Legislature(2005 - 2006)CAPITOL 106
02/16/2006 03:00 PM House HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| Overview (s): || "cost Effective Alternative to Criminalizing Those with a Mental Illness" | |
| Lewin Group and Econorthwest "long Term Forecast of Medicaid Enrollment and Spending in Alaska: 2005-2025" | |
| Citizens' Review Panel | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE
February 16, 2006
3:09 p.m.
MEMBERS PRESENT
Representative Paul Seaton, Vice Chair
Representative Vic Kohring
Representative Sharon Cissna
Representative Berta Gardner
MEMBERS ABSENT
Representative Peggy Wilson, Chair
Representative Tom Anderson
Representative Carl Gatto
COMMITTEE CALENDAR
OVERVIEW(S):
DR. TOM HAMILTON - "COST-EFFECTIVE ALTERNATIVE TO CRIMINALIZING
THOSE WITH A MENTAL ILLNESS;"
- HEARD
LEWIN GROUP - "LONG-TERM FORECAST OF MEDICAID ENROLLMENT AND
SPENDING IN ALASKA;"
- HEARD
STATE CITIZEN REVIEW PANEL
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ALEXANDER VONHAFFTEN, M.D., President
Alaska Psychiatric Association
Anchorage, Alaska
POSITION STATEMENT: Testified that although the community
mental health system in Alaska is fragmented and broken, there
are opportunities to make it better.
TOM HAMILTON, PhD
Medora Investments, LLC
Houston, Texas
POSITION STATEMENT: Presented a cost-effective alternative to
criminalizing those with a mental illness.
JOHN SHIELDS
Lewin Group
Virginia
POSITION STATEMENT: During the long-term forecast of Medicaid
enrollment and spending in Alaska presentation, answered
questions.
TED HELVOIGHT, Economist
ECONorthwest
Eugene, Oregon
POSITION STATEMENT: Presented the long-term forecast of
Medicaid enrollment and spending in Alaska.
FRED VAN WALLINGA, Chair
Citizens' Review Panel
Willow, Alaska
POSITION STATEMENT: Presented an overview of the Citizens'
Review Panel.
SUSAN HEUER, Member
Citizens' Review Panel
Anchorage, Alaska
POSITION STATEMENT: Presented an overview of the Citizens'
Review Panel.
ACTION NARRATIVE
VICE CHAIR PAUL SEATON called the House Health, Education and
Social Services Standing Committee meeting to order at 3:09:32
PM. Representatives Gardner, Cissna, and Seaton were present at
the call to order. He noted that Representatives Wilson and
Gatto were excused.
^OVERVIEW (S):
^"Cost Effective Alternative To Criminalizing Those With A
Mental Illness"
VICE CHAIR SEATON announced that the first order of business
would be an overview of the cost effective alternative to
criminalizing those with a mental illness.
3:10:16 PM
ALEXANDER VONHAFFTEN, M.D., President, Alaska Psychiatric
Association (APA), informed the committee that he began doing
clinical work in Alaska in 1990 as a Washington, Alaska,
Montana, Idaho Medical Education Program (WAMI) resident. He
further informed the committee that he has worked throughout the
state in a variety of clinical settings, including community
mental health, the Alaska Psychiatric Institute, the Department
of Corrections, the Alaska Native Medical Center, et cetera.
Dr. vonHafften then said that the bad news is that the community
mental health system in Alaska is fragmented and broken. He
pointed out that the Alaska Department of Health and Social
Services 2001 In-Step Report highlights some of the challenges
faced in Alaska.
DR. VONHAFFTEN opined that the community mental health system is
largely designed for failure in that the least-desired outcomes
too often become the most likely outcomes. For instance, the
[community mental health system] increases the likelihood of
disability and pernicity and increases the likelihood of arrest
and incarceration. The system, he pointed out, is crisis
driven. However, he opined that the good news it that the
system can be made better and there are opportunities to do so.
Dr. vonHafften then introduced Dr. Tom Hamilton, who has a
doctorate in engineering and has had a distinguished career in
the oil and gas industry. Dr. Hamilton, he related, is present
to speak today because he has a son with schizophrenia, and thus
since 1992 he and his wife have learned about psychiatric
illness and the mental health system. The aforementioned has
resulted in Dr. Hamilton's involvement in several Texas
Department of Mental Health and Mental Retardation task forces
regarding resource allocation. Currently, Dr. Hamilton is a
member of the board of trustees for the Harris County Mental
Health and Mental Retardation Authority, which has one of the
largest catchment areas in the country.
TOM HAMILTON, PhD, turned the committee's attention to a
document entitled, "Redirecting Resources: Cost-Effective
Alternatives to Criminalizing Those With A Mental Illness." He
began his presentation with a history of mental illness, which
is as old as the human race and its cause has been attributed to
everything from physical to demonic, to biological reasons.
Furthermore, the stigma associated with mental illness is
centuries old as is the tendency to characterize individuals
with a mental illness as inmates. However, the truth is that
mental illnesses are treatable illnesses with efficacy rates
higher than most other illnesses. The problem is that the
policies in place are riddled with unintended consequences due
to lack of understanding. Dr. Hamilton pointed out that one of
the results of those unintended consequences is that individuals
with mental illnesses are three to fives times overrepresented
in the criminal justice system.
3:17:04 PM
DR. HAMILTON turned to the term transinstitutionalization, which
was coined by J. L. Penrose in 1939 [after observing] that when
the number of beds in mental hospitals in Europe increased there
was an increase in the number of beds in the criminal justice
system. The term refers to moving individuals from one
institution to another. He related information gathered in 1880
and in 1955, which were the height of institutionalization.
Today one finds that there has been a 10-fold decrease in the
number of individuals in state hospitals, of which one-third
have been remanded by the court. However, one finds today that
0.3 percent of the U.S. population in the criminal justice
system is thought to have a mental illness [which is the same
proportion of the U.S. population that was institutionalized in
1955]. He then drew attention to the graph entitled,
"Transinstitutionalization", which illustrates the height of
institutionalization in 1955 to its 10-fold decline and
corresponding increase in incarceration in 2000. He reminded
the committee of the following key events during the
aforementioned timeframe: 1973 Community Mental Health Center
Act signed; the drug culture in the 1960s and 1970s; philosophy
change from rehabilitation to punishment in the 1980s. He
highlighted that in the mid 1990s state spending on the criminal
justice system was dominant and has continued as such ever
since.
3:21:15 PM
DR. HAMILTON explained that the result of the aforementioned is
that prisons have become the state's largest psychiatric
institutions. He related that in 2000 the American Psychiatric
Association estimated that 20 percent of the prison population
has a serious mental illness. He related various other
statistics regarding the percentage of prisoners that have
mental illnesses. Juvenile offenders with serious emotional
disturbances are estimated in the range of 40-75 percent. Dr.
Hamilton related his belief that the one thing upon which
everyone can agree is that prisons are not set up to nor do they
provide a therapeutic environment for addressing mental
illnesses. The net result of the aforementioned is treatment-
resistant individuals who recidivate. He then related data from
a 2004 sampling of a Texas prison and informed the committee
that 25-50 percent of inmates have a diagnosable mental
disorder. Although some might suggest that there are so many
inmates with mental disorders because mental illness causes
people to behave in a criminal manner, much data refutes such a
notion. Data specifies that those who are treated appropriately
aren't more likely to commit a crime or be violent than the
general public. However, lack of treatment of those same group
of individuals increases the likelihood of arrest, which is
usually for a minor offense at the outset. Unfortunately, there
is a large population with a co-occurring substance abuse
disorder and the lack of treatment for this group dramatically
increases the likelihood of arrest and violence. He pointed out
that consumers of mental health services are at two-thirds
greater risk for being arrested per encounter than nonconsumers.
Some officers are trained to recognize those who might have a
mental disorder and to deal with such individuals. With crisis
intervention trained officers and community alternatives, the
arrest rate drops to 1-2 percent, which is about the same as the
general population. "There's a wealth of information out there,
which tells us that these individuals are not more criminally
inclined. We just normally lack alternatives to deal with them
in the community," he said.
3:26:53 PM
DR. HAMILTON addressed what is known about this population,
offenders with a mental impairment (OMI), from general data
across the country. In answer, he related that half are non-
violent, misdemeanor offenders; three of four have a co-
occurring substance abuse disorder; and they usually receive
little or no treatment in prison. With regard to the lack of
treatment received in prison, Dr. Hamilton noted that prisoners
are guaranteed by the U.S. Constitution to treatment. He
continued by relating that typically prisons lack rehabilitation
and pre-release planning, which results in a lack of a
connection to treatment and places a safety risk in the public.
In the general public, these individuals are victimized more
often than the general public. Therefore, when such individuals
are placed in an environment like a prison, they spend a
disproportionate amount of time in administrative segregation or
solitary confinement. The aforementioned adds complexity to the
running of the prison, which in turn adds cost. Therefore, it's
more expensive to keep these individuals in prison and these
individuals serve longer sentences for comparable crimes under
comparable circumstances. In fact, the Pennsylvania Department
of Corrections estimates that an inmate with a serious mental
disorder costs 75 percent more to maintain than a non-mentally
ill inmate. He then pointed out that in addition to those
costs, there are significant additional law enforcement and
judicial system costs that haven't been captured.
3:31:11 PM
DR. HAMILTON then provided the committee with jail data from
Harris County Texas, which includes the Houston area and has a
population of about 5 million. In 2004 information from the
[Texas] public mental health system and the Harris County
Criminal Justice System was merged and compared. He noted that
there are fairly high barriers to enter the public mental health
system in Texas, and therefore one must be very ill to enter it.
He also noted that this data doesn't include those who have a
mental disorder but have never entered the system. Therefore,
"the message here is the numbers are going to be higher than one
in four," he said. Based on intake records, there are 16 entry
points into the public mental health system in Harris County,
with the jail being the largest as it provided 38 percent of the
first-time entrants. Once those who have a mental illness are
incarcerated, they serve twice the number of jail episodes per
defender. Through the process of incarceration and not treating
the mental illness and having subsequent incarcerations, these
individuals are criminalized and technically become felons. He
related further statistics regarding how inmates with mental
illnesses have more average jail days per episode and are more
likely to recidivate and have more post-release jail days.
3:34:47 PM
REPRESENTATIVE GARDNER inquired as to what are post-release jail
days.
DR. HAMILTON clarified that post-release jail days refers to the
number of jail days an inmate spends in jail after he/she
recidivates.
3:35:09 PM
REPRESENTATIVE CISSNA inquired as to the morale of the employees
of the prisons and the inmates without mental illness because
she opined that [the lack of treatment for inmates with a mental
illness] would have a confounding effect that would drive many
other aspects of this equation.
DR. HAMILTON agreed, adding that some of the most frustrated are
the county sheriffs, deputies, and jailers, who readily relate
that they weren't set up to address [inmates with mental
illness]. The situation is demoralizing and unhealthy for
everyone, he opined.
3:36:37 PM
REPRESENTATIVE GARDNER inquired as to the proportion of the
mentally ill in the general population who never have any
contact with the criminal justice system.
DR. HAMILTON indicated that to be about 50 percent.
3:37:16 PM
REPRESENTATIVE CISSNA related her belief that if issues such as
mental illness and fetal alcohol spectrum disorder were
addressed early on, the prison population would be diminished.
DR. HAMILTON agreed, and emphasized that this cycle will never
be broken unless a more proactive course that diverts people
from jail and treats juveniles and those with [mental]
illnesses. "These are either pay me now or pay me later
illnesses; we're either going to pay for it on the front end or
we're going to pay a lot more for it on the back end, with
enormous human suffering on the part of the individuals, their
families, their communities, and everyone else," he opined.
3:39:07 PM
VICE CHAIR SEATON then asked the committee to hold any general
discussion questions until the conclusion of Dr. Hamilton's
presentation.
3:39:23 PM
DR. HAMILTON then turned to the cost and resource allocation
issues associated with this. He related that an average stay in
the Harris County jail costs more than intensive community care,
annually it amounts to approximately $38 million. If the
incarceration rate matched the epidemiological rate and jail
days matched regular offenders, it would cost approximately $5
million, and therefore he suggested that the $30 million in
savings could be put toward treatment of the mentally ill
population. By diverting individuals with a mental illness from
jail or connecting them with community treatment, there is a
potential savings in Harris County of 40 percent per consumer.
3:41:26 PM
DR. HAMILTON addressed community treatment and related that in
Harris County there is a model program entitled, "New Start."
The program, which has been in existence for 12 years, was
originally designed to pick up people at the gate of the prison
and connect them with appropriate services. In 2004 this
program served 600 serious offenders, including those who
committed murder. In 2004 the recidivism rate of this program
was 5 percent, much of which he attributed to technical
violations such as not making a meeting with the parole officer
or the community treatment team. However, the recidivism rate
over the 12 years of the program is about 1 percent, which is in
stark contrast to the 60-70 percent recidivism rate when folks
with mental illnesses aren't connected to services.
Furthermore, long-term studies show that "the graduates" of this
program don't re-offend at rates any higher [than the general
population]. This program, he opined, protects the general
public from a safety point of view, which is a strong argument
for treatment. Dr. Hamilton informed the committee that the
average cost per individual in the New Start Program was
$14,400, which is about $10,000 less than keeping the individual
in jail. In fact, if everyone above the epidemiological rate
had been diverted, it would amount to a $9 million savings.
However, he stressed that it would take much time to establish a
program to take care of that many individuals. The program is
being expanded at this point to accept those who have been
diverted from the criminal justice system. In response to
Representative Gardner, Dr. Hamilton confirmed that the program
only takes people who are in the criminal justice system, either
entering or exiting.
3:45:02 PM
DR. HAMILTON then turned to the matter of determining the cost
data for incarceration versus treatment, which is difficult.
However, there have been studies by Substance Abuse and Mental
Health Services Administrator (SAMHSA) a federal organization
that reviewed the nine diversion programs in the nation. Four
of those studies attempted to answer whether it's cost effective
to divert as opposed to incarcerate. From those studies, it was
learned that diversion does reduce jail time without increasing
the public safety risk. The studies also concluded that
connection to services decreases recidivism. However, with
regard to the next cost, two studies determined that diversion
costs more and two studies determined that it cost less. The
question one has to ask is to what is the individual being
diverted because the quality of community programs is highly
variable. Furthermore, unless the community programs are set up
to receive these individuals, they will be costly programs. The
reason, he opined, two of the programs cost more to divert
rather than incarcerate is because the only community program
was emergency services. Moreover, these studies lasted one year
or less and the most costly year of diversion is the first year
due to the individual's need for much intensive treatment to
stabilize him/her, which typically requires about 18 months. He
opined that most communities aren't ready for large scale
diversion.
3:48:51 PM
DR. HAMILTON then made the following hypothetical assumptions:
the cost of the criminal justice system would cost $20,000 per
year and that it would cost $20,000 per year to divert people to
mental health services. Following the model results that
specify that after 18 months there is a decline in the services
required to keep these individuals stable in the community, the
cost per year would decline to $12,000 per year. Therefore,
after 18 months diversion should produce economical benefits.
In response to Representative Gardner, Dr. Hamilton clarified
that the treatment programs in the hypothetical would be
residential such as the New Start program. He further clarified
that the first year of a diversion program would be the
intensive treatment, but as individuals are stabilized they
become out-patients.
3:50:22 PM
REPRESENTATIVE GARDNER asked if these individuals, once stable
and with decreased mental health services, are utilizing public
assistance.
DR. HAMILTON answered that such individuals are likely to be
utilizing public assistance. However, he indicated that it
depends upon whether vocational rehabilitation services and
psychosocial services can be provided. Still, he maintained
that it's very unlikely that a large percentage of this
population will return to [the workforce]. In further response
to Representative Gardner, Dr. Hamilton agreed that the benefit
is in the recidivism rate because far more could be spent up-
front than the figures show. He did point out that the same
could be said of prison costs. Dr. Hamilton then continued his
presentation and informed the committee that if evidence-based
practices are used, those individuals receiving such services
qualify for Medicaid. The aforementioned results in cost
shifting/saving such that the state's burden dramatically
decreases.
3:52:30 PM
REPRESENTATIVE CISSNA related her belief that the opportunity
cost is not included nor is the part-time job that an individual
who has received treatment can do. Furthermore, the costs
associated with the extended family in regard to travel isn't
included. There are, she opined, large costs associated with
being institutionalized. She mentioned that some of these
individuals with mental illnesses may even be parents. She
questioned whether any data has been gathered on the
aforementioned.
DR. HAMILTON responded that he has seen some attempts to capture
those issues, although he said that he hasn't seen any data that
has been able to encapsulate all the issues. He noted his
agreement with Representative Cissna that there are huge burdens
that aren't included in related data. In fact, he highlighted
the burden placed on society in regard to the homeless
population.
3:54:17 PM
DR. HAMILTON then continued his presentation by discussing how
the system was changed in Texas. He related that in 2001 he was
involved with examining the cost of warehousing persons with
mental illnesses and created a macro economic model. During
fiscal year 2002-2003, the Texas Legislature didn't build a new
prison but rather redirected $35 million from punishment to
treatment. During the 2004-2005 legislative session in Texas,
the Texas Legislature renewed the $35 million to treatment and
legislated a dramatic change in the delivery of mental health
care in the state such that the state went to a disease
management jail diversion model, which is a recovery-based
model. The aforementioned model, which combines substance abuse
money into the behavioral health model, was introduced in
September 2004. Furthermore, this model required every
community center to have a jail diversion plan.
3:56:59 PM
DR. HAMILTON reviewed the 1997 one-day snapshot from the Alaska
Department of Corrections (DOC), which relates that 29 percent
of the DOC population exhibits mental illness. That percentage
and the fact that most suffer a co-occurring substance abuse
disorder is consistent with national data. While the
[percentage of the DOC population exhibiting mental illness] was
increasing, the number being treated was much lower. In fiscal
year 2000, DOC served 2,556 individuals who were suffering from
various conditions at the time of arrest. He said that the data
is a subtle way to indicate that Alaska has the same problems as
elsewhere. Dr. Hamilton related that the basic elements to
address this problem, although they may be inadequate or
insufficient, exist in Alaska the same as elsewhere. He
acknowledged that in Alaska correction officers are receiving
some training and that there is a functioning mental health
court, a jail alternative services program, and an institutional
discharge program. However, he opined that many of the
aforementioned programs are based on federal funds.
3:59:24 PM
DR. HAMILTON concluded by reminding the committee that mental
illnesses are real illnesses that are treatable. Without
treatment those suffering from mental illness are much more
prone to violence and arrest than the general public, but with
treatment these individuals are no more prone to such than the
general public. Dr. Hamilton opined that at worst, it's cost
neutral to treat those with mental illnesses rather than
incarcerate them. Furthermore, treatment of these individuals
is more likely to result in a cost saving over the long term.
4:00:04 PM
DR. HAMILTON, in response to Representative Cissna, related that
in the Texas criminal justice system there is an agency that
addresses offenders with mental impairments and helps to ensure
they receive treatment. However, since not everyone with a
mental illness is identified, Texas was originally only
addressing 14 percent or so.
4:02:02 PM
The committee took an at-ease from 4:02 p.m. to 4:06 p.m.
^Lewin Group and ECONorthwest "Long Term Forecast of Medicaid
Enrollment and Spending in Alaska: 2005-2025"
VICE CHAIR SEATON announced that the next order of business
would be a presentation by the Lewin Group regarding the long-
term forecast of Medicaid enrollment and spending in Alaska.
4:08:06 PM
JOHN SHIELDS, Lewin Group, began by informing the committee that
the Lewin Group consists of specialists in developing health
care models. The model presented today is based on designs that
have been successfully used in other states. He noted that the
Lewin Group is committed to nonpartisan research.
TED HELVOIGHT, Economist, ECONorthwest, began by reminding the
committee that in March 2005, the Department of Health and
Social Services (DHSS) contracted with the Lewin Group and
ECONorthwest to develop a model that would allow the department
to project future Medicaid spending and update its long-term
spending projections. Mr. Helvoight noted that the model is
entirely data driven and thus is based on historical claims-
based data in Medicaid from Alaska. The model also has the
capability of reviewing scenarios that may occur, even if no
historical data exists for those scenarios. Additionally, the
companies, upon request, created a report describing a baseline
forecast for Alaska while documenting the methodology followed
and the data used in the model. Therefore, this presentation
highlights some of the points of the report.
MR. HELVOIGHT reviewed the steps utilized to build the model,
with the first being Alaska's population because Medicaid
spending in the future relates to the population. The
population projections are based on the Alaska Department of
Labor & Workforce Development (DLWD) projections that are at the
state level and review population growth by gender and age. For
this analysis, the population growth was reviewed per region and
Native and non-Native status. The Native and non-Native status
is important due to the Federal Matching Assistance Program
(FMAP). All of the aforementioned resulted in 220
subpopulations that were reviewed for the forecasting. Once the
population forecast is established, the next step is determining
Medicaid enrollment, which differs quite a bit by age and
gender. The next step is to review the utilization of services.
To continue, one must next review the total spending on claims,
the amount of state funds spent; and other payments and offsets.
Mr. Helvoight emphasized that the committee should keep in mind
that the legislature/state is in control of the following:
eligibility requirements, reimbursement rates, and services
provided. However, there are factors, such as population
growth, demographic changes, and changes in medical technology.
4:18:18 PM
MR. HELVOIGHT then highlighted that the baseline analysis is
based on the assumption that the status quo as of fiscal year
2004 will remain for the next 20 years because the data supports
that. Therefore, the baseline analysis doesn't anticipate
policy changes such as the following made in 2005-06: cost
containment; Bring the Kids Home initiative; personal care
attendant regulation changes; or Medicare Part D drug benefit.
However, it's clear that all four of the aforementioned will
have an impact on spending over time, which DHSS will be able to
review for each initiative.
4:20:08 PM
MR. HELVOIGHT moved on to the population, which will be the
largest driver throughout this analysis. He informed the
committee that the 65 and older population, currently totaling
43,000, is projected to triple to 124,000 between 2005 and 2025.
Furthermore, between 2005 and 2010 the state's population is
estimated to slow from about 1 percent per year to .6 percent in
2025. Most of the growth will occur in the Anchorage/Mat-Su
region while Southeast Alaska will experience a slight
population decrease over the next 20 years. Furthermore, Mr.
Helvoight projected that the Native population will grow
significantly faster than the non-Native population. He then
turned attention to the Alaska Population growth graph on slide
14, which breaks out the population growth by age. This graph
indicates that there will be significant growth primarily in the
elderly population.
4:22:32 PM
MR. HELVOIGHT continued with Medicaid enrollment, which the
analysis projects will grow faster than the state's population
as a whole such that Medicaid enrollment in Alaska will grow
from 132,000 in 2005 to 175,000 by 2025. Medicaid enrollment
will grow much faster for the elderly than for the entire state
population. The elderly enrollment will grow from approximately
10,000 in 2005 to 33,000 by 2025. Similarly, the graph on slide
18 indicates that there will also be growth in Medicaid
enrollment for the children and working age groups.
4:25:25 PM
MR. HELVOIGHT addressed the utilization of services, which will
determine how many services each of the 220 sub-populations
enrolled in Medicaid will use. He clarified that for this
analysis Medicaid utilization is the annual unduplicated count
of Medicaid enrollees who used a particular Medicaid service
during a particular year. The department aggregated Medicaid
services into 20 service categories and the growth projected in
utilization will differ greatly among the service categories.
He reminded the committee that the personal care service
category doesn't include any changes made to that category, and
therefore the hope is that the 9.7 percent projected will
actually be less. Still, it will be a category that will grow
fast.
4:27:36 PM
REPRESENTATIVE CISSNA recalled from the House Finance Health,
Education, and Social Services subcommittee that the personal
care attendant service is much less expensive than growth in the
residential nursing home. Therefore, she questioned whether a
decrease in the personal care service would actually be less
costly because it could mean that a more expensive alternative
is being utilized.
MR. HELVOIGHT agreed that it's not a good thing if it's a case
in which personal care regulation changes push people to nursing
homes. However, if it's a case in which some might consider the
inappropriate use of personal care, then it's probably
appropriate. He specified that if the things aren't related to
nursing home care, then it's a good change.
4:29:01 PM
MR. HELVOIGHT continued with regard to utilization of services
and directed attention to slide 21, which specifies 6 of the 20
service categories. Each category is projected to grow at a
different rate, which is based largely on historic growth rates.
For all Medicaid utilization as a whole, the Centers for
Medicare and Medicaid Services' (CMS) national forecast of
growth is utilized to guide the overall growth of such in
Alaska. He related that CMS projects future growth of about 2.2
percent in utilization growth. The aforementioned, he noted,
was a required assumption when doing such analysis. He then
mentioned that slower relative growth in nursing home services
is partially offsetting the very high projected growth in
personal care and Medicaid home- and community-based (HCB)
waiver categories. He further mentioned that in addition to the
220 subpopulations projected through time, the analysis projects
20 different service categories through time. Therefore, there
is a certain complexity with regard to the utilization of
services and the spending on services.
4:31:58 PM
MR. HELVOIGHT turned to total spending and highlighted that of
primary importance are the findings related to the direction and
approximate magnitude of changes in spending on Medicaid. In
2005 calendar year total spending by the state and federal
governments on Medicaid claims in Alaska was approximately $1
billion. By calendar year 2025, total spending by the state
and federal governments on Medicaid claims in Alaska is expected
to increase to about $4.8 billion in actual dollars or to about
$2.2 billion in inflation adjusted dollars. The difference
between the two growth rates is medical specific. Mr. Helvoight
related that in 2005 inpatient hospital services is the largest
Medicaid service category and is responsible for 15 percent of
total spending on Medicaid plans while the HCB waivers and
personal care constitute approximately 11 percent and 10 percent
of spending, respectively. However, the projection for 2025 is
that inpatient hospital services will only account for 5 percent
of the total Medicaid service spending while HCB waivers and
personal care will grow to about 22 percent and 27 percent,
respectively. Therefore, half of all spending in 2025 would be
in the aforementioned two categories, which he attributed to the
demographics. Mr. Helvoight then drew the committee's attention
to two graphs on slides 29 and 30, both of which illustrate the
proportion of spending by each of the three age cohorts. In
2005, about 44 percent of all Medicaid spending is for children
with about 22 percent for the elderly. However, by 2015 the
spending for the elderly will surpass spending on working age
adults and by 2018 it will surpass spending on children.
Therefore, the program will be very different than it is today.
4:35:20 PM
REPRESENTATIVE CISSNA recalled being told by AARP that in other
states when it comes time for nursing home care, those residents
without a family base in the area return to the state in which
there is a family base. However, she surmised that in Alaska
the growth is too recent to determine what will happen, which
could substantially change the projections.
MR. SHIELDS agreed that such could change the projections. The
influx of individuals in and out of Alaska is a serious issue in
terms of its impact on the estimates. To the extent the aged
are leaving Alaska today, the assumption is that it will
continue at the same rate in the future. However, there will be
so many more aged people that it will seem to mushroom and could
have a dramatic impact. Mr. Shields noted that Mr. Helvoight
will present a slide that addresses what will happen if the
demographics are very different than projected today. Although
the number is very different, it remains larger than the
spending for children and adults. The aforementioned is what
Mr. Shields referred to as a "robust result" that is very likely
to occur.
4:41:37 PM
MR. HELVOIGHT explained that the models built for DHSS will
allow it to conduct long-term forecasts of different scenarios.
For example, the department could forecast the effect on total
spending if the elderly population grows slower than is
forecasted by the DLWD and the department could also determine
the effect on spending if utilization grows slower than is
projected in the models. He presented graphs illustrating the
aforementioned possible effects on slides 33 and 35. Mr.
Helvoight related that CMS projects that nationally Medicaid
spending will grow by 7.5 percent per year through 2014. This
analysis projects that over the same period, total Medicaid
spending in Alaska will increase by 7.7 percent. However, state
spending will be different. In calendar year 2005 state
matching fund spending on Medicaid services was approximately
$380 million, but by calendar year 2025 it's actual spending
will grow to approximately $2.1 billion. The aforementioned is
an 8.9 percent growth rate over the next 20 years, which
illustrates that the growth in spending will clearly be greater
for the state than the federal government. In fact, over the
next five years is when much of this change will occur. He
projected that between 2005-2010, the state will increase its
spending by 10.5 percent per year while the federal government
will only increase its spending by 6.3 percent, which he
attributed to the federal matching rate that is projected to be
at the minimum by 2008. Mr. Helvoight then informed the
committee that on a per capita basis every man, woman, and child
of Alaska is paying about $500 for Medicaid services. By 2025
that will increase in actual terms to just over $2,500, which is
a must faster growth than will occur with real per capita income
over that same time period.
4:46:38 PM
MR. HELVOIGHT concluded by addressing the topic of "Going
Forward." He related the following quote from Janet Clarke,
Assistant Commissioner, DHSS, "The Alaska Medicaid program will
fundamentally change over the next 20 years from a program that
centers on children to one that is dominated by seniors."
Therefore, in the future Medicaid will look more like Medicare.
He then emphasized the importance of recognizing that in 2025
almost half of the spending will be for the elderly, although
the elderly will only account for 33,000 out of 175,000 Medicaid
enrollees. The legislature, to some extent, has control over
the following: eligibility requirements; reimbursement rates;
and services provided.
4:48:38 PM
VICE CHAIR SEATON asked if the shift from Medicaid prescription
phase to Medicare prescription phase was included.
MR. HELVOIGHT replied no, but stated that it should have an
impact. He confirmed that this could be included in the model.
MR. SHIELDS explained that the claw back provision in which what
is saved in the state Medicaid program will be paid back into
the program to some degree. Therefore, the savings won't be a
windfall but rather will be used to help pay for the program.
"It's complicated, but it's not clear whether you break even or
spend more or spend less," he said.
^Citizens' Review Panel
4:49:54 PM
VICE CHAIR SEATON announced that the final order of business
would be the overview by the Citizens' Review Panel (CRP).
4:50:43 PM
FRED VAN WALLINGA, Chair, Citizens' Review Panel, introduced the
members of the panel present. He informed the committee that
this panel was established by the federal government and works
with the Office of Children's Services (OCS) to improve services
to the citizens of Alaska.
SUSAN HEUER, Member, Citizens' Review Panel, related that this
group has been working together for two years. The CRP is
federally mandated to review the policies and procedures of OCS.
Over the past two years, CRP has conducted four town meetings in
Anchorage, Wasilla, Juneau, and Bethel. She noted that CRP has
had training with regard to performing an audit of OCS records.
Based on the public testimony, the most concerns arose from the
town meeting in Wasilla, which prompted a site review in the
Matanuska-Susitna area.
4:54:04 PM
MS. HEUER explained that two weeks ago, four CRP members went to
the Matanuska-Susitna area to interview eight collateral
agencies that deal with OCS as well as OCS itself. The
interviews reviewed how the agencies worked together and how
they view child protection in the community. For those
meetings, a list of positives and negatives will be shared with
the community, the legislature, and the federal government.
Furthermore, some short-term recommendations have been provided
to OCS to be implemented by the end of this fiscal year. The
short-term goal for CRP is to help implement changes in the
Matanuska-Susitna office such that the public's concerns are
addressed and more children are being protected. The long-term
goals of CRP are to continue community meetings around the
state. The goal, she opined, is for there to be an increased
adherence to policies and procedures by OCS and stronger
collaboration among agencies working with OCS. The goal is also
to increase the level of protection of children in Alaska such
that incidences of child abuse and neglect will decrease.
4:55:53 PM
MS. HEUER expressed concern that as CRP is becoming more public,
more individuals are contacting CRP with concerns. The panel is
a volunteer group that has no means to meet that level of time
and concern. Therefore, CRP would like to refer people to the
grievance procedures already established by OCS and the
Ombudsman's Office. However, at some point CRP will address how
to track those grievances and review the outcome after the
grievance process. Ms. Heuer related that more members are
needed throughout Alaska in order to have as balanced a board as
possible. However, travel expenses make [a board with
representation throughout the state] cost prohibitive. "We have
touched the tip of the iceberg, functionally, with this," she
opined. She further opined that CRP hopes to establish a
positive relationship with OCS.
4:57:59 PM
VICE CHAIR SEATON commented that as legislators can relate to
colleagues that questions can be properly directed to OCS and
the Ombudsman's Office. Recalled presentations from other
departments and agencies, and recalled frustration with regard
to the time it takes for data input into reports as it reduces
the amount of service the agencies can provide to clients.
Therefore, he suggested checking with those in the field to
determine whether there are reporting provisions that aren't
working and inhibiting service.
5:00:11 PM
REPRESENTATIVE CISSNA expressed concern that there may be
individuals who want to relate concerns to CRP because there
could be a conflict of interest when OCS is the responder to
questions of OCS's service. Furthermore, the Ombudsman's Office
is very understaffed. Therefore, she asked whether anything has
been worked out with the Ombudsman's Office.
MR. VAN WALLINGA explained that most often the calls come after
going through the process with OCS. The first thing that he
said he relates is that CRP can't handle individual cases and
they are directed to the Ombudsman's Office. However, going to
the Ombudsman's Office is like going to OCS to those making the
complaint. In most of the cases CRP receives, it seems to be a
lack of communication at some point.
5:03:20 PM
VICE CHAIR SEATON related his understanding that the directive
of CRP is to determine where the system is not working.
MR. VAN WALLINGA agreed that is what CRP will be doing, although
he clarified that CRP won't do much with the Ombudsman's Office
because it isn't in CRP's area. He mentioned that he understood
the difficulties with the new system, Online Resources for the
Children of Alaska (ORCA).
5:05:22 PM
REPRESENTATIVE CISSNA related her understanding that since the
legislature [this committee] has oversight over OCS, it's
reasonable to speak with the Ombudsman's Office regarding ways
to help with this.
VICE CHAIR SEATON noted that the Ombudsman's Office is under the
purview of the legislature as well.
5:05:44 PM
ADJOURNMENT
There being no further business before the committee, the House
Health, Education and Social Services Standing Committee meeting
was adjourned at 5:05:52 PM.
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