Legislature(2019 - 2020)ADAMS ROOM 519
05/02/2019 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB96 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 49 | TELECONFERENCED | |
| += | HB 145 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 96 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
May 2, 2019
1:45 p.m.
1:45:37 PM
CALL TO ORDER
Co-Chair Wilson called the House Finance Committee meeting
to order at 1:45 p.m.
MEMBERS PRESENT
Representative Tammie Wilson, Co-Chair
Representative Jennifer Johnston, Vice-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
MEMBERS ABSENT
Representative Neal Foster, Co-Chair
ALSO PRESENT
Representative Zach Fields, Sponsor; Tristan Walsh, Staff,
Representative Zach Fields; David Teal, Director,
Legislative Finance Division.
PRESENT VIA TELECONFERENCE
Clinton Lasley, Director, Division of Alaska Pioneer Homes,
Department of Health and Social Services.
SUMMARY
HB 96 PIONEERS' HOME AND VETERANS' HOME RATES
HB 96 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 96
"An Act relating to Alaska Pioneers' Home and
Alaska Veterans' Home rates and services."
1:46:08 PM
Co-Chair Wilson reported that the committee would review
the fiscal notes.
CLINTON LASLEY, DIRECTOR, DIVISION OF ALASKA PIONEER HOMES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES (via
teleconference), reviewed the new fiscal impact note from
the Division of Alaska Pioneer Homes, Department of Health
and Social Services. He relayed that the total cost of
operating the homes was $62 million. The administration was
currently proposing to return the operation of the Pioneer
Homes into a need based system versus the present manner of
appropriating $33 million in state funding regardless of
the residents ability to pay. The fiscal note reflected
the governor's proposal. He pointed to the $1.5 million in
federal receipts from the Veteran's Administration that
were for the Veteran's Home in Palmer. In addition, the
$26,052.2 million (with the reduction of $5,552.2 million
in the current fiscal note) from program receipts were the
funds collected from the elder residents or their private
insurance. The interagency receipts amounting to $32
million, reduced by $7,751.7 in HB 96 were typically from
the Medicaid waiver program. He elaborated that under the
governor's proposal a separate component would be added
under the Medicaid Waiver, called the Pioneer Homes Payment
Assistance component. The Pioneer Homes Payment Assistance
funding would supplement the interagency receipts on the
current fiscal note for individuals without the ability to
pay. Finally, the $3,083.7 million in Statutory Designated
Funds were receipts that were received for pharmacy. He
delineated that when the administration decided to propose
rates equivalent to the cost of providing services, they
examined a report done by Agnew Beck Consulting. The
division considered the current expected spend in FY 20
based on the expected 95 percent occupancy which equated to
a total population of 471 elders. He concluded that based
on the level of care, population, and using their rate
methodology, HB 96 would leave the homes $13 million short
from what the homes would be able to earn. He referenced
public testimony earlier in the week from a resident
stating that the proposed rate increase would cost him $78
thousand. He indicated that the $78 thousand was the amount
the state was currently subsidizing which amounted to $13
thousand each month at the highest level of care. Under the
bill the maximum the state could charge for the highest
level of care left a $3,000 gap. The funding gaps would
add up to $13 million in GF (General Funds) and was
necessary to fund the Pioneer Homes.
Co-Chair Wilson asked whether there was a spreadsheet
available to provide detail. Mr. Lasley answered that he
had provided a spreadsheet to the Legislative Finance
Division (LFD). He offered to provide it.
1:52:06 PM
Co-Chair Wilson referenced the fiscal note and surmised
that the governor included $25 million for residents
needing payment assistance and no other general funds (GF).
Mr. Lasley answered in the affirmative. He recapped that
the governor's proposal removed $33 million GF and added a
new need-based payment assistance component appropriating
$25 million.
Vice-Chair Johnston asked how long the Pioneer Home been
working on restructuring its finances. Mr. Lasley responded
that the division had started looking at restructuring in
the current year. Since 2015, the legislature and the
governor had asked the division to look for other ways of
earning revenue. The division gradually transitioned from
GF to other funding sources, primarily Medicaid and program
receipts. He pointed to the challenges of providing the
same service with less GF and offer the same subsidy to all
residents regardless of income. Vice-Chair Johnston
recalled spending time with the previous division director
of the Pioneer Homes who had seemed to be working on
something similar. She asked whether the current plan had
been worked on for some time. Mr. Lasley replied in the
affirmative. He detailed that the agency had asked the
Alaska Mental Health Trust Authority (AMHTA) to help fund a
study to determine how to best utilize and fund the home
for the needs of the community and increasing aging
population. He noted that the study was published in
November 2018. The division worked on the issue for one
year and was implementing some of the findings.
Vice-Chair Johnston pointed out that some of the concerns
was related to "the mix of the population in the homes."
She understood that "some mission creep" had occurred in
running the homes due to an older population currently
residing in the homes compared to the past's more active
population. She shared a concern that if the rates were
raised too high, it could penalize some of the more active
residents living with a spouse who required a higher level
of service and were paying via insurance. She pondered
whether raising rates resulted in the state losing money;
thus, the ability to subsidize the residents. She was
trying to get a sense whether there were enough residents
paying their own way at a lower level of care that offsets
the higher costs for high level care. She thought
statistics should reflect the change and costs of the
home's population.
1:58:02 PM
Mr. Lasley responded that currently over 50 percent of the
elders were in a higher level of care requiring 24 hour
assistance due to dementia and other issues and currently
10 percent at the lowest level. He restated that currently
seniors were not required to prove how much they could
afford to pay prior to moving in. Once a person was
admitted to the home, the amount a resident could pay was
determined and the remainder was subsidized. He emphasized
that the proposal was requiring residents "that can pay, to
pay what they can." The state was currently subsidizing
about half of the home's service costs. Total costs were
over $60 million, and the state subsidized roughly $33
million. Vice-Chair Johnston asked what percentage of the
population paid on their own and what percentage was paying
strictly through Medicaid and Medicare. Mr. Lasley answered
that currently approximately 50 percent received a state
subsidy.
Vice-Chair Ortiz asked whether the governor's proposal had
potential to drive out a population of current payers
covering at least some of their costs leading to an
increased population without the ability to pay. Mr. Lasley
replied that anything was possible. He noted that if the
rates went into effect, they would be closer to the cost in
the private sector. He relayed that every time the rates
were increased some residents left the Pioneer Homes and
chose to reside in a private facility.
2:02:42 PM
Co-Chair Wilson asked for the difference between when a
person needed assisted living versus a nursing home
setting. Mr. Lasley replied that the Pioneer Home allowed
and elder to age in place until the end of life. Typically,
many assisted living facilities asked residents to leave
when they required higher levels of care and the next step
would be a nursing home. He indicated that the Pioneer
Homes unique model was a cost saver to the state because
the nursing home care was reimbursed at a higher rate. He
noted that it was rare that high care seniors were asked to
leave the home due to care issues.
Co-Chair Wilson wondered whether federal law dictated the
type of home an elder resided in. Mr. Lasley answered that
the level of care was based on medical need. The homes had
nurses on staff but did not provide skilled nursing
services, which would require a resident to leave the
Pioneer Homes. Co-Chair Wilson recalled viewing a chart
showing the number of care levels and the amount of beds
associated with the levels. She asked if the homes still
measured beds in the same way. Mr. Lasley responded that
the homes were staffed based on the level of care that was
anticipated in the community except for the Juneau home,
which solely accepted people via their position on the
waitlist. The division structured their homes based on the
needs of the individuals on the waitlist and were not
holding beds according to care level. He offered that prior
to his tenure many beds were left vacant while many
individuals remained on the waitlist. He determined that
the system was unacceptable, and he instituted a goal of 95
percent occupancy; the industry standard. Co-Chair Wilson
asked for clarification that the state currently subsidized
the Pioneer Homes and residency was not based on the
ability to pay. Mr. Lasley elaborated that once a person
was transitioned to an active list, which meant they were
ready to move in within 30 days, was the point the
individual's finances and ability to pay was determined. He
cited AS 37.55 that clearly outlined in statute that elders
living in Alaska where not accepted or evicted based on
their ability to pay.
2:08:32 PM
Co-Chair Wilson clarified that she was not attempting to
evict any seniors from the Pioneer Homes. She referenced
Mr. Lasley's testimony stating the state subsidized every
resident at the same level regardless of their ability to
pay and asked for clarity. Mr. Lasley responded that under
the current system the state was subsidizing every resident
at the same level because the rates were artificially low.
He exemplified that a current level 3 resident was charged
$6,795. per month but the true cost was $13,333. The state
subsidized the difference in cost, regardless of the
ability to pay. Co-Chair Wilson surmised that even if
someone could pay the $13,300, the level had been set so
low the costs were automatically subsidized. Mr. Lasley
replied in the affirmative.
Vice-Chair Johnston asked if a sliding fee scale had been
considered. Mr. Lasley answered that essentially, the
payment assistance program that had been in effect was
based a sliding fee scale. He used the top level 3 rate of
$13,333 as an example; if the resident was able to pay
$5,000 per month the state subsidized the remainder. The
sliding fee scale was based on the resident's resources and
monthly income. Vice-Chair Johnston asked if the current
sliding fee schedule considered insurance or other forms of
payment. Mr. Lasley answered that currently, the payment
assistance program was only subsidizing against the rate of
$6,795. He voiced that the problem was that the rates were
set artificially low and it was not a regulatory issue.
Vice-Chair Johnston surmised that under the proposal that
established 5 levels of care, the division would still use
the same approach. The fiscal note would show what the
actual costs were because residents would be charged the
full amount of their ability to pay. She asked whether she
was correct.
2:13:23 PM
Mr. Lasley replied that under HB 96 the state would fall
$13 million short because the maximum allowable rate was
$10,000. However, the actual cost was $13,333.
Co-Chair Wilson wondered why the division would not base
the rate on $13,333. Mr. Lasley answered that the
governor's proposal under the current regulatory package
was to do as stated and charge $13,333. The division would
charge the rate based on the true cost of services and the
remainder would be subsidized by the state in recognition
of the statute that provided the payment assistance
program. The problem was that the rates had been so low it
did not reflect the true cost of services. The change was
proposed in regulation and was currently in the public
comment period. Co-Chair Wilson wondered whether the elders
understood the payment system versus a sliding scale based
on the ability to pay. Mr. Lasley answered that it had been
very difficult to communicate the proposal. He reiterated
that the division was not doing anything different except
charging the true costs of services. The residents would
still only receive a monthly bill for the portion deemed
they could afford to pay under the formula set in statute.
The system that protected every elder that allowed them to
live and stay in the home regardless of their ability to
pay remained in place. Co-Chair Wilson understood why the
residents were upset. She wondered whether a general letter
was sent to residents or a letter to each individual
resident explaining the rate increase and detailing how it
affected their monthly bill including their subsidy. Mr.
Lasley replied that he had sent a blanket letter to every
resident in October that was not specific to everyone's
financial situation. He maintained that he lacked the
financial information of residents that were privately
paying the full advertised rate and would need to request
financial information from each elder.
2:18:24 PM
Co-Chair Wilson did not understand how the division had
communicated a huge rate increase and did not anticipate
the anxious reaction by residents. She countered that the
division had collected the necessary financial paperwork
and the ability to pay was known. She suggested that the
division wanted to avoid the work of sending individual
letters. She thought that the division upset the
individuals in the home for no reason.
Representative Josephson ascertained that the division was
attempting to maximize the payments of residents' other
resources like Medicaid benefits or private insurance and
then subsidize the remaining amount. Mr. Lasley replied in
the affirmative and added that the goal was to create a
true need based system. He furthered that for individuals
paying the full rate, until recently they had never asked
them what resources they had. Representative Josephson
asked about the impact on the self-paying resident, He
deduced that the increase would reduce their resources and
leave their estate diminished. Mr. Lasley affirmed the
statement. He indicated that payment assistance required a
resident to use their resources prior to receiving a state
subsidy, which was the same with Medicaid. He conveyed that
under current statute and regulations, residents paying the
advertised rate were exempted from financial reporting. The
proposal planned to maximize the resident's revenue and the
payment assistance would be a true need-based system.
2:22:33 PM
Representative Josephson asked how the division would know
what it could capture in the maximization effort. Mr.
Lasley replied that presently, the division was uncertain.
He shared that in 2017 the division began requesting
"simple" resource information and again in November 2018.
The division did not know the amount of additional revenue
that would be generated under program receipts due to the
limited data. Representative Josephson concurred with one
of the concerns that had been expressed about increasing
rates. He did not know how much income could be replaced if
people decided to look at the private marketplace. Mr.
Lasley agreed that there was no way of knowing whether
elders would move to the private marketplace or remain in
the Pioneer Homes. He referenced the number $5.7 million
that was the estimated amount of additional program
receipts that would be generated based on the limited data.
Representative Josephson asked that if the figure was $5.7
million, why not raise the rate to that level. Mr. Lasley
answered that the goal was to reflect the true cost of
service in the rates. He noted that the division had been
asked to find ways to earn more money in the past couple of
legislative sessions. The effort was to be truthful and
honest about the cost and to return to a true needs-based
system. The payment assistance program should operate on
need and not based on an arbitrary number.
2:26:37 PM
Representative Merrick asked how to address the problem of
fraud. She exemplified the individual who transferred their
assets to a family member. She wondered if the division had
considered the issue. Mr. Lasley answered that the program
required a three-year lookback under state statute and
Medicaid required a five-year lookback. Representative
Merrick asked if it was a lookback at income or assets. Mr.
Lasley answered that it was a review of both. The financial
disclosure required bank statements, property, other non-
liquid assets, title searches, etc.
Co-Chair Wilson thought the state may need to increase the
number of years in the review.
Co-Chair Wilson asked to hear from the sponsor.
2:28:26 PM
REPRESENTATIVE ZACH FIELDS, SPONSOR, reported the purpose
of the bill was to honor the state's historic commitment to
the Pioneer Homes and provide a solid financial base. He
commented that the discussion centered on a disagreement
regarding finding the best economic policy for the Pioneer
Homes versus a competitive environment. His concern was
that "setting a price point that was impossibly high would
scare off paying customers, adversely impact the pool of
residents, and ultimately cost the state money" He detailed
that he had studied economics and an artificially high
price point in terms of the market and not based on actual
cost of care could decrease the home's revenue collection.
He suggested hearing from LFD. His goal was for the home to
be as financially sound as possible for the next 100 years.
Co-Chair Wilson asked exactly what the bill accomplished.
Representative Fields replied that the bill capped the
rates that the department could set. He preferred not to
cap the rates in statute but given the governor's current
proposal, he worried about the long-term financial
viability of the Pioneer Homes. In addition, the bill
allowed the Department of Health and Social Services (DHSS)
to raise rates based on the Social Security rate of
inflation to better keep pace with the increasing cost of
care. Co-Chair Wilson pointed to Section 5(f) [page 3, line
20] and ask whether the section was based on the proposed
five tiers. Representative Fields answered in the
affirmative. He emphasized that the bill supported the
recommendation to go from three to five levels of care
based on the Agnew Beck Report and SB 74- Medicaid Reform;
Telemedicine; Drug Database [Chapter 25 SLA 16 -
06/21/2016] recommendations. He pointed to Section 5,
subsection (f)(5) and relayed that he did not propose rate
caps for a category in Tier 5 care for complex behavioral
health issues, which was a separate rate of reimbursement.
He maintained that it was unnecessary to cap the Level 5
rates in terms of keeping the Pioneer Homes competitive.
Co-Chair Wilson surmised that he did not number the levels
of care in the bill but addressed the levels by specifying
the rates and care for each level. Representative Fields
affirmed that the levels of care language corresponded to
the department's tiers.
2:31:51 PM
Co-Chair Wilson referred to subsection (f) (5) on page 4
and reasoned that the subsection corresponded to level 5,
the highest level of care and was not "setting the level"
in statue. Representative Fields responded in the
affirmative. Co-Chair Wilson pointed to subsection (f) (6)
and (7) and asked what the subsections corresponded to.
TRISTAN WALSH, STAFF, REPRESENTATIVE ZACH FIELDS, cited
page 4, line 8 and line 13, and explained that the
provisions reflected payments for respite care services
that were set in regulation and not in statute. The bill
would set the schedule in statute.
Co-Chair Wilson asked if respite care was available in a
person's home versus the Pioneer Homes. Mr. Walsh replied
that respite care was available in the Pioneer Homes. He
deferred to Mr. Lasley to expound on the extent to which
respite care was used. Co-Chair Wilson cited Section 5,
Subsection (6) on page 4, lines 8 through 12 and Section 5,
Subsection (7) on page 4, lines 13 through 16. She inquired
whether the respite rates were paid in addition to the rate
a resident paid. Mr. Lasley answered in the negative and
expounded that respite care allowed the home to provide
temporary services for up to 14 days for an individual that
needed to come into a home, or for a temporary replacement
for a primary care provider that took care of an elder in a
Pioneer Home. The regulation allowed them to secure the
service at a "good daily rate." Co-Chair Wilson asked
whether the following provisions were reflective of the
actual cost. She cited the provisions as follows:
(6) $70 a day for services provided in a home to a
recipient who requires the provision of housing,
meals, emergency assistance, medication
administration, health-related services, recreation,
and extensive assistance with activities of daily
living for up to eight hours a day between 6:00 a.m.
and 6:00 p.m., including meals scheduled during the
period the recipient is receiving the services;
(7) $100 a day for room and board provided in a home
to a recipient who requires the provision of housing,
meals, emergency assistance, medication
administration, health-related services, recreation,
and extensive assistance with activities of daily
living for 24 hours a day for up to 14 consecutive
days
Mr. Lasley answered that the subsections reflected the fees
that were currently in statute but were increased in the
new regulation package. Co-Chair Wilson asked what the
rates were increased to.
2:35:00 PM
Mr. Lasley answered that the $70 rate would change to $161
and the respite service would change to $322.
Representative Merrick asked if the home had a certain
number of beds allocated to respite care. Mr. Lasley
answered in the negative. He elaborated that the vacancy
rate dictated the space available to take in residents. The
respite service was rarely utilized but he wanted to
maintain the ability when necessary.
Representative Josephson recalled hearing that the rates
Representative Fields recommended were higher than the
typical adjustments for inflation. He asked for clarity.
Representative Fields affirmed that the rates in the bill
were a bit higher. He indicated that based on testimony and
the prior committee process the rates had been increased.
He would be supportive of ratcheting the increase back down
a bit after discussions with LFD about the economics of
revenue capture and keeping the homes on a sound financial
footing.
Co-Chair Wilson speculated that the legislature was
disadvantaged by not having access to the actual
financials.
Vice-Chair Ortiz asked if most of the homes had a
substantial waiting list. Mr. Lasley replied that there was
a waitlist for every home. He furthered that 200
individuals were on the waitlist systemwide. The vacancy
rate of 95 percent occupancy ensured that there was always
a set number of rooms available. Vice-Chair Ortiz inquired
about the selection process. He asked if the waiting list
was on a first come, first served basis. Mr. Lasley
responded that anyone age 65 or older could place
themselves on the inactive wait list, which set their place
in line. He elucidated that once an individual was ready to
move into a home, they were placed on an active waitlist.
The selection was based on the original application date.
The home considered the level of services needed to find
the placement.
2:40:07 PM
Vice-Chair Johnston ascertained that a person residing in
the state for at least one year had the ability to place
themselves on the inactive waiting list at the age of 65.
The inactive waiting list was weighted against how many
years the person was on the inactive list. The individual
placed themselves on an active waitlist when thy desired to
move into a home. She asked whether she was correct. Mr.
Lasley replied in the affirmative. Vice-Chair Johnston
expressed concern about mission creep. She detailed that
the Pioneer Homes had been established for people who had
built Alaska and in honor of the state's pioneers. However,
it was found unconstitutional to require a longer than one
year residency requirement. She asked for confirmation. Mr.
Lasley answered in the affirmative. However, many of the
residents entering the homes had been in the state for a
substantial amount of time due to the waitlist system. He
articulated that the average age of a resident was 87 years
old. Elders were entering the Pioneer Homes at a later
point in life when they truly need high levels of service.
Vice-Chair Johnston thought that the mission of the home
had changed drastically. Mr. Lasley confirmed that Vice-
Chair Johnston was correct and added that over 50 percent
of the residents were at the highest level of care.
2:43:35 PM
Representative LeBon provided a hypothetical scenario of
someone age 66 placing themselves on the list. He wondered
when the person met the one year requirement could he jump
to a second list and accrue time on that list and make
themselves available to move in as soon as possible. He
asked whether a person on the active list that was a
resident for 65 years could be treated "more special" than
the one year resident on the active list. Mr. Lasley
affirmed that a person could put their name on an inactive
list and change to the active list after one month as
required under statute. He explained that since the active
waitlist was predicated on the application date on the
inactive waitlist, the earlier a person placed themselves
on the inactive waitlist, the better the chance of
placement. Therefore, the new person on the active waitlist
would have their placement drop as more people that had
applied years earlier placed themselves on the active list.
He noted that individuals placed themselves on the active
list each month. Representative LeBon felt assured that the
system prohibited the new resident from being placed before
the long-term resident.
Co-Chair Wilson asked Mr. Teal to speak to the fiscal
notes.
2:46:22 PM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
indicated that he could not provide a "simple walk through"
of the fiscal notes based on the previous discussion. He
noted that the behavioral and other implications made the
fiscal impacts more than "merely a numbers exercise." He
emphasized that the bill changed the source of funds but
not the amount required to operate the Pioneer Homes. The
state would still operate the Pioneer Homes System. He
pointed out that a complicating factor was a change in
structure by adding the Payment Assistance component. The
component made it appear that the funds were reduced by $33
million. The add back of $20 million along with program
receipts, etc. created confusion. He thought it was best to
envision the fiscal note as a single appropriation that
reduced GF by roughly $12.3 million. The problem with the
governor's appropriation was that the administration did
not expect to cover the receipts. The fiscal note made it
appear that the $12.3 million in UGF would be replaced by
program receipts and Medicaid. However, the Pioneer Homes
did not expect to receive more than about $5.7 million. He
informed the committee that LFD estimated that amount at $5
million rather than $5.7 million. The governor's budget
left the Pioneer Homes short by about $6 million to $7
million. In other words, the governor left the home
underfunded relative to FY 19 and he advised the committee
to expect a supplemental request. The governor's budget was
replacing GF with uncollectible receipts. It appeared that
the Pioneer Homes would run out of funding in May. He
highlighted that the current legislation did collect less
funds. He cautioned that it was best not to compare the
governor's budget to the fiscal note. He deduced that HB 96
reduced costs by approximately $2 million, which was much
less than the governor's reduction of $12.3 million. He
reminded the committee that the fiscal note was being
compared to a governor's scenario that had not yet occurred
and was not fully funded. He felt that the situation made
the fiscal note comparison difficult. He continued that the
primary concern when analyzing the fiscal note was how the
change affected behavior. He was concerned that the rate
increase would drive the level 1 residents out of the
homes. He figured that if the level 1 residents were
replaced by higher level residents the governor's plan
could cost more than HB 96 and the exact amount was
difficult to quantify but emphasized that the scenario was
a significant concern. He pointed to the handout that was
prepared by the director of the Pioneer Homes.
2:52:26 PM
AT EASE
2:56:28 PM
RECONVENED
Mr. Teal pointed to a handout from LFD with no title
related to the Pioneer Homes bed rate and costs(copy on
file). The chart showed the current bed rate and the bed
rate under HB 96. He explained that the furthest left
column indicated the number of residents at each level of
care that illustrated over half were at level 4 care versus
20 years ago when most occupants were at level 1 care. The
furthest column to the right characterized the significant
impact of the shift through continual increases in the
state subsidy, which totaled $13 million under HB 96. He
reiterated that the governor did not request additional
funding and would result in insufficient funding. The
monthly Level 1 bed rate under HB 96 was $3,100. He
remarked that if making money was the goal the Level 1
rates should be lowered. Increasing the rate for Level 1
care meant going to the Pioneer Homes would be much more
expensive than remaining in a person's home. He referenced
the fourth column on the left that reported the current bed
rate costs for Level 1 care that was $3,623.20. He
hypothesized a scenario where the cost of Level 1 care was
decreased to $2,000 per month which resulted in a $1,600
subsidy, creating more demand for Level 1 residents and
less beds for Level 4 residents. The outcome would still be
more cost effective considering the $15,000 subsidy of the
Level 4 resident. He maintained that the fiscal note
preparer was asked to project behavior and economic
alternatives. He asserted that it was impossible to use
current data, which did not include information about
occupant's finances, impacts of rate increases, and future
occupants care requirements and craft a reliable fiscal
note. The best projection that LFD could calculate was that
HB 96 appeared to reduce costs from FY 19 by about $2
million. The governor's proposal would reduce it by more
than that, but due to rate increases it could cost more.
The exact outcome was unpredictable. He indicated that the
$13 million increase in the fiscal note was based on the
current costs to operate the homes relative to governor's
budget where he eliminated the GF and underfunded the
program. The HB 96 fiscal note funded the program for a
full year. He stressed that the fiscal note was difficult
to prepare. He understood why the fiscal note created
confusion. He believed the HB 96 fiscal note was reasonable
and reiterated that the increase in GF reflected the cost
to fully fund the homes for one year.
3:02:44 PM
Vice-Chair Johnston agreed with Mr. Teal that the costs
were unpredictable. She reported that the DHSS subcommittee
had also struggled with the topic and chose to fund the
subsidy at a higher rate than the governor. She declared
that one aspect that was overlooked was the policy to
capture as much available funds as possible, particularly
at the high levels of care (Levels 4 and 5). She voiced
that the state was not capturing all the available Medicaid
funds at the high levels of care. The difficulty was that
residents could have gone into the facility with funds of
their own, but when fees would be subsidized eventually
became a negotiation with Medicaid, which meant a divesture
of their assets. She discerned that the discussion was
about the amount of state subsidy, the population of the
Pioneer Homes, and whether the issue could be viewed as
subsidizing residents' estates. Mr. Teal believed the
points were all good. He thought the answer was known, but
it could not be quantified. He commented that the
governor's proposal would cost more for certain residents
like those that self-pay, in theory, because the rates were
increased. However, the increase could push a self-payer
into requiring partial subsidies. He emphasized that
without access to the financial records of the individuals
and always dealing with the unknowns of the amount and
level of care of future residents, fiscal notes were
impossible to prepare. He did not know how big the problem
was but did not think that many could be self-paying when
the cost was $15,000 per month. He offered that as the
rates increase, the costs drive self-payers out and
potentially replace them with completely subsidized
residents. Unless one could specify who would occupy the
homes, he could not prepare an accurate fiscal note.
3:07:27 PM
Representative Sullivan-Leonard referenced the spreadsheet
and was not sure they were receiving accurate numbers. She
indicated that the budget the committee worked on was not
the FY 20 budget the governor transmitted to the
legislature in February [2019]. She requested another
comparison that included the FY 19 budget and the budget
action items the DHSS subcommittee reviewed. Mr. Teal
stated that her request made perfect sense, but
unfortunately fiscal notes were compared to the governor's
original budget. Representative Sullivan-Leonard thought
the comparison should include the FY 19 budget. She noted
that the committee received updated fiscal notes "all of
the time." Mr. Teal clarified that the fiscal notes were
updated because the costs changed, not the comparison to
the governor's request base budget. He continued that in
the case of the Pioneer Homes budget, the governor
included an amendment for an additional $5 million GF in
recognition that the shortage in GF could not be made up
based on receipts collected from residents. He disclosed
that the governor's original budget was $18 million short
funded rather than $12.3 million. The comparison was to the
governor's amended budget. He referenced testimony that
$5.7 million in additional Medicaid funding could be
captured, however that still left a shortage of $6 million
to $7 million.
3:10:30 PM
Co-Chair Wilson clarified that the governor's budget had
zero under GF for the Pioneer Homes. She asked that if $15
million was added through the budget process, would the
Pioneer Homes still need the $13 million. Mr. Teal answered
that the $13 million would be additional money added to the
Conference Committee budget leaving the negative $2
million, that would really be an $11 million net add. The
net add would bring the Pioneer Homes appropriation up to
the full cost of running the home. Co-Chair Wilson thought
that the fiscal note would qualify that the $13 million
appropriation was predicated on the assumption that the
conference committee number stayed at zero. Mr. Teal
answered that the house budget added $10 million; the
governor's amendment added $5 and the house added $5
million more, if the conference committee chose the House
number then the fiscal note would be reduced by $5 million,
which occurred in Conference Committee. Co-Chair Wilson
recapped the conference committee process and noted that
the final numbers would reflect that the Pioneer Homes were
fully funded. Mr. Teal affirmed. He added that under HB 96
the costs were roughly $2 million less than in FY 19. Co-
Chair Wilson reiterated that the HB 96 fiscal note and the
funding was "a best guess" of what was necessary to cover
the costs. Mr. Teal mostly agreed, but cited the
spreadsheet demonstrated where the subsidies occurred and
that $10 million out of the $13 million subsidy was
attributed to Level 4 care. The data offered a snapshot of
information even though it was not calculated on a per
person basis; he was unsure the numbers could really be
understood in that manner.
3:15:10 PM
Co-Chair Wilson noted that the 12 Level 5 individuals'
subsidies were not reflected on the chart. Mr. Teal
answered in the affirmative. He voiced that the fiscal note
was "the messiest fiscal note you will see - through no
fault of the bill or the sponsor" He reiterated that the
fiscal note contained a comparison to an underfunded budget
and was trying to predict behavior that was virtually
impossible to predict.
Representative Carpenter was not sure he understood the
purpose of the Pioneer Homes. He stated that if the purpose
was to care for all the elderly the "purpose" would cost a
given amount then the question was nothing more than where
to obtain the money. He questioned whether the intent of
the original service of the Pioneer Homes was ever to
provide more than Level 1 care. Representative Fields
responded that the homes were originally established in
1913 as a home for indigent men. He surmised that the
changing population in the homes was reflective of
demographic changes in the population at large rather than
from policy decisions. He offered that 50 years ago people
did not live long enough to reach the age dementia and
other diseases affected the elderly. The homes were meeting
the original mission that was to take care of people in
their final home. However, the demographics had changed
significantly, resulting in higher cost care.
Representative Carpenter deduced that the issue boiled down
to a question of purpose and policy. He asked whether the
state was going to subsidize any amount "to be all things
for all people." He questioned what the policy was that the
state wanted to subsidize and pay for if the subsidy
covered all levels of care. He reiterated that the question
was the intent of the Pioneer Homes and whether it was all
things to all people.
Co-Chair Wilson agreed that the issue was a policy call.
Representative Fields replied that he did not believe the
purpose of the homes, past or present was to be all things
to all people. However, there was a historic policy
decision that believed in the benefit of a diversity of
residents which brought a quality of life benefit to the
residents. The benefit extended to the state, which
happened to correspond to a financial benefit. He concluded
that meeting the historic mission, offering a respectful
and supportive final home to elders, and maintaining a
diversity of residents which included level 1 and level 2
was consistent with its historic mission.
3:19:54 PM
Representative Carpenter was sensitive to the matter but
noted that someone had to pay for it. He contended that the
discussion in the committee was focused on who was paying
at what level and was germane to the facilities and
"structure that exist to take care of people." He wondered
if the structure considered all levels of care or was it
limited to service the state could afford to provide. He
surmised that unfortunately, a level of care that was not
affordable for the state would have to be found elsewhere.
Co-Chair Wilson agreed that Representative Carpenter's
statement was "absolutely correct." The bill before the
committee included a policy call regarding the level of
subsidy and whether it was included in HB 96 or in the
operating budget. She remarked that unless a bill to change
the structure of the Pioneer Homes was introduced - the
current bill was under discussion.
3:22:04 PM
Representative Fields put the bill into the context of a
broader discussion on a sustainable budget and healthcare
savings that began with SB 74. He recognized that savings
were associated with operating the homes. He referred to
Mr. Lasley's testimony that the Pioneer Homes were not
equivalent to nursing home care and that they qualified for
a 50 percent match for Medicaid funding. He voiced that the
costs were real, but people did not just disappear if they
were not residing in the Pioneer Homes. Some were in the
Alaska Psychiatric Institute (API) at a cost of $500
thousand per year. He stated that the 451 residents of the
homes "existed in a much broader eco system."
Co-Chair Wilson affirmed that HB 96 was a policy call.
Representative Josephson asked for verification that the
administration's initial assumption wanted the Pioneer
Homes to "have a net zero cost to the state." Subsequently,
the administration conceded that the homes would need a $25
million subsidy. Mr. Teal thought that Representative
Josephson's perspective was from a single appropriation to
the Pioneer Homes that did not factor in the governor's
payment assistance allocation. He surmised that it did not
appear that the governor's intent was to eliminate GF
support for the Pioneer Homes. He recalled that the
governor's subsidy increased to $20 million versus the
house's $25 million. Representative Josephson deduced that
the administration agreed that it had to continue to
subsidize funding for the homes. Mr. Teal responded in the
affirmative. Representative Josephson stated that the bill
was a long way from becoming law but suggested that there
was merit in passing the bill pending completion of
obtaining the financial information that was not yet
available regarding capturable revenue. He asked whether
his suggestion made sense. Mr. Teal stated that it made
sense to examine the information, but it was unobtainable
due to the unknowns regarding the future population.
Co-Chair Wilson stated concerns regarding obtaining
accurate information related to resident who self-pay. She
was unsure the state was collecting the necessary
information. She wondered if the state was subsidizing
individuals who could pay more. She inquired whether the
$25 million should be Designated General Fund (DGF) verses
GF.
3:27:47 PM
Mr. Teal responded that a separate fund was not created. He
verified that the fund source was UGF. He thought the
component breakdown was created for clarity. He indicated
that the $33 million was UGF and the structure change did
not make it any more visible, it merely confused the issue.
It appeared that the funding would need to come from two
different allocations and created "a bureaucratic
inefficiency" and the department would need to request
funding transfers from one allocation to another. Co-Chair
Wilson noted that the bill did not correct the
inefficiency. Mr. Teal affirmed and added that the bill
maintained the governor's structure.
Representative Carpenter appreciated the work that had gone
into the bill. However, he wondered if HB 96 put the cart
before the horse. He asked whether there was a level of
care the Pioneer Homes could provide without a subsidy. Mr.
Lasley did not believe so. He detailed that the Pioneer
Homes system was designed to be a safety net for
individuals that could not afford services in the private
sector. The homes had become a safety net for individuals
with the understanding that the state would provide a
subsidy. Representative Carpenter stated that the answer
did not "jive" with what had been stated as the original
intent - to provide level one care. He reiterated that it
was not possible to provide all things to all people. He
stated that if the policy continued, the only question was
about where the money would come from; either the state or
individuals.
Co-Chair Wilson asked where the individuals would go if the
Pioneer Homes did not exist. Mr. Lasley answered that if
the Pioneer Homes did not exist there were not enough
facilities in the state to provide care for individuals.
The individuals would leave Alaska. He addressed
Representative Carpenter's statement and concurred that in
1913 there was only one level of service that jumped to 3
service levels in 1954 and increased to 5 service levels in
1996 and was again decreased to 3 levels in 2004. He
observed that the homes were providing and subsidizing
multi-levels of care for 70 years.
3:32:38 PM
Co-Chair Wilson asked if the state had always played a part
in subsidizing the Pioneer Homes. Mr. Lasley answered that
residents were only paying a small portion of the costs in
1913 when the homes had been established for indigent men.
Co-Chair Wilson found it interesting the homes had been
established for men only.
Vice-Chair Ortiz deemed that just because the original home
only offered one level of care did not necessarily make a
statement about what the purpose of the homes had been.
The population and needs had changed. The changes were not
based on policy, but changes were based on changing
population and needs. He read the mission statement of the
Pioneer Homes as follows: "Assist older Alaskans to have
the highest quality of life by providing assisted living in
a safe home setting which promotes independence positive
relationships meaningful activities physical and emotional
and spiritual growth." He did not view any changes in the
mission; just adaption to the needs of Alaskans.
Representative Carpenter interjected that if assisted
living was the mission and individuals exceeded that level
of care, it was no longer assisted living but a nursing
home.
Vice-Chair Ortiz thought Representative Carpenter was
assuming a specific definition of assisted living.
Representative Carpenter agreed and offered that the
industry had standards for assisted living homes, nursing
homes, etc. Therefore, the mission was assisted living and
the Pioneer Homes was providing higher levels of service.
3:36:19 PM
Co-Chair Wilson noted that HB 96 would be heard again the
following afternoon. Discussion ensued regarding what
policy decisions were being made by the bill.
Representative Knopp thought that Representative Carpenter
brought up a good point about the level of care. He
reasoned that if the structure was changed to provide low
levels of care the individuals would need to find care
somewhere else and the revenue would be lost. He pointed to
the over 471 bed capacity and vacancies that would be
created by only offering lower levels of care, which would
ultimately increase costs.
Co-Chair Wilson underscored that pioneers in Alaska were
very important and to understand that the members were
struggling with policy calls.
HB 96 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
3:38:23 PM
The meeting was adjourned at 3:38 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 96 NEW FN DHSS PH 5.2.19.pdf |
HFIN 5/2/2019 1:30:00 PM SHSS 2/12/2020 1:30:00 PM |
HB 96 |
| HB 96 Supporting Doc Testimony.pdf |
HFIN 5/2/2019 1:30:00 PM SHSS 2/12/2020 1:30:00 PM |
HB 96 |
| HB 96 Supporting Doc DHSS PH costs.pdf |
HFIN 5/2/2019 1:30:00 PM SHSS 2/12/2020 1:30:00 PM |
HB 96 |