Legislature(2015 - 2016)HOUSE FINANCE 519
01/26/2015 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Fy 16 Budget Overview: Department of Department of Health and Social Services | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
January 26, 2015
1:29 p.m.
1:29:54 PM
CALL TO ORDER
Co-Chair Neuman called the House Finance Committee meeting
to order at 1:29 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 Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Valerie Davidson, Commissioner, Department of Health and
Social Services; Sana Efird, Assistant Commissioner,
Finance and Management Services, Department of Health and
Social Services; Amanda Ryder, Budget Analyst, Legislative
Finance Division; Jon Sherwood, Deputy Commissioner,
Department of Health and Social Services; Margaret Brodie,
Director, Health Care Services, Department of Health and
Social Services; Representative Liz Vazquez.
SUMMARY
FY 16 BUDGET OVERVIEW: DEPARTMENT OF DEPARTMENT OF HEALTH
AND SOCIAL SERVICES
Co-Chair Neuman passed the gavel to Vice-Chair Saddler.
Vice-Chair Saddler welcomed the department.
^FY 16 BUDGET OVERVIEW: DEPARTMENT OF DEPARTMENT OF HEALTH
AND SOCIAL SERVICES
1:31:20 PM
VALERIE DAVIDSON, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES (DHSS), introduced herself and provided
information on her personal and professional background.
She had attended Head Start as a child and spoke in favor
of the program. She had attended the University of Alaska
in Fairbanks and Juneau. She highlighted her past work as a
teacher. She had begun her career at the Yukon Kuskokwim
Health Corporation. She shared that for the past eight
years she worked for the Alaska Native Tribal Health
Consortium (ANTHC) based in Anchorage. Additionally, she
had served as chair of the National Tribal Technical
Advisory Group to the Centers for Medicare and Medicaid
Services. She believed there were tremendous opportunities
for partnerships in Alaska and for leveraging both human
and financial resources.
1:35:17 PM
Commissioner Davidson provided a PowerPoint presentation
titled Department of Health and Social Services House
Finance: FY2016 Department Overview." She moved to an
organization chart on slide 2. She introduced department
staff. She pointed out that the Office of Behavioral Health
had been moved from the Medicaid and Health Care Policy
section to the Family, Community and Integrated Services
section. Additionally, Public Assistance had moved from
Family, Community and Integrated Services to Medicaid and
Health Care Policy. She believed the Offices of Children's
Services, Juvenile Justice, and Behavioral Health were more
closely aligned when working towards the state's effort to
stop some of the cycles that were a part of daily life in
Alaska.
Vice-Chair Saddler asked committee members to keep
questions at a minimum during the presentation.
1:37:00 PM
SANA EFIRD, ASSISTANT COMMISSIONER, FINANCE AND MANAGEMENT
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, turned
to slide 3 that contained the department's total FY 14
funds. She detailed that unrestricted and federal funds
accounted for approximately the same portion of the
department's funding [49 percent and 45 percent
respectively]. Additional funding sources included
designated general funds and other funds. The graph to the
right provided a breakout of the funding sources by dollar
amount. Slide 4 included a breakout of actual funding by
division in percentages and dollar amounts.
1:38:13 PM
Co-Chair Neuman discussed the growth rate in the state's
aging population and how it impacted the state's Pioneer
Homes. He remarked that medical costs continued to
increase. He wondered if the presentation included growth
projections and how the department planned to deal with the
growth. Ms. Efird replied that the department was looking
at the Pioneer Homes. She detailed that the homes provided
three levels of care including low, medium, and high-need.
She elaborated that the number of high-level needs had
increased. She could not speak to the specific plan, but
the department was looking at ways to deal with changes.
Co-Chair Neuman spoke to juvenile justice. He noted that in
recent history there had been an effort to move civil
justice work over to tribal organizations to increase local
control. He wondered if there was an opportunity to work
with tribal organizations to take over facilities such as
the juvenile justice center in Bethel.
Commissioner Davidson believed the department was open to
any possibility in order to provide care as close to home
as possible and in the most culturally appropriate way. She
believed doing so provided better outcomes for children and
families. The department was looking at ways to do things
differently in order to achieve the goal.
Co-Chair Neuman believed if tribal organizations such as
the Yukon Kuskokwim Health Corporation could take over some
programs it would be possible to develop a long-term budget
plan. He observed that the organizations could take
advantage of increased federal funds that were currently
not accessible to the state.
1:42:33 PM
Vice-Chair Saddler remarked that the angel was in the
details. He noted that the committee would discuss the
issue in depth with the Division of Juvenile Justice during
an upcoming DHSS Finance Subcommittee meeting.
Commissioner Davidson communicated that the presentation
would address the department's priority of leveraging the
opportunities with tribal partners potentially in tribal
health or tribal social services and welfare programs. She
believed the opportunities existed, the time was right, and
that people were ready for the change.
Ms. Efird addressed the DHSS FY 15 management plan on slide
5. The chart included all funds for a total of $2.7
billion. She relayed that Medicaid accounted for the
largest percentage of the pie chart at $1.7 billion (62
percent of the DHSS budget). She elaborated that the budget
also included 11 percent in other formula funds, 7 percent
in non-formula grants and benefits, and 20 percent in non-
formula other line items (including personal services,
travel, commodities, and supplies). She discussed formula
funded programs on slide 6, which accounted for the largest
portion of the department's budget. She read the definition
of a formula program:
A program with specific eligibility standards which
guarantees a specific level of benefits for any
recipient who qualifies. The eligibility standards and
benefits must be based in statute and/or regulations.
1:45:26 PM
Ms. Efird read a list of the department's formula programs
on slide 7:
Public Assistance
· Adult Temporary Assistance Program
· Adult Public Assistance
· Child Care Benefits
· General Relief Assistance
· Tribal Assistance Programs
· Senior Benefits Payment Program
· PFD Hold Harmless
· Energy Assistance Program
Medicaid Services
· Behavioral Health Medicaid Services
· Children's Medicaid Services
· Adult Preventive Dental Medicaid Services
· Health Care Medicaid Services
· Senior/Disabilities Medicaid Services
Representative Wilson asked where the legislature could
make changes in the formula programs. She wondered which
programs were federally mandated at a certain poverty
level. She wondered if the legislature had the ability to
determine how much over the poverty level something would
be. She wondered where it was possible for the legislature
to make changes and where it was not.
Ms. Efird replied that the department would address the
information for each of the formula programs. She continued
reading from slide 7:
Children's Services
· Subsidized Adoptions/Guardianship
· Foster Care Special Need
· Foster Care Augmented Rate
· Foster Care Base Rate
Ms. Efird moved to slide 8 titled "Service Population." The
slide depicted the magnitude of the DHSS programs and who
they impacted in the Alaska population. She detailed that
over the past several years the department had worked on
performance measures, and results-based budgeting and
accountability. Subsequently, three priorities had been
identified including: 1) health and wellness across the
lifespan; 2) health care access delivery and value; and 3)
safe and responsible individuals, families, and
communities. She elaborated that each of the priorities
contained core services; division presentations would
provide more detailed core services and priorities. She
pointed to a chart showing a continuum of ages of
individuals served by the department beginning with
prenatal through death.
1:48:45 PM
Vice-Chair Saddler asked Ms. Efird to clarify that there
was a timeline of the human lifespan and not a direct
correlation between the chart and core services offered.
Ms. Efird replied that the chart demonstrated that all of
the DHSS priorities spanned throughout the life of an
individual. She relayed that each division planned to
indicate the time in an individual's life that it targeted.
Vice-Chair Saddler agreed that the information would be
helpful. He noted that Representative Gara had joined the
committee earlier.
Ms. Efird moved to slide 9 pertaining to the department's
total FY 15 budget of $2,692,324,500. The slide showed that
the department aligned its current budget with each of the
three priorities down to the seven core services, by
division, and finally with a breakout of the divisions'
budgets. The intention of the slide was to show the process
the department had undergone over the past couple of years.
She used the Alaska Pioneer Homes as an example; the
division's total budget rolled up into the core services,
which correlated across the seven core services and up to
the priorities.
1:53:02 PM
Ms. Efird further explained that slide 9 intended to depict
the department's priorities and where it was spending its
money. Performance measures had been developed and
divisions were reporting to the department on data
collected in order to obtain a baseline for the success of
division programs.
Representative Wilson wondered about current mandates from
the Alaska Constitution and federal government related to
existing programs. She surmised that some programs could be
done by the private sector if the state was not mandated to
provide them. Ms. Efird agreed that looking at the
financial situation was the appropriate next step. She
believed the question was related to formula programs that
were currently under the department's purview.
Representative Gara referred to the governor's formula that
outlined how cuts would be made to agency budgets. One of
the components looked at whether an agency's budget had
grown. He remarked that over the past four to five years
the number of youths in foster care had increased from
1,700 to over 2,300, which accounted for a budget increase.
He detailed that the former governor and DHSS commissioner
had determined that hiring support staff for the Office of
Children's Services (OCS); the recommendation had been for
50, but only 15 had been implemented. He noted that the
decision to add new staff had been based off of the 1,700
children in foster care, but the number had risen. He
understood deep cuts in areas where people could handle
them and stand up for themselves; however, he asked whether
the state was sensitive to young children who could not
handle less infrastructure.
Commissioner Davidson answered that currently the
department did not have all of the budget details from the
Office of Management and Budget. She relayed that one of
her priorities was addressing child welfare issues. She
relayed that unfortunately there were currently 2,400
children in out of home placements throughout the state.
She noted that the state was effectively the parents of the
children. She believed it was important to take measures in
order to do things differently in order to protect
children. She reiterated her commitment to working on child
welfare matters.
1:57:34 PM
Vice-Chair Saddler relayed that there would be results-
based budget training in the committee room the upcoming
Friday and Saturday.
Co-Chair Neuman wondered if there had been an increase in
funding for foster care in recent years. Ms. Efird replied
in the affirmative. She detailed that the increases had
been based on some litigation for increases in base-rate
foster care payments. There had also been an increase due
to additional positions added in the prior year.
Additionally, there was an increase in the work in progress
budget asking for additional program receipts to
accommodate the increase in the number of children in out
of home placement with the collection of child-support
payments that passed through the department.
Co-Chair Neuman stressed the importance of caring for
foster children. He stated that the legislature had been
working to do what it could related to funding.
Ms. Efird relayed that Commissioner Davidson would address
the department's divisions and their individual missions.
Commissioner Davidson communicated that the department
contained eight divisions (slide 10). She shared that
Vickie Wilson was the acting director of the Alaska Pioneer
Homes division. She introduced Gina Delrosario the director
of the Juneau Pioneer Home. The Pioneer Homes had 649
positions, which represented approximately 2 percent of the
department's operating budget. The homes were responsible
for providing the highest quality of life in a safe home
environment for older Alaskans and veterans. She relayed
that further detail would be provided by the divisions [in
finance subcommittee meetings]. She addressed the Division
of Behavioral Health and introduced the director Al Wall.
The division housed 374 positions and accounted for 5
percent of the department's operating budget; its mission
was to manage an integrated and comprehensive behavioral
health system based on sound policy, effective practices,
and partnerships.
Commissioner Davidson moved to slide 11 and addressed OCS
and the Health Care Services Division:
Office of Children's Services
Christy Lawton (Director)
· 509 Positions
· $143,709.6 - FY2015 Management Plan
· 5.34 percent of DHSS FY2015 Operating Budget
· Prevent and respond to child maltreatment in
order to ensure safe children and strong
families.
Health Care Services
Margaret Brodie (Director)
· 131 Positions
· $24,391.6 - FY2015 Management Plan
· 0.91 percent of DHSS FY2015 Operating Budget
· Manage health care coverage for Alaskans in need.
2:01:50 PM
Commissioner Davidson addressed the Divisions of Juvenile
Justice and Public Assistance on slide 12:
Division of Juvenile Justice
Karen Forrest (Director)
· 503 Positions
· $58,824.7 - FY2015 Management Plan
· 2.18 percent of DHSS FY2015 Operating Budget
· Hold juvenile offenders accountable for their
behavior, promote the safety and restoration of
victims and communities, and assist offenders and
their families in developing skills to prevent
crime.
Division of Public Assistance
Ron Kreher (Acting Director)
· 566 Positions
· $331,226.7 - FY2015 Management Plan
· 12.30 percent of DHSS FY2015 Operating Budget
· Provide self-sufficiency and provide for basic
living expenses to Alaskans in need.
Commissioner Davidson highlighted the Division of Public
Health and the Division of Senior and Disabilities Services
on slide 13:
Division of Public Health
Dr. Jay Butler (CMO/Director)
· 488 Positions
· $138,502.8 - FY2015 Management Plan
· 5.14 percent of DHSS FY2015 Operating Budget
· Protect and promote the health of Alaskans.
Senior and Disabilities Services
Duane Mayes (Director)
· 171 Positions
· $63,385.8 - FY2015 Management Plan
· 2.35 percent of DHSS FY2015 Operating Budget
· Promote the independence of Alaskan seniors and
persons with physical and developmental
disabilities.
Commissioner Davidson introduced additional department
staff.
2:05:16 PM
AMANDA RYDER, BUDGET ANALYST, LEGISLATIVE FINANCE DIVISION,
relayed that many of the graphs in the presentation were
built on the prior year because information for the current
year was forthcoming. She addressed slide 14 that showed
the DHSS total agency operations non-formula and formula
budget (unrestricted and designated general funds only).
The blue line represented the percentage of the DHSS budget
compared to all department budgets. She highlighted that in
the FY 06 management plan the DHSS general funds accounted
for 22 percent of agency operations; the number had grown
to approximately 26 percent. She explained that Medicaid
was a huge driver of the budget and had grown at
approximately 150 percent since FY 06. She noted that the
data was based on FY 06 to FY 15 management plans.
Representative Edgmon recalled an increase of 2,000 state
employees from FY 06 to FY 15. He wondered how many of the
new employees were attributed to DHSS. Ms. Ryder relayed
her intent to address the question on a subsequent slide.
Co-Chair Neuman wondered how much of the growth was due to
federal government requirements. Ms. Ryder replied that she
did not have an exact amount; however, Medicaid accounted
for a significant portion.
Co-Chair Neuman remarked that the state's current
contribution to Medicaid was about $700 million. He stated
that the rate had been growing at approximately 9 percent
in the past 10 years. He attributed a significant portion
of the growth to Medicaid. Ms. Ryder agreed. She elaborated
that as the division graphs were looked at during the
upcoming month it would be possible to look more carefully
at what was federally required and what had grown over the
past 10 years by state choice. She acknowledged that due to
the large size of the department it was difficult to delve
into all of the changes during an overview. She added that
Medicaid was the primary reason for growth in the
department.
2:10:20 PM
Representative Gara referred to testimony by former
Commissioner Bill Streur related to the growth in Medicaid.
The chart had showed that an increased number of people
were on Medicaid, Alaska's cost of medical services ranked
first or second in the nation, and the increase in medical
costs in Alaska ranked first or second in the nation. He
wondered if the department had been able to do anything to
address the state's annual rise in medical costs.
Ms. Ryder deferred the question to the department. She knew
DHSS had been working hard to reduce healthcare costs.
Ms. Efird pointed to the steep cost increases due to
Medicaid [beginning with the FY 12 management plan] on
slide 14. She communicated that the chart showed a decrease
in cost [in FY 10 and FY 11] due to the department's
receipt of an enhanced federal participation rate and
American Recovery and Reinvestment Act (ARRA) funding. She
elaborated that DHSS had been working to stem the
unsustainable increase in Medicaid growth through various
initiatives. She relayed that some benefit had resulted
through the use of generic prescription drugs and an effort
to reduce the number of "super utilizers" of emergency room
services. She believed the committee would hear further
detail about the successes and failures during division
presentations.
Representative Gara noted that a medical cost increase
would occur when providers caught up on their billing. He
noted that the issue had been lingering for three years and
did not represent a new administration problem.
2:13:58 PM
Amanda Ryder advanced to slide 15 that showed the DHSS
budget from FY 06 to FY 15 by line item. She reported that
grants and benefits accounted for the largest piece of the
department's budget; the majority of which was Medicaid.
She detailed that the department had approximately $2.1
billion in grants; about $87 million of the figure was
behavioral health, $77 million went to OCS (for items like
payment to foster care parents), and $1.6 billion was
associated with Medicaid. She added that the Division of
Public Assistance also provided numerous grants and various
programs, which accounted for approximately $239 million of
the budget.
Ms. Ryder addressed salary adjustment increases and
personal services costs on slide 16. She reported that the
total cost of personal services had increased by
approximately $121 million or 52 percent between FY 06 and
FY 15. She pointed to the bar chart on slide 16 and relayed
that the lower light purple portion of the bar represented
personal services less the salary adjustments. She relayed
that salary adjustments were included in the budget on an
annual basis, which included contractual increases and
health insurance increases. Around 2008 the adjustments had
been for retirement when the percentage had increased from
11.5 or 12.5 percent up to 22 percent. She noted that the
Legislative Finance Division (LFD) did not budget by line
items for all funds; it could not extract general funds;
however, it could make an estimate based on percentage. She
estimated that approximately $22 million of the $121
million increase was associated with health insurance
increases. She detailed that the cost had increased by
about $6,500 per employee since FY 06. She estimated that
increased retirement accounted for approximately $36
million. The last bar of the chart represented how much of
the increase was due to contractual, health insurance, and
retirement increases. She noted that most of the increase
was attributable to the three items.
2:17:47 PM
Ms. Ryder noted that DHSS had gained new positions over the
years. She turned to slide 17 related to the department's
budgeted positions. The slide depicted the governor's
request from the prior year, but did not include
approximately 10 positions added by the legislature to OCS
(10 positions had been added, but the legislature had
funded about 14 positions). The department housed
approximately 3,500 employees; there had been a net
increase of 135 positions, but permanent positions had
increased by 278. She noted the department had not wanted
to increase the number of permanent full-time employees;
therefore, there had been an aligning within the department
to swap with permanent part-time and temporary positions.
Representative Munoz asked how many of the department's
3,400 positions were dedicated to Medicaid services and how
many may be needed for Medicaid expansion. Ms. Efird
responded that she could follow up with the detail. She
communicated that there were a number of divisions within
the department that involved Medicare. She elaborated that
the Division of Public Assistance housed eligibility
technicians, whereas the processing of claims was handled
by the Division of Health Care Services. Other divisions
that contained pieces of Medicaid included the Divisions of
Behavioral Health, Senior and Disability Services, and some
children services that had been picked up by Behavioral
Health.
Commissioner Davidson elaborated that she planned to
address administrative costs and the number of expected
positions pertaining to Medicaid.
Vice-Chair Saddler asked the department to provide the
answer at a later time. He noted his preference to finish
the department's presentation.
Representative Wilson wondered how to determine how many
people were involved in providing DHSS services in some way
including those funded by grants. She gave an example of
grantees providing work for the department. She stated that
for every 200 Alaskans there was 1 person in DHSS. She
surmised that the statement was only part of the story due
to the numerous grants. She added that the department could
get back to her with an answer.
Co-Chair Neuman relayed that someone was looking at the
grants and behavioral health issue discussed by
Representative Wilson. He asked about the department's
vacancy rate. Ms. Efird replied that the vacancy rate was
approximately 8 to 10 percent.
2:23:56 PM
Co-Chair Neuman followed up and asked how the vacancy rate
compared to other departments. He wondered if the number
was high or low. He thought the Division of Juvenile
Justice had a low turnover rate with an average length of
employment of 18 years, whereas OCS had a high turnover
rate. He reasoned that there were inefficiencies when
employees were lost after they had been trained. He
wondered what could be done to rectify the problem.
Ms. Efird answered that she did not know how the DHSS
vacancy rate compared to the rate in other departments. She
would look into providing the information. She noted that
there were specific positions that were difficult to
recruit for throughout all the divisions such as
information technology programmers. Frontline social
workers for OCS in rural areas were also difficult to
recruit. However, there were other divisions with very
long-term employees such as the Division of Juvenile
Justice and the Pioneer Homes. She elaborated that the
department was looking at ways to do recruitment that
focused on the needs of what each division specifically
needed to target for the positions. The goal was to match a
person to a position and to provide the individual with a
true picture of what the position entailed in an effort to
maintain an employee for a longer period of time.
Co-Chair Neuman believed the issue was important in
relation to the budget. He asked for information pertaining
to the department's outreach and training programs,
particularly for OCS. He wondered about cost-benefits
associated with the efforts. He remarked that many times
the state could not find people to fill the vacant
positions.
Representative Gara referred to reports from OCS that the
division only expected social workers to stay in the
position for two years. He elaborated that a portion of the
two-year period was spent on training and then employees
left due to burnout. He remarked that the social worker
caseloads at OCS were 50 to 100 percent higher than the
national standard. He reasoned that the problem would
persist as long as the caseloads remained high. He
discussed that the turnover was costly to the state. He did
not believe a two-year retention average was satisfactory.
Commissioner Davidson recognized the challenge. The
department understood that children needed stable
environments. She agreed that a high turnover existed, but
she believed improvement would come through better
recruiting and better support of people in the very tough
jobs. One way the department could make a difference was by
leveraging the partnerships between state, federal, tribal
entities to do what was right for children. She opined that
one of the ways to address turnover was by accessing
partnerships. She stressed that the work was hard enough
without "beating each other up." She discussed the
importance of being in the same room to address how to best
serve children. She spoke to the importance of the state's
acknowledgement of its part of the problem. She stressed
the importance of owning up to the problems in order to
help the state's children.
2:29:46 PM
Ms. Ryder turned to slide 18 that included the total
Medicaid formula appropriations from FY 06 to FY 15. The
chart included the management plan and supplementals for
each year. The budget had increased from $381 million in FY
06 to $695 million in FY 15. She discussed the intent to
discuss the issue further at a later time.
Vice-Chair Saddler pointed to a supplemental decrement in
FY 09 and asked for detail. Ms. Ryder replied that during
FY 09 there had been an enhanced Federal Medical Assistance
Percentage (FMAP) rate that had increased from 50 percent
up to 60 percent. She elaborated that the federal
government had paid for a significantly larger portion of
the budget, which had saved the state in general funds. She
relayed that when the enhanced FMAP had ended, the general
funds had to increase to continue paying the state's share
of Medicaid.
Vice-Chair Saddler wondered if federal assistance had been
offered in FY 13 as well [supplemental funding was also
shown as a decrement in FY 13 on the slide]. Ms. Ryder
replied that there had been savings that occurred, which
had resulted in a negative $25 million supplemental. She
added that the unusual occurrence had been a pleasant
surprise.
Representative Guttenberg addressed reasons listed for the
Medicaid general fund growth rate (slide 18). He asked for
an explanation of items listed including FairShare,
ProShare, FMAP changes, and Rate Rebasing.
Ms. Ryder deferred the question to the department.
JON SHERWOOD, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES, explained that FairShare and ProShare were
financing endeavors the department undertook in the early
2000s. He elaborated that FairShare was associated with
payments to tribal providers and ProShare was related to
payments to government and private nonprofit providers. He
elaborated that the items had to do with the upper payment
limit; Medicaid was limited to what it could pay providers
(for some services) by the amount of money Medicare would
have paid the provider for providing comparable services.
He detailed that the state had taken advantage of the
opportunity to raise its payments to providers to the upper
limit; in return providers had been asked to assume a
number of responsibilities or to return funds to the
general fund. He relayed that a similar activity had taken
place in the late 1990s and early 2000s nationwide. He
explained that after a period of time the federal
government had decided that Alaska's program did not meet
criteria allowed under federal law; therefore, the state
had to make adjustments to its federal reimbursement to
reflect disallowances for the FairShare and ProShare
programs. The chart reflected adjustments that had been
made. The state had to fund the adjustments when federal
funding had been reduced.
Vice-Chair Saddler surmised that the state had been
creative [in the financing endeavors] and had to
subsequently pay funding back. Mr. Sherwood agreed, but
used the word "aggressive" in place of creative.
2:35:59 PM
Representative Guttenberg asked for verification that the
costs were not above the rate increases, but were a
reflection of creative negotiation for rates that the
federal government did not agree with. He wondered if the
reason was related to the escalating costs of delivering
services in the state.
Mr. Sherwood replied that the department had been creative
or aggressive at a time when it had been facing growth in
the program and revenue shortfalls. He believed the federal
government had decided that the methodology and upper
payment limits used by the state were not appropriate. He
expounded that the issue did not involve a disagreement
about what the cost of healthcare was; it was more about
what kinds of activities providers were performing in
return for the enhanced rate. He detailed that the state
had increased the rate above what it would normally pay and
had required something in exchange. He believed the federal
government's concern had to do with what had been
exchanged; the federal government felt that the state had
been using the rates to artificially inflate the federal
match.
Representative Guttenberg asked for verification that the
department had negotiated a larger package that the federal
government had rejected. Mr. Sherwood replied in the
affirmative. For example, one facility made payments with
the funding that was normally funded by grant-based
services.
2:38:33 PM
Vice-Chair Saddler asked if the situation provided a lesson
for the state as it tried to share expenses with tribal
partners and other organizations. He wondered if the
experience should be cautionary.
Mr. Sherwood replied that it was a lesson that the state
should make sure its federal partners understood clearly
what the state was doing prior to demanding on the revenue
the state was expecting from the activities.
Commissioner Davidson remarked that it had been a classic
example of people believing there was an agreement, but it
had not been sufficiently flushed out. She discussed the
importance of paying attention to the details in order to
avoid making the same mistake twice.
Representative Guttenberg disputed the use of the term
mistake. He applauded the department for trying to do
bundling or rate negotiations in an attempt to drive down
costs. He remarked that the federal government disapproved
with the state's actions in that regard, but it was how
most entities in the medical world operated. He wondered if
other states had taken the same action and gotten away with
it. He observed that Alaska's medical costs were
skyrocketing well beyond those in other states.
Commissioner Davidson replied that the department was
looking at the opportunity for Medicaid expansion to serve
as a catalyst for meaningful Medicaid reform. She believed
it was important to look at lessons learned by other states
to maximize efficiency when delivering services.
2:41:43 PM
Ms. Ryder addressed a graph on slide 19 that illustrated
general funds in each appropriation in DHSS; Medicaid
services was the largest by far and dwarfed all other
appropriations. Additionally, the growth for Medicaid was
much higher than growth of any other appropriations. She
turned to slide 20 that included a multi-year appropriation
summary for FY 16 (non-formula only). The slide depicted
where large growth had occurred and included both
unrestricted and designated general funds. She pointed out
that behavioral health was the highest expenditure on the
chart; however, public health showed a substantial increase
and had surpassed behavioral health costs. The public
health increase was primarily due to the implementation of
the Vaccine Assessment Program, which was paid for by the
assessors. She advised committee members to not be alarmed
by the increase given that most of the cost was not
unrestricted general funds. She relayed that the costs
would be covered in further detail by each division [at a
later date].
Representative Edgmon referred to an increase of 135 DHSS
employees from FY 06 to FY 15 (slide 17). He moved to slide
18 and noted the precipitous uptick in Medicaid
appropriations. He inferred that an increase in employees
over a 10-year period had been arguably restrained. He
noted that the increase had occurred gradually over time.
He gave the legislature credit for keeping the increase at
bay. He believed the graph on slide 18 was a better
representation of the overall uptick in the healthcare
sector in Alaska. He thought the issue would be a relevant
topic to address during Medicaid expansion discussions.
2:46:02 PM
Vice-Chair Saddler agreed that the legislature had done a
good job.
Representative Edgmon noted that the legislature had
applied some discipline going forward in terms of budgetary
requirements for DHSS.
Ms. Ryder agreed that the positions did not look like the
graph on slide 18 pertaining to Medicaid. She stated that
the graph on slide 14 looked very similar to the Medicaid
graph (slide 18); an indication that Medicaid was the
primary driver of the budget increase. However, there were
many pieces at play, which meant it was important to
address each individual appropriation.
Vice-Chair Saddler referenced Representative Wilson's
question about how many new positions there were in grantee
agencies. He asked for clarification pertaining to the cost
increase for public health on slide 20. He wondered if the
increase was related to federal funding for vaccine
programs.
Ms. Ryder replied that the public health increase was
related to the Vaccine Assessment Program. She elaborated
that various providers were paying an assessment to
purchase vaccines. The program had previously been
federally funded, but those funds were no longer available.
She relayed that legislation passed the prior year provided
a vaccine program for the state and the funding mechanism
for the program.
Vice-Chair Saddler asked if the state retrieved any of the
revenue stream after providing the funds to grantees for
the vaccinations. Ms. Ryder replied that the program was
funded by the assessments. She explained that people did
pay for the vaccines. She relayed that an unrestricted
general fund revenue chart would look vastly different from
the total general fund chart.
2:49:01 PM
Representative Gara pointed to slide 18. He referred to a
$313 million increase in Medicaid general funds from FY 06
to FY 15. He recalled that former DHSS Commissioner Joel
Gilbertson under former Governor Frank Murkowski had tried
to use grant money instead of traditional funds, which had
become the FairShare and ProShare that the federal
government had put a stop to three years later. He believed
at that point the state had to begin covering the cost with
general funds.
Ms. Ryder answered that she did not know the details about
the budget in question; however, the FairShare/ProShare had
begun occurring long before Commissioner Gilbertson was
appointed. She noted that litigation had resulted and the
federal government had ended up denying the funds, which
accounted for the large supplemental budgets in the
impacted years; there had also been large ratifications
prior to that point. She estimated that FairShare/ProShare
had begun around FY 00.
2:51:17 PM
Commissioner Davidson continued with the presentation on
slide 21 titled "Department Updates":
· Alaska's Resource for Integrated Eligibility
Systems (ARIES)
· Medicaid Management Information System (MMIS)
· Medicaid Expansion
· Medicaid Reform
Commissioner Davidson referred to the department's three
primary priorities including health and wellness across the
lifespan; healthcare access, delivery, and value; and safe
and responsible individual families and communities. She
remarked on the broadness of the priorities and addressed
where the department would begin focusing its efforts. The
first primary focus was to ensure that Alaskans had access
to healthcare, which included Medicaid expansion. She
communicated that the administration believed that Medicaid
expansion could be a catalyst for meaningful Medicaid
reform. She detailed that the department's state plan
amendment that would be submitted to the Centers for
Medicare and Medicaid Services specified that the state
would participate as long as FMAP remained equal to or
greater than 90 percent. She explained that if the federal
government chose to decrease funding below 90 percent the
state plan amendment authorization would terminate. She
relayed that an in-depth conversation about the proposed
expansion would occur on February 16.
Commissioner Davidson stated that in the past there had
been "dueling banjos" reports. She explained that the Urban
Institute Report commissioned by the Alaska Native Tribal
Health Consortium (ANTHC) had come out in February 2013 and
the Lewin Group report commissioned by the prior
administration had come out in November 2013. She noted
that while there were some differences between the reports,
the results of both studies indicated that Medicaid
expansion was a good investment for Alaska. She noted that
the reports were dated; therefore, the current
administration would make public a new report in the near
future. She detailed that the new report was authored by
Evergreen Economics; the company had been analyzing
Medicaid data for DHSS for almost a decade. She discussed
that the results were pretty consistent; there were
approximately 42,000 potentially newly eligible
individuals. She detailed that almost 44 percent of the
individuals were employed; 30 percent were recently
employed. The data indicated that individuals in the 30
percent category were either recently laid off or seasonal
employees.
Vice-Chair Saddler asked for a cost estimate of the
Evergreen Economics report.
2:55:15 PM
Ms. Efird would follow up with the information.
Representative Gara asked for clarification on the numbers
provided related to Medicaid eligibility. He thought that
under Medicaid expansion eligible individuals would be 100
percent employed.
Commissioner Davidson replied that under the Medicaid
expansion people were eligible for coverage if they had
incomes up to 138 percent of the federal poverty level. She
detailed that an individual could have a full-time job and
make about $9.50 or $9.60 an hour. She elaborated that
under the expansion population 43 percent of the
individuals in the eligible category were at those income
levels.
Representative Gara thought that individuals making the
current level in the 80 percent range were also employed.
He thought 100 percent of the individuals who would benefit
from Medicaid expansion were employed.
Vice-Chair Saddler asked members to hold Medicaid expansion
questions for a later time.
2:57:11 PM
Commissioner Davidson replied that there were gaps in
coverage under existing Medicaid programs; the expansion
would eliminate the gaps. She added that 54 percent of the
eligible population were male and 20 percent of the group
were between the ages of 19 to 34, which resulted in
significantly lower per enrollee spending than any other
age and gender. She expounded that no Medicaid program had
ever reached full enrollment and the department did not
expect enrollment in Alaska to reach full enrollment. The
department expected approximately 20,000 people to enroll
in the first year and about 27,000 to enroll by 2021. She
noted that many individuals were eligible for Medicaid, but
did not sign up. She communicated that the department
expected administrative costs to be fully offset by
savings; the costs were developed by department staff
conducting the work. Some administrative costs were
anticipated because increased eligibility requirements and
the processing of payments would increase the need for
additional eligibility determinations and claims
processing.
Commissioner Davidson believed the expansion savings in the
first year (FY 16) would be conservative; however, there
were savings within the department's control. She used the
state funded medical assistance program as an example;
Medicaid timely filing rules were allowed for one year
after service was provided; therefore, it was not prudent
to identify all of the savings associated with what the
general fund paid for in the first year. The department
expected some grant reductions due to the expansion;
however, prior to cutting programs, it was necessary to get
the expansion funds in the door. She discussed the annual
Department of Corrections (DOC) hospital contract payments
that were funded with general funds. She detailed that the
state was not taking all of the savings in the first year,
given the time it would take for the change to take place.
She expected savings to offset administrative costs in the
first several years. The department expected that the
federal match would be approximately $204 million by 2021;
the state's share would be under $20 million. She discussed
that as the state moved forward during a time when the
budget was contracting, it was necessary to be mindful of
economic impact in the state. She referred to a host of
opportunities for the state to diversify its revenues (e.g.
through liquid natural gas and other). She was excited
about the opportunities; however, many of the projects
would not bring in revenue for quite some time. She relayed
that the economic impact from Medicaid expansion could be
approximately $1.5 billion in the first seven years. She
stated that the economic benefit would positively impact
all areas of the state. She relayed that the issue would be
discussed in further depth at a later date.
3:02:41 PM
Commissioner Davidson continued to discuss slide 22. She
remarked that DHSS currently had some significant systems
challenges. She communicated that in order for the state to
take advantage of Medicaid expansion and to continue its
current Medicaid program the department needed to improve
the enrollment of individuals and the payment of providers.
She detailed that the department had been undergoing
systems conversions related to eligibility and payments for
quite some time. She addressed the eligibility system and
relayed that there were two phases envisioned for the
Alaska's Resource for Integrated Eligibility Services
(ARIES) project. The first phase was for the system to do
Medicaid determinations under the new federal rule that
disregarded asset testing and was based on modified
adjusted gross income. She highlighted that it had become
easier to qualify for Medicaid because assets were no
longer considered.
Commissioner Davidson relayed that the first phase that
would do MAGI [modified adjusted gross income]
determinations was supposed to go live in October 2013;
however, the implementation had been delayed by one year.
Phase two of the systems change was aimed at replacing the
old Medicaid eligibility System and the Medicaid Payment
System (that were both approximately 28 years old). Phase
two was also intended to ensure that ARIES was able to do
other kinds of public assistance determinations including
Temporary Assistance for Needy Families (TANF) and all
other Division of Public Assistance determinations. She
noted that there was currently a backlog. She relayed that
the department had brought back former Director of the
Division of Public Assistance Ron Kreher to help work
through the backlog.
Commissioner Davidson addressed the payment system and
relayed that DHSS was in litigation with Xerox because it
needed the company to significantly improve the payment
amount and the timeliness of payment. She detailed that the
litigation was currently before an administrative law judge
as required by contract; the state was seeking $64 million
in liquidated damages. She added that the hearing was
scheduled for February 2015. The department had hired a
company called Navigant to look at the codes and to provide
an assessment.
3:06:47 PM
Representative Wilson wondered if the state was $64 million
behind in payments to providers. Commissioner Davidson
replied that the figure did not necessarily reflect the
behind payments. She detailed that the liquidated payments
were the workarounds that DHSS healthcare services staff
had to do in order to process payments because the Xerox
system was unable to process the payments in a timely way.
Representative Wilson wondered how far behind the state was
in payments to providers. She was hoping the state was more
caught up than it had been the prior year. She wondered how
many individuals were waiting to determine if they were
eligible.
MARGARET BRODIE, DIRECTOR, HEALTH CARE SERVICES, DEPARTMENT
OF HEALTH AND SOCIAL SERVICES, responded that there were
still a very small number of providers that were not able
to be paid. The department had not needed to make advances
to providers in several weeks. Additionally, it was on the
verge of fixing a problem in order to pay the majority of
claims correctly. The backlog included the reprocessing of
all claims from inception. She relayed that the department
was working to prioritize the claims because it was not
possible to process them all at one time. She believed
claims would be paid accurately across the board by the end
of February. The majority of the claims would be
reprocessed by the end of the fiscal year, but some would
fall into the upcoming fiscal year.
Vice-Chair Saddler informed members that the committee
would have a subcommittee meeting on Medicaid expansion.
Commissioner Davidson communicated the department's
recognition of the significant payment problem. The current
focus with Xerox was on issues related to getting payments
out the door. The work the Medicaid Management Information
Service was supposed to do was beyond getting providers
paid; those issues had been put on hold until providers
were paid. The administration understood that Medicaid in
its current form was not sustainable; therefore, it was
undertaking an effort to focus on a Medicaid reform
package. The department would explore options to maximize
100 percent FMAP (e.g. working with tribal and federal
partners). She noted that there were tremendous
opportunities to learn lessons from other states. She
addressed how the state managed the care of its population;
it continued to pay for incidents of care and not
necessarily for outcomes. There were opportunities to
extend other provider types that currently happen in tribal
health through behavioral health aides, community health
aides, dental health aide therapists, and nurse
practitioners. There were also great tele-health
opportunities; the department believed savings would occur
if it utilized the services more effectively and
efficiently. She believed there would be savings
opportunities in tele-health throughout the state.
Commissioner Davidson moved to slide 23 and addressed child
welfare, the department's second area of primary focus.
There were currently over 2,400 children in out-of-home
placements. She stressed the importance of maximizing the
state's relationships in order to improve outcomes for
children. She addressed tribal and federal partnerships on
slide 24, the department's third primary area of focus. She
communicated that given where the state had been with its
tribal and federal partnerships she thought focus was
necessary in order to do partnerships well. She furthered
that there were many barriers that could impede collective
efforts in the area of tribal and federal partnerships. She
emphasized that the state, tribes, and the federal
government could not do the work alone. She stated that
even two of the three groups working together was not
sufficient. She spoke to the importance of leveraging the
partnerships.
Commissioner Davidson addressed the fourth area of primary
focus: "Improving the health status of Alaskans" (slide
25). She relayed that more detail would be provided later
on by the Division of Public Health. She detailed that Dr.
Butler would present on recreational marijuana and the
impacts on health the following day in the Senate State
Affairs Committee. She communicated that the department was
responsible for informing the public about health impacts
of marijuana. She pointed to five recommendations from
Governor Bill Walker's 2014 DHSS transition report on slide
26.
3:13:35 PM
Commissioner Davidson thanked members for the opportunity
to address the committee.
Representative Guttenberg pointed to item 4 on slide 26
"health care cost and affordability." He commented that
Alaska's healthcare costs were rising faster than those in
other states. He wondered if there was an ongoing effort to
determine healthcare cost drivers in the state.
Commissioner Davidson replied that the efforts were
underway. She elaborated that it was also one of the key
opportunities in Medicaid reform. She believed
opportunities existed in how the state paid for healthcare
services. She thought the state was the largest buyer of
healthcare services in Alaska including healthcare
purchased for state employees, retirees, and Medicaid
beneficiaries. The department believed there were
opportunities to work together more efficiently to reduce
costs.
Co-Chair Neuman recalled his prior work with the DHSS
finance subcommittee. He spoke about a trip the
subcommittee took to Fairbanks the prior year to meet with
department staff. He discussed work done by OCS caseworkers
and how many rural areas had no cell phone coverage or
internet. He remarked on the cumbersome and time consuming
paperwork caseworkers were required to complete. He
recalled reading that 800 state jobs would be lost due to
budget reductions in the current year. He commented on the
impact the lost jobs would have on the economy in
communities. He discussed thousands of jobs that would be
lost due to the budget deficit. He discussed the continued
growth in healthcare. He surmised that the job loss would
impact families and would increase domestic violence,
substance abuse, child abuse, and sexual assault. He
stressed that the abuses hurt society more than anything.
He spoke about legislation he had worked on in the past
related to "Jessica's law." He stated that in the past the
annual cost to Alaska for the abuses was $45 million. He
added that the current cost far exceeded the amount. He
discussed working to ensure that jobs remained in
communities. He wondered how the department would deal with
the issues. He asked for a copy of a plan the department
was working to devise.
3:21:31 PM
Commissioner Davidson addressed that slow internet was a
challenge because it inhibited work of the staff. She
detailed that the DHSS information technology staff had
been working with the Department of Administration on
increasing throughput to increase internet speeds. The
department recognized that people could not work and fill
out online forms if they could not be done in a timely way.
She agreed that job loss would occur because the state
could not continue to afford the level of government it had
grown accustomed to. She remarked that DHSS was not immune
to budget cuts that would occur. She concurred that
terrible things did happen in families and communities when
people were under tremendous financial pressure. She
stressed that the challenges would be bigger if the state
did not do Medicaid expansion. She appreciated that
Medicaid expansion required behavioral health parity,
meaning that it would pay for behavioral health services
for alcohol treatment and other substance abuse treatment.
She emphasized that treatment was one of the only ways to
stop the cycle. She elaborated that a significant number of
juvenile justice and corrections cases were alcohol and
drug related. She noted that the Division of Juvenile
Justice would report to the committee on its work to
address recidivism by providing treatment services to
youths in a way that disrupted the cycle. She relayed that
a significant percentage of people Alaska's jails were
either awaiting sentencing or trial for drug related
charges. She stressed the importance of behavioral health
programs; it was necessary to change the way people thought
about substance abuse. She emphasized that children should
not grow up believing substance abuse was normal. She added
that the efforts would take time.
3:25:43 PM
Representative Pruitt thanked the commissioner for taking
on her role in the department. He addressed slide 25 and an
upcoming presentation related to marijuana. He wondered if
the administration would take a larger role in helping to
determine the direction the state would head pertaining to
marijuana. He wondered when to expect it. He wanted to see
the direction from the administration.
Commissioner Davidson did not want to get ahead of what the
governor planned pertaining to recreational marijuana use.
She noted that DHSS had a tremendous opportunity to educate
the public via a public health message or other. The
department was currently addressing whether it made sense
for the state to have a public health website communicating
information about the drug to young people such as impacts
and dangers. She stated that unfortunately the state did
not currently have a public health message posted online
pertaining to marijuana.
Representative Pruitt surmised that something should be
expected from the governor. Commissioner Davidson replied
that she would follow up on the question at a later time.
Representative Pruitt requested specifics on what Medicaid
reform meant. He wanted to know what statutes needed to be
changed and what role the legislature could play in getting
to the reform discussion. He wondered if the state would be
changing some of the services it offered under Medicaid. He
noted that every state had different levels of services
provided. He opined that services provided in Alaska tended
to be fairly good. He believed the only way to address the
issue was through statutory changes. He wondered if the
administration would look for leadership on the topic from
the legislature. He requested that the administration
indicate where it would like to see support come from.
3:30:24 PM
Representative Gara discussed that a healthcare policy task
force been established eight years earlier. He remarked
that for years the legislature had not received any
information on the reports. He relayed that Co-Chair Neuman
had suggested going through the reports the prior year. He
spoke to one of the recommendations related to transparent
healthcare pricing. He noted that the strategy had been
successful in other locations. He requested that the
legislature keep working with the task force. He spoke to
the importance of listening to ideas from the task force
that would cut medical costs. He stressed that one of the
largest cost drivers facing state government was the rise
in medical costs. He discussed the state's payment
responsibility.
Vice-Chair Saddler recognized Representative Liz Vazquez's
presence in the room. He asked what kind of reductions the
department was likely to look for in the upcoming fiscal
year.
Commissioner Davidson replied that DHSS had been asked to
cut 5 percent from its budget. She did not have further
detail at present.
Commissioner Davidson made clarifying comments related to
Medicaid reform. She relayed that the state was early in
the process related to the reform and was committed to
implementing reform responsibly. She detailed that the
administration wanted to be sure to explore opportunities
other states were looking at. The administration was open
to ideas that would allow services to be provided more
efficiently and that would act as a safety net for the
state's most vulnerable population. She relayed that Dr.
Butler would begin chairing the Alaska Health Care
Commission. She shared that she had been a member on the
commission for many years. She underscored that the entity
had been tasked by the legislature to develop a healthcare
policy and plan for the state. She had been frustrated in
the past that the commission had been told that it could
not talk about the federal Affordable Care Act or Medicaid
expansion. She believed that ignoring the largest change
that had happened in healthcare law was not the best way to
look at developing a sound and prudent health plan for
Alaska. She noted that looking at the items did not mean
the state would be required to adopt all of changes. She
believed it was important to have the ability to have
conversations out in the open.
Vice-Chair Saddler remarked that the ball was in the
department's court. He relayed that the first subcommittee
meeting would be at 9:00 am on January 28. He passed the
gavel to Co-Chair Neuman.
Co-Chair Neuman lauded the department for its hard workers.
He discussed the schedule for the following day.
ADJOURNMENT
3:36:55 PM
The meeting was adjourned at 3:36 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DHSS-HFIN Dept Overview 012615 Final.pdf |
HFIN 1/26/2015 1:30:00 PM |
DHSS Budget Overview HFIN |
| DHSS ResponsenHFIN Overview Log 2790.pdf |
HFIN 1/26/2015 1:30:00 PM |
|
| DHSS Response HFIN Overview.pdf |
HFIN 1/26/2015 1:30:00 PM |