average.
Chenault Commissioner Gilbertson acknowledged
that he is concerned about the State's
ability to continue funding the
program. He agreed that it will be a
tremendous financial burden, but
indicated that the Department is
committed to continued funding for the
program.
3:13:42 PM Vice-Chair Questioned if eligibility would be
Stoltze based on an "honor" system.
Commissioner Gilbertson explained that
would be difficult at first, but as the
program matures, the reporting
requirements will be drastically
increased.
3:15:16 PM Representative Asked about the 50% not included in the
Kelly budget and the odds of attaining that
amount.
Commissioner Gilbertson replied that is
up to the U.S. Congressional delegation
and will require extensive work. The
Department is optimistic.
3:18:09 PM Co-Chair Meyer Asked what options were available to
seniors if the program is not passed.
Commissioner Gilbertson replied that in
January 2006, seniors who receive cash
assistance will see that go away;
seniors currently receiving
prescriptive drug assistant will see
that go away; any senior receiving any
benefit will receive none. What they
will get instead would be their
traditional Medicare prescription drug
assistance for seniors below the 135%
poverty.
Mr. Sherwood pointed out that penalties
would be added if seniors do not enroll
when they become eligible.
Commissioner Gilbertson added that was
consistent with Medicare, Part B, the
payback.
3:21:44 PM Co-Chair Meyer Requested materials on the various
poverty level determinations.
Commissioner Gilbertson stated that the
Department has done that work and will
submit it to Committee members.
Co-Chair ADJOURNMENT
Chenault
The meeting was adjourned at 3:22 P.M.
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