Legislature(2015 - 2016)CAPITOL 106

03/19/2015 03:00 PM HEALTH & SOCIAL SERVICES



Audio Topic
03:05:17 PM Start
03:05:39 PM Presentation: Medicaid 101
05:06:07 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: TELECONFERENCED
"Medicaid 101" by Director Margret Brodie,
Division of Health Care Services
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
      HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                     
                         March 19, 2015                                                                                         
                           3:05 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Paul Seaton, Chair                                                                                               
Representative Liz Vazquez, Vice Chair                                                                                          
Representative Louise Stutes                                                                                                    
Representative David Talerico                                                                                                   
Representative Geran Tarr                                                                                                       
Representative Adam Wool                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Neal Foster                                                                                                      
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                              
Representative Dan Saddler                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION: MEDICAID 101                                                                                                      
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JON SHERWOOD, Deputy Commissioner                                                                                               
Medicaid and Health Care Policy                                                                                                 
Office of the Commissioner                                                                                                      
Department of Health and Social Services                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented a PowerPoint and answered                                                                      
questions during the presentation on Medicaid 101.                                                                              
                                                                                                                                
MARGARET BRODIE, Director                                                                                                       
Director's Office                                                                                                               
Division of Health Care Services                                                                                                
Department of Health and Social Services                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     Presented  a  PowerPoint   and  answered                                                             
questions during the presentation on Medicaid 101.                                                                              
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:05:17 PM                                                                                                                    
                                                                                                                                
CHAIR PAUL  SEATON called  the House  Health and  Social Services                                                             
Standing   Committee    meeting   to    order   at    3:05   p.m.                                                               
Representatives Talerico,  Wool, Stutes, and Seaton  were present                                                               
at the call  to order.  Representatives Tarr  and Vazquez arrived                                                               
as the meeting was in  progress.  Representative Saddler was also                                                               
in attendance.                                                                                                                  
                                                                                                                                
^PRESENTATION: Medicaid 101                                                                                                   
                   PRESENTATION: Medicaid 101                                                                               
                                                                                                                                
3:05:39 PM                                                                                                                    
                                                                                                                                
CHAIR SEATON announced  that the only order of  business would be                                                               
a presentation on Medicaid.                                                                                                     
                                                                                                                                
3:07:24 PM                                                                                                                    
                                                                                                                                
JON  SHERWOOD,  Deputy  Commissioner, Medicaid  and  Health  Care                                                               
Policy,  Office of  the Commissioner,  Department  of Health  and                                                               
Social Services, introduced himself.                                                                                            
                                                                                                                                
3:07:56 PM                                                                                                                    
                                                                                                                                
MARGARET BRODIE, Director, Director's  Office, Division of Health                                                               
Care Services, Department of Health  and Social Services, began a                                                               
PowerPoint on Medicaid, [Included  in members' packets] which she                                                               
said was intended to provide  an overview of the Medicaid program                                                               
on a national as  well as a state level.  She  turned to slide 2,                                                               
"Medicaid  Goals,"  and outlined  the  goals,  which included  to                                                               
integrate and  coordinate services and to  strategically leverage                                                               
technology.    She  shared  that the  Centers  for  Medicare  and                                                               
Medicaid Services  (CMS) has a  vision for  how it would  like to                                                               
see the different enterprise  systems established for eligibility                                                               
or  claims processing.   The  CMS  also would  like to  implement                                                               
sound  policy, practice  fiscal responsibility,  and measure  and                                                               
improve performance.                                                                                                            
                                                                                                                                
MS.  BRODIE, turning  to slide  3, "Medicaid  Services Overview,"                                                               
provided  a brief  history of  the Medicaid  program, which  is a                                                               
shared program  by the federal  government and states  that began                                                               
in  1965.    She  reported  that  each  state  runs  its  program                                                               
differently,  with different  options, waivers,  and populations.                                                               
Currently, Medicaid  provides insurance  to more than  80 million                                                               
people,  she reported,  and in  2014, 138,300  of 158,853  people                                                               
enrolled in Alaska actually utilized the services.                                                                              
                                                                                                                                
MS.  BRODIE  directed   attention  to  slide  4,   "The  Role  of                                                               
Medicaid,"  which  outlined  where  the  80  million  people  are                                                               
located,  including  that  33 million  children  and  19  million                                                               
adults  obtain Medicaid  health  insurance  coverage; 10  million                                                               
elderly  and  disabled  person  receive  assistance  as  Medicare                                                               
beneficiaries; and  1.5 million  institutional residents  and 2.9                                                               
million   community-based   residents  receive   long-term   care                                                               
assistance.    She reported  that  support  for the  health  care                                                               
system  and  safety-net provide  16  percent  of national  health                                                               
spending, which represents half of  long-term care spending.  The                                                               
state capacity for  health coverage in FY 2015  for federal match                                                               
rates [Federal Medical Assistance  Percentage (FMAP)] ranged from                                                               
50  to  73.6 percent,  with  Alaska  currently  at a  50  percent                                                               
federal  matching  rate,  which  is  the  floor  and  the  lowest                                                               
possible rate.  In  fact, if a floor did not  exist the FMAP rate                                                               
would  be  42.1 percent,  she  said.    She  turned to  slide  5,                                                               
"Medicaid   is  an   Integral  Health   Care  Component,"   which                                                               
highlighted that Medicaid in Alaska  provides services, helps the                                                               
economy, and provides  jobs.  She turned to  slide 6, "Services,"                                                               
and said the  Medicaid program supports providers as  one of many                                                               
payers in  the system,  and it  also serves as  a safety  net for                                                               
individuals,  children, and  elders,  by  providing basic  health                                                               
coverage for those who would otherwise be uninsured.                                                                            
                                                                                                                                
MS. BRODIE  turned to  slide 7,  "Economy," and  highlighted that                                                               
Medicaid is  the primary payer  for long-term care  services, not                                                               
just in  Alaska, but nationally,  for behavioral  health services                                                               
and   for   anti-psychotic   medications.     The   health   care                                                               
expenditures in Alaska  were $7.5 billion in the  last census, of                                                               
which Medicaid represented approximately  18 percent, and in 2014                                                               
Medicaid  provided  34,100  health  care jobs  [slide  8].    She                                                               
directed  attention to  slide 9,  "Who  Pays for  Health Care  in                                                               
Alaska?"   She reported that  the University of  Alaska Anchorage                                                               
Institute  of Social  and Economic  Research (ISER)  provided the                                                               
statistics depicted in the pie chart  on this slide.  She pointed                                                               
to  the bottom  of  the  pie chart,  to  two slices  representing                                                               
Medicaid, with the  red slice indicating the federal  share at 12                                                               
percent and  the yellow slice  indicating the state  general fund                                                               
payments at 5.5  percent.  In addition,  government employers are                                                               
the largest payers  of health care in Alaska at  22 percent, with                                                               
self-insurance at  11 percent, employer premiums  at 8.5 percent,                                                               
and again the  combined federal and state Medicaid  share at 17.5                                                               
percent.                                                                                                                        
                                                                                                                                
MS.   BRODIE   directed   attention  to   slide   10,   "Medicaid                                                               
Expenditures  by   Service  FY  2013,"  and   pointed  out  these                                                               
expenditures   actually  cover   long-term  care,   premiums  for                                                               
enrollees  to participate  in the  Medicare program,  payments to                                                               
managed care  organizations (MCOs)  at 31.1 percent,  other acute                                                               
care at  9.5 percent, inpatient  hospital costs at  13.5 percent,                                                               
and pharmacy costs at 1.5 percent.                                                                                              
                                                                                                                                
REPRESENTATIVE  STUTES asked  for  further  clarification on  who                                                               
makes the premium payments for Medicare.                                                                                        
                                                                                                                                
MS. BRODIE answered the State  of Alaska's Medicaid program makes                                                               
the premium  payments to Medicare  since it represents  the payer                                                               
of last  resort.  She  emphasized the  state's goal, which  is to                                                               
have an  insurance company or  any entity pay for  services prior                                                               
to the state payment.                                                                                                           
                                                                                                                                
REPRESENTATIVE  STUTES maintained  her  interest  in the  premium                                                               
payments for Medicare.                                                                                                          
                                                                                                                                
MR. SHERWOOD  replied that most Medicare  recipients are required                                                               
to pay  premiums for Medicare  Part B.  Most  Medicaid recipients                                                               
are  low-income individuals,  but  some  Medicaid recipients  are                                                               
also  Medicare  eligible.    The   premium  coverage  relates  to                                                               
Medicare individuals  who receive Medicare, not  to contributions                                                               
withheld  by  employers for  employees;  however,  once the  low-                                                               
income recipient goes on Medicare  and must pay the Medicare Part                                                               
B  premium, Medicaid  picks up  the premium  costs because  it is                                                               
cost-effective to  first allow Medicare coverage  before Medicaid                                                               
pays.                                                                                                                           
                                                                                                                                
MR. SHERWOOD  clarified that a  small number of  individuals must                                                               
also  pay Medicare  Part A,  and  in those  instances, the  state                                                               
would also pay those costs since it is cost effective to do so.                                                                 
                                                                                                                                
3:14:51 PM                                                                                                                    
                                                                                                                                
MS. BRODIE directed  attention to slide 11, "Top  5% of Enrollees                                                               
Account for  More than Half  of Medicaid Spending,"  and reported                                                               
that the top 5 percent of  enrollees spend 53 percent of Medicaid                                                               
funds and 95  percent spend 47 percent of the  funds.  She turned                                                               
to slide 12, "Medicaid Enrollees  and Expenditures," and detailed                                                               
the  percentage of  Medicaid expenditures,  with  disabled at  42                                                               
percent, the  elderly at  21 percent, adults  at 15  percent, and                                                               
children at 21 percent.                                                                                                         
                                                                                                                                
MS.  BRODIE  directed  attention   to  slide  13,  "FY2014  Total                                                               
Medicaid  Recipients," referred  to the  pie chart  and read  the                                                               
breakdown  of recipients  in Alaska:   children  - 59.6  percent,                                                               
adults -  26 percent, disabled  adults - 12.1 percent,  elderly -                                                               
5.6 percent, and disabled children  - 1.5 percent.  She commented                                                               
that Alaska  has a higher  percentage for covering  children than                                                               
many  states.     She  reviewed   slide  14,   "Medicaid  Service                                                               
Population,"  which  provided  another  way  of  looking  at  the                                                               
population served in Alaska.                                                                                                    
                                                                                                                                
REPRESENTATIVE STUTES asked if the  higher percentage of children                                                               
served was for the dollar amount paid or the number covered.                                                                    
                                                                                                                                
MS.  BRODIE clarified  that  it was  the  percentage of  children                                                               
participating in the Medicaid program.                                                                                          
                                                                                                                                
MS.  BRODIE  moved  on  to  slide  15,  "Growth  in  Per-Enrollee                                                               
Medicaid  Spending vs.  Other Health  Spending,"  which she  said                                                               
indicated the annual rate of growth  from 2007 through 2012.  She                                                               
pointed  out that  Medicaid has  not increased  as much  as other                                                               
types of  health care coverage,  noting that private  health care                                                               
insurance  increased  by 4.6  per  enrollee  while Medicaid  only                                                               
increased by 3.1 percent.                                                                                                       
                                                                                                                                
3:17:07 PM                                                                                                                    
                                                                                                                                
CHAIR SEATON asked  for further clarification on  whether this is                                                               
dollar increases or numbers of participants.                                                                                    
                                                                                                                                
MS. BRODIE replied  this was the percent of  increase in spending                                                               
by type of coverage.                                                                                                            
                                                                                                                                
MS.  BRODIE  turned  to slide  16,  "Federal  Medical  Assistance                                                               
Percentage (FMAP)," and pointed out  that this indicated the FMAP                                                               
rates in  the Lower 48, with  Alaska at 50 percent;  however, the                                                               
state receives 65 percent for Title 21 children.                                                                                
                                                                                                                                
MR. SHERWOOD, in  response to Chair Seaton,  explained that Title                                                               
21,  also known  as CHIP  [Children's Health  Insurance Program],                                                               
refers to children who are  covered at somewhat higher rates than                                                               
the rest  of the children,  with an enhanced federal  match rate.                                                               
Some states have  a stand-alone CHIP program,  other states cover                                                               
them  through   Medicaid,  with   some  states  electing   for  a                                                               
combination  of both.    Alaska  has elected  to  cover Title  21                                                               
children  through  the  Medicaid   program,  but  as  Ms.  Brodie                                                               
mentioned, at a  higher federal match rate.   In further response                                                               
to Chair  Seaton, he agreed that  the Title 21 children  are ones                                                               
above  the poverty  line,  although  he noted  that  the CHIP  is                                                               
triggered by age.                                                                                                               
                                                                                                                                
CHAIR SEATON asked for the Title 16 definition.                                                                                 
                                                                                                                                
MR. SHERWOOD  answered that Title  16 refers to  the Supplemental                                                               
Security  Income  Program (SSI).    He  explained that  Title  16                                                               
provides coverage for a number  of elderly and disabled who often                                                               
qualify  for Medicaid;  however, Medicaid  falls under  Title 19.                                                               
Thus  the  department  often   differentiates  between  Title  19                                                               
Medicaid  recipients and  Title  21 Medicaid  recipients, or  the                                                               
CHIP component.                                                                                                                 
                                                                                                                                
CHAIR SEATON  asked for further  clarification on  the categories                                                               
of children.                                                                                                                    
                                                                                                                                
MR. SHERWOOD  answered that  the category  for Medicaid  Title 19                                                               
children  includes children  below the  poverty line  and younger                                                               
children  up to  133  percent of  poverty  using the  traditional                                                               
standards; however, the categories  have been further complicated                                                               
since they  were converted in  2014 to the new  modified adjusted                                                               
gross  income standards.    He apologized  for  not having  those                                                               
specific figures with him today.                                                                                                
                                                                                                                                
CHAIR  SEATON, in  response to  Representative  Stutes, asked  to                                                               
review a few of the previous slides for members.                                                                                
                                                                                                                                
3:20:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL  asked  if  there  were  two  categories  of                                                               
poverty level for  those children in the  CHIP [Children's Health                                                               
Insurance Program].                                                                                                             
                                                                                                                                
MR.  SHERWOOD  answered that  there  are  not two  categories  of                                                               
poverty  levels.   He explained  that the  CHIP starts  where the                                                               
traditional Medicaid  coverage ends.   The standard  for children                                                               
through the age of 5 in  the regular Medicaid was higher than the                                                               
standard for children ages 6 to  18; however, the break point for                                                               
regular Medicaid to  CHIP is different for  younger children than                                                               
older children, he said.                                                                                                        
                                                                                                                                
CHAIR  SEATON  asked to  return  to  slide  11, and  related  his                                                               
understanding that  the top 5  percent of spenders  accounted for                                                               
53 percent of the expenses.                                                                                                     
                                                                                                                                
MS. BRODIE answered yes.   She explained that slide 12, "Medicaid                                                               
Enrollees and  Expenditures" identifies them as  the disabled and                                                               
the elderly.                                                                                                                    
                                                                                                                                
CHAIR  SEATON  asked  whether any  specific  diseases  or  causes                                                               
accounted for the  top 5 percent of spenders that  account for 53                                                               
percent of the expenditures.                                                                                                    
                                                                                                                                
MR.  SHERWOOD  answered  that  it does  not  relate  to  Medicaid                                                               
enrollees  with a  particular disease,  but to  a combination  of                                                               
issues for individuals  who needed an intense  level of long-term                                                               
support,  such as  nursing home  services.   He  added that  this                                                               
category also  included people with acute  episodes that resulted                                                               
in extensive  surgery or  prolonged hospitalization;  however not                                                               
all  seniors and  disabled  are high  spenders.   Typically  high                                                               
spenders  include enrollees  who had  an event  that put  them in                                                               
hospitals for significant  periods of time, or  in nursing homes,                                                               
or those  who received extensive  long-term support in  their own                                                               
homes or communities.                                                                                                           
                                                                                                                                
MS. BRODIE  directed attention to  slide 12,  "Medicaid Enrollees                                                               
and  Expenditures,"  which  showed the  correlation  between  the                                                               
percentage  of  each enrollee  by  type,  including disabled  and                                                               
elderly  adults   and  children,  and  the   amount  of  spending                                                               
attributed to  them.  She  clarified that the department  has not                                                               
said  that  there  are  not high  cost  individuals  outside  the                                                               
elderly  or disabled  category since  there  are a  few in  other                                                               
categories.                                                                                                                     
                                                                                                                                
3:24:57 PM                                                                                                                    
                                                                                                                                
MS.  BRODIE  moved  on  to   slide  13,  "FY2014  Total  Medicaid                                                               
Recipients,"  and reported  that  nearly 60  percent of  Medicaid                                                               
recipients are  children, 5.6 percent  are elderly,  12.1 percent                                                               
are disabled adults, and 26  percent are adults who are typically                                                               
single  parents or  two-parent  households  with young  children.                                                               
She  turned  to slide  14  "Medicaid  Service Population,"  which                                                               
showed the  population being served  and how these  core services                                                               
fall in the department's priorities.                                                                                            
                                                                                                                                
CHAIR  SEATON asked  whether the  three priorities  influence the                                                               
state's Medicaid expenditures.                                                                                                  
                                                                                                                                
MS. BRODIE replied that the  department has actually gone through                                                               
an  exercise  to  tie  every  single activity  -  whether  it  is                                                               
Medicaid or a division activity -  to one of these core services.                                                               
She explained  the department  used a  matrix to  go down  to the                                                               
lowest level to  identify the core service that  will be affected                                                               
for every potential program cut or expansion.                                                                                   
                                                                                                                                
CHAIR SEATON asked  if cuts in funding could  eliminate an entire                                                               
department priority.   He asked for further  clarification on the                                                               
categories for priority 1, 2, or 3.                                                                                             
                                                                                                                                
MR. SHERWOOD  answered that the slide  identified three different                                                               
priorities, however, they  are not prioritized in order  so it is                                                               
not a numbered order of precedence.                                                                                             
                                                                                                                                
3:27:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   TARR,  referring   to   slide   13,  asked   for                                                               
clarification on  whether the age  of the children  identified on                                                               
the pie  at 59.6 percent  is for children up  to the 18  years of                                                               
age.                                                                                                                            
                                                                                                                                
MS. BRODIE answered that is correct.                                                                                            
                                                                                                                                
REPRESENTATIVE  TARR reflected  that slide  14 "Medicaid  Service                                                               
Population" showed a  category split for children in  the ages of                                                               
[5-12], 13-17, and 18-24.                                                                                                       
                                                                                                                                
MS.  BRODIE  directed attention  to  slide  15, "Growth  in  Per-                                                               
Enrollee  Medicaid Spending  vs.  Other  Health Spending,"  which                                                               
depicted the  annual growth in  actual health care  expenses from                                                               
2007 to 2012.   She reported that Medicaid  expenditures rose 3.1                                                               
percent while private health insurance  per enrollee increased by                                                               
4.6 percent.   She  pointed out  the graph  for Medical  Care CPI                                                               
[Consumer Price  Index] at  3.1, but  explained a  separate index                                                               
exists for medical care than for everything else.                                                                               
                                                                                                                                
MS.  BRODIE  directed attention  to  slide  16, "Federal  Medical                                                               
Assistance  Percentage  (FMAP),"  and  explained  that  this  map                                                               
depicted the  FMAP rates in the  Lower 48, with the  highest FMAP                                                               
rates primarily  falling in the  southern states.   She explained                                                               
that  the FMAP  rates vary,  for example,  the Title  19 Medicaid                                                               
rate receives 50 percent federal match  and the Title 21, or CHIP                                                               
children, receives 65  percent federal match.   She also reported                                                               
women  being treated  for breast  or cervical  cancer receive  90                                                               
percent  federal  match,  people  engaged  with  family  planning                                                               
activities receive  90 percent  federal match,  and beneficiaries                                                               
of Indian Health  Service (IHS) who receive their  services at an                                                               
IHS  facility, receive  100 percent  federal match.   She  stated                                                               
that the  division continually  monitors claims  and utilization.                                                               
For example,  the division reviews  assistance for women  who had                                                               
babies  in an  IHS  facility, because  according  to the  federal                                                               
rules, the state can't claim  100 percent for a non-Native person                                                               
in an IHS  facility.  However, she explained, that  once the baby                                                               
is born and  begins to receive IHS services, the  state can cover                                                               
the pregnancy  under the 100  percent rate for  IHS participants.                                                               
She recapped IHS coverage for  mothers, such that the state would                                                               
receive a  50 percent federal  match up  until the baby  is born,                                                               
but the  department could later reclaim  it at 100 percent.   She                                                               
emphasized  that  the  department  does  attempt  to  obtain  the                                                               
maximum federal participation.                                                                                                  
                                                                                                                                
3:30:49 PM                                                                                                                    
                                                                                                                                
MS. BRODIE,  in response to  Representative Tarr,  clarified that                                                               
the 50 percent  figure on slide 16 was for  federal match for the                                                               
basic Title  19 Medicaid recipients.   She said the  average FMAP                                                               
federal match  typically would  be at  63 percent,  once blended,                                                               
but she  predicted this  rate will  continue to  rise due  to the                                                               
state's activities.                                                                                                             
                                                                                                                                
MS.  BRODIE  directed attention  to  slide  17, "Alaska  Medicaid                                                               
Organizational  Chart,"  which  showed  the  composition  of  the                                                               
Medicaid  program  organization.   She  pointed  out that  people                                                               
often  think  of  Medicaid  as  just  one  entity;  however,  the                                                               
department represents  the single  entity.  She  listed positions                                                               
on   the  Medicaid   organization  chart,   which  included   the                                                               
Commissioner,  the Deputy  Commissioner for  Medicaid and  Health                                                               
Care Policy,  and Deputy Commissioner for  Family, Community, and                                                               
Integrated  Services.   She stated  that the  Division of  Public                                                               
Assistance,  the  Division  of  Health  Care  Services,  and  the                                                               
Division of Senior & Disabilities  Services were under the Deputy                                                               
Commissioner  for Medicaid  and Health  Care Policy.   The  Adult                                                               
Preventive Dental program  was also under the  Division of Health                                                               
Care Services, she said.                                                                                                        
                                                                                                                                
MS. BRODIE  explained that the  Children's Services  Medicaid and                                                               
Behavioral  Health Medicaid  were under  the Deputy  Commissioner                                                               
for Family,  Community, and Integrated  Services.   She clarified                                                               
that the  Division of Behavioral  Health now runs  the Children's                                                               
Services Medicaid program.                                                                                                      
                                                                                                                                
3:32:35 PM                                                                                                                    
                                                                                                                                
MR.  SHERWOOD, in  response to  Representative Stutes,  explained                                                               
the map on  slide 16, such that the colors  represented the basic                                                               
FMAP - federal match rate or  share - for Medicaid in each state.                                                               
He  highlighted  that  the formula  compared  per  capita  income                                                               
between the  states.   States with high  per capita  income would                                                               
have a low federal match rate  whereas states with low per capita                                                               
income  would have  a high  federal  match rate.   As  previously                                                               
mentioned, many Southern states,  with historically lower incomes                                                               
have higher  federal match rates,  while Northeastern  states and                                                               
the  Midwest, with  historically  higher  incomes, receive  lower                                                               
federal match  rates.   Alaska with its  high per  capita income,                                                               
has a lower  federal match rate; however, no  adjustment was made                                                               
for  the cost  of living.   Therefore,  Alaska has  almost always                                                               
been at the floor for the FMAP, he said.                                                                                        
                                                                                                                                
3:34:33 PM                                                                                                                    
                                                                                                                                
MS.  BRODIE, in  response to  Representative Stutes,  agreed that                                                               
was what was  meant by the "floor."  She  then directed attention                                                               
to slide  18 "Alaska  Medicaid," and said  that the  Divisions of                                                               
Public  Assistance   and  Health  Care  Services   determine  the                                                               
eligibility for  every type  of Medicaid,  while the  Division of                                                               
Health Care  Services administers  the Medicaid program  and pays                                                               
the  claims.    She  added  that the  Divisions  of  Health  Care                                                               
Services, Behavioral  Health, and Senior and  Disability Services                                                               
(SDS) Home  and Community Based  Services are the  divisions that                                                               
provide services by monitoring and licensing entities.                                                                          
                                                                                                                                
MS. BRODIE directed  attention to slide 19,  "All Medicaid Direct                                                               
Services   Beneficiaries  &   Expenditures,"  which   showed  the                                                               
Expenditures and enrollment  figures for FY 2014.   She indicated                                                               
that  these  figure   were  taken  out  of   the  MMIS  [Medicaid                                                               
Management  Information  System],  which  identified  the  dollar                                                               
amount  of  the  claims.     In  response  to  Chair  Seaton  she                                                               
identified MMIS  as the  Medicaid Management  Information System,                                                               
which she stated was the computer system used to pay claims.                                                                    
                                                                                                                                
MS.  BRODIE returned  to slide  19, which  identified the  dollar                                                               
amount of  claims paid and  the number of individuals  for claims                                                               
paid in  a fiscal year.   She reiterated that these  figures were                                                               
taken from the Medicaid Management  Information System because in                                                               
reality the number of Medicaid enrollees increased in 2014.                                                                     
                                                                                                                                
MS.  BRODIE moved  on  to  slide 20  "Allocation  Summary 2007  -                                                               
2016,"  which was  provided by  the Legislative  Finance Division                                                               
and identified the spending by  the different divisions.  The top                                                               
pink line depicted  health care services, the  blue line referred                                                               
to behavioral  health services expenditures, and  the bottom line                                                               
depicted Children's Medicaid Services and adult dental figures.                                                                 
                                                                                                                                
CHAIR  SEATON asked  for the  reason why  the top  two lines  are                                                               
showing such a dramatic upturn as compared to the other line.                                                                   
                                                                                                                                
MS. BRODIE  answered that  the lines went  up dramatically.   She                                                               
identified the  lines in question  as the amount of  general fund                                                               
expenditures.     The  state   received  American   Recovery  and                                                               
Reinvestment Act (ARRA) funding, but  the state also had enhanced                                                               
federal funding during  that period of time that  was lost, after                                                               
which  the line  dramatically rose,  she said.   She  pointed out                                                               
that every  line on  the graph  has leveled off  in the  last few                                                               
years.                                                                                                                          
                                                                                                                                
3:38:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  VAZQUEZ asked  if  the FMAP  federal rate  hasn't                                                               
changed, whether a block grant occurred.                                                                                        
                                                                                                                                
MR. SHERWOOD answered that was due  to an enhancement in the FMAP                                                               
federal rate.  Although the  basic rate was still calculated, the                                                               
federal government  gave all states  an add-on rate;  however, he                                                               
said  he did  not  recall the  exact  percentage states  received                                                               
during the  economic recession period.   This type  of additional                                                               
funding has happened  several times over the  course of Medicaid,                                                               
in which the  Congress decided that, due to the  general state of                                                               
the  national economy,  it would  provide an  enhancement to  the                                                               
federal matching  rate for Medicaid.   He further  explained that                                                               
the increase shows up over the  course of a few years because the                                                               
timing  of  the enhanced  rate  doesn't  coincide perfectly  with                                                               
Alaska's  fiscal year.   Thus  the changes,  which occurred  mid-                                                               
year, were worked in over the course of a couple of years.                                                                      
                                                                                                                                
MS. BRODIE  directed attention to  slide 21, "General  Fund 2006-                                                               
2015," which  she said depicted  the total general  fund spending                                                               
from the FY 06-FY 15 Governor's Medicaid formula appropriations.                                                                
                                                                                                                                
MS. BRODIE  directed attention to  slide 22,  "Controlling Growth                                                               
in Medicaid," and  pointed out that the last  two slides depicted                                                               
what  the  department has  done  in  the  past  few years.    She                                                               
highlighted  that  the  options  to control  Medicaid  costs  are                                                               
limited; however,  the state has  options, for example,  it could                                                               
change its  eligibility criteria  or its  covered services.   She                                                               
said the state  could choose to eliminate  coverage for inpatient                                                               
hospital services, which  is not an option, but  that issue would                                                               
be covered later.   However, the state could change  the rates it                                                               
pays to providers  for services or equipment, or  it might decide                                                               
to implement  utilization controls,  such that a  recipient would                                                               
be  limited to  five  sessions  of a  service  instead of  having                                                               
unlimited access to  the service.  Further, the  state could work                                                               
on its compliance/anti-fraud efforts or  it could work to improve                                                               
innovation in service delivery or try to maximize its revenue.                                                                  
                                                                                                                                
MS. BRODIE cautioned that although  eligibility criteria could be                                                               
changed, it  takes significant  time to do  so.   She highlighted                                                               
that  she  and  Mr.  Sherwood   previously  worked  on  the  last                                                               
eligibility change,  but it took over  a year to get  the federal                                                               
government to  agree with the  state.   She concluded that  it is                                                               
not  simple to  make a  change and  it would  require significant                                                               
negotiations and substantial work to accomplish.                                                                                
                                                                                                                                
CHAIR  SEATON asked  whether that  type of  change would  include                                                               
going from 200 percent of poverty level to 175 percent.                                                                         
                                                                                                                                
MR.  SHERWOOD answered  that the  department has  previously done                                                               
so.  He  recalled that in 2003, the state  reduced eligibility at                                                               
one time  to 150 percent  of the  poverty level and  the standard                                                               
was   frozen,   which   illustrated  an   example   of   reducing                                                               
eligibility.  However,  eligibility requirements are complicated,                                                               
and it  can be difficult in  some cases to ensure  that the state                                                               
meets its maintenance  requirements, although he said  he did not                                                               
wish  to go  into detail  at this  time.   He suggested  that the                                                               
expansion  group  would not  be  subject  to any  maintenance  of                                                               
effort group so it would be a relatively easy one to change.                                                                    
                                                                                                                                
MS. BRODIE  directed attention to  slide 23,  "Covered Services,"                                                               
and shared that the state  has mandatory and optional services it                                                               
provides  through the  Medicaid  program, which  are outlined  on                                                               
slide  24.    Although  the state  can  limit  certain  benefits,                                                               
typically those limits  merely create cost shifts.   For example,                                                               
drugs are considered  an optional service; however,  if the state                                                               
stopped  covering  pharmacy  costs,  the burden  would  shift  to                                                               
another area of  Medicaid.  Thus, if the state  no longer allowed                                                               
recipients  with  hypertension  to  obtain  prescriptions,  these                                                               
patients will  end up  with heart  attacks or  strokes and  in an                                                               
emergency  room,  as inpatients.    In  addition, these  patients                                                               
would  need  further rehabilitation.    In  fact, these  patients                                                               
could end up  in nursing homes for a period  of time, which would                                                               
be very costly, as opposed to  the state paying $30 per month for                                                               
their medications.                                                                                                              
                                                                                                                                
MS.  BRODIE turned  to another  optional  service, personal  home                                                               
health  care,  but  pointed out  these  recipients  were  already                                                               
qualified  to   be  in  institutions   so  they  would   need  an                                                               
institutional  level of  care.   If  the state  denied them  home                                                               
health care, the state would then  need to find nursing home beds                                                               
for these individuals.   She reminded members that  the state did                                                               
not  build its  Medicaid program  on a  nursing home  model, but,                                                               
instead, based  it on a home  and community-based model.   If the                                                               
state  denied optional  personal home  health care  services, she                                                               
predicted  that the  state would  not  have enough  institutional                                                               
beds to meet their needs.   She turned to optional therapies, and                                                               
recalled  her  earlier scenario  in  which  patients were  denied                                                               
their medications  and suffered  strokes.   She said  many stroke                                                               
patients need  speech therapy in order  to learn to talk  or walk                                                               
again.    She  cautioned  that  if the  state  does  not  provide                                                               
optional  Medicaid services,  recipients  will simply  end up  in                                                               
nursing homes  or hospitals, which  would result in  cost shifts,                                                               
often  at  higher  rates.    In response  to  Chair  Seaton,  she                                                               
explained   the  abbreviations   for  the   therapies,  including                                                               
physical  therapy  (PT),  occupational therapy  (OP)  and  speech                                                               
language pathology (SLP).   She said that the  state doesn't have                                                               
a choice with respect to  mandatory services since these services                                                               
must be provided if the state has a Medicaid program.                                                                           
                                                                                                                                
CHAIR  SEATON  asked whether  slide  24,  "Mandatory VS  Optional                                                               
Services" referred  to the services  required for  every Medicaid                                                               
program or  if these services  would be  required as part  of the                                                               
state negotiated plan with the federal government.                                                                              
                                                                                                                                
MS. BRODIE  answered that  the aforementioned  mandatory services                                                               
are ones  required by  every Medicaid program  in each  state and                                                               
territory.                                                                                                                      
                                                                                                                                
3:47:30 PM                                                                                                                    
                                                                                                                                
MS. BRODIE  directed attention  to slide  25, "Rates,"  which she                                                               
said  was one  thing other  states have  closely reviewed.   Last                                                               
year,  the  CMS  [Centers  for Medicare  and  Medicaid  Services]                                                               
mandated that states  must raise the rates paid  to physicians to                                                               
at  least the  level of  Medicare.   In fact,  a number  of other                                                               
states had to raise their rates  because they were lower than the                                                               
Medicare  rates;  however, Alaska's  rates  were  not lower,  she                                                               
said.  She remarked that some  states often "play games" with the                                                               
rates, for  example, by freezing them  for years.  She  said that                                                               
Alaska  has experienced  several  instances when  its rates  were                                                               
frozen due to  regulations, such that its regulations  spoke to a                                                               
specific date  and time and  did not allow  for any updates.   In                                                               
fact, Alaska  currently uses the  2006 rates for  durable medical                                                               
equipment  for  that  very  reason,   she  said.    In  addition,                                                               
providers  have rights  during rate  changes and  recipients have                                                               
rights to an appeal process,  therefore, litigation often occurs.                                                               
At  any  given  point  in time,  states  have  active  litigation                                                               
related to rate reductions or the methodology being changed.                                                                    
                                                                                                                                
MS. BRODIE emphasized that states  must receive approval from the                                                               
Centers for Medicare and Medicaid  Services (CMS) for any changes                                                               
they make.   Thus for every Medicaid change,  Alaska must prepare                                                               
a state plan amendment.  She  emphasized the need to be proactive                                                               
and seek prior  approval in order to avoid  accruing three months                                                               
of expenditures only to find out  that the CMS denied the change.                                                               
She pointed  out that CMS  considers whether the  proposed change                                                               
would impact access  or quality of care for recipients.   If such                                                               
a  denial  were  to  occur,   the  state  would  be  100  percent                                                               
responsible for the expenditures.                                                                                               
                                                                                                                                
CHAIR  SEATON  asked  for  further   clarification  that  if  the                                                               
proposed   change  impacts   access  or   quality  of   care  for                                                               
recipients, it might not be approved.                                                                                           
                                                                                                                                
MR. SHERWOOD  stated his agreement.   He explained  the standard,                                                               
such that  Medicaid services  have to  be accessible  to Medicaid                                                               
recipients to the  same extent those services  would be available                                                               
to the general public.  This does  not mean the state must pay to                                                               
ensure that a neurosurgeon would  be available in each community,                                                               
but  if  the general  public  has  access to  the  neurosurgeon's                                                               
services,  Alaska's  Medicaid  recipients   must  have  the  same                                                               
access.   He  noted  that CMS  can  deny a  plan  if the  state's                                                               
reduction would adversely  impact access to the  point that there                                                               
was a substantial difference in access.                                                                                         
                                                                                                                                
MS.  BRODIE shared  that the  CMS imposes  a start/stop  time for                                                               
plan amendments so when the  state requests a plan amendment, the                                                               
CMS  starts  the clock.    In  the  event  the CMS  believes  the                                                               
proposed plan change  will impact access or quality  of care, the                                                               
agency will send a letter indicating  the state has "x" amount of                                                               
time  to resolve  the issue;  however, it  also offers  technical                                                               
assistance to  states.  She  characterized this process  as being                                                               
helpful, since  the department  might overlook  an impact  to the                                                               
quality of care or access.                                                                                                      
                                                                                                                                
3:52:05 PM                                                                                                                    
                                                                                                                                
MS.  BRODIE   directed  attention   to  slide   26,  "Utilization                                                               
Controls," and  reported that  the state  manages its  costs with                                                               
utilization  controls.    Some   of  these  controls  consist  of                                                               
computer system edits; for example, if  a claim comes in by a 30-                                                               
year  old male  for a  hysterectomy,  the system  would edit  the                                                               
claim for  appropriateness.  She  related her  understanding that                                                               
over 8,000 edits are applied to each claim prior to payment.                                                                    
                                                                                                                                
REPRESENTATIVE VAZQUEZ asked whether any edits were turned off.                                                                 
                                                                                                                                
MS. BRODIE answered, yes.   In further response to Representative                                                               
Vazquez  she   responded  that  there  were   about  eight  edits                                                               
purposefully turned off.                                                                                                        
                                                                                                                                
REPRESENTATIVE  VAZQUEZ asked  if the  MMIS [Medicaid  Management                                                               
Information Systems],  now known as the  [Alaska Medicaid Health]                                                               
Enterprise  system  is  broken,   as  everyone  in  the  provider                                                               
community is  aware that  it is,  how can the  state rely  on the                                                               
information with respect to utilization costs.                                                                                  
                                                                                                                                
MS. BRODIE  replied that the [Alaska  Medicaid Health] Enterprise                                                               
[AMHE] system,  also known  as the MMIS,  had vastly  improved in                                                               
the last  three months.   In fact, the  state has been  paying 97                                                               
percent accurately and  correctly the first time, she  said.  She                                                               
reported  that  the  department  has  been  working  through  its                                                               
backlog of claims  that were paid incorrectly, with  two more big                                                               
deployments scheduled  to go out in  the next two weekends.   She                                                               
said  the department  hoped this  would  be the  last of  payment                                                               
issues;  however,  as  the  department  has  worked  through  the                                                               
defects  in the  system  related  to payments,  it  has found  27                                                               
additional  defects.   She further  reported that  the department                                                               
has successfully  addressed 22 defects  to date and hoped  not to                                                               
discover any additional ones.   She concluded by stating that the                                                               
AMHE has vastly improved.                                                                                                       
                                                                                                                                
MS.  BRODIE returned  to slide  26,  "Utilization Controls,"  and                                                               
highlighted  another control  used  for cost  control was  "prior                                                               
authorization."   She  stated that  recipients must  obtain prior                                                               
authorizations for  such items as  an extended hospital  stay, in                                                               
which recipients  must obtain prior  approval for the  fourth day                                                               
and  beyond.     Patients  would   also  need  to   obtain  prior                                                               
authorization for  other types of care,  including long-term care                                                               
services, travel,  and behavioral health services.   In addition,                                                               
these prior  authorizations limit  eligibility for the  number of                                                               
services recipients can receive.                                                                                                
                                                                                                                                
MS.  BRODIE   indicated  the  department   conducts  post-payment                                                               
reviews,  which includes  reviewing medical  documents to  ensure                                                               
that  the documents  support the  claims  just paid.   She  noted                                                               
there are  hard or soft  edits in the system.   One of  the edits                                                               
the department turned off related  to behavioral health payments.                                                               
An issue arose and the  department was unable to make significant                                                               
health  payments.   Health  insurance  was  supposed to  pay  for                                                               
behavioral  health  claims but  the  insurance  industry was  not                                                               
reacting  well to  the [Patient  Protection and]  Affordable Care                                                               
Act  (ACA) so  providers  were  not being  paid.   Therefore  the                                                               
department  has temporarily  turned  off the  edit that  required                                                               
billing insurance first, followed  by Medicaid coverage; instead,                                                               
with the edit  turned off, Medicaid now pays the  claims and then                                                               
bills the insurance providers.                                                                                                  
                                                                                                                                
MS. BRODIE turned  to another utilization control,  new edits and                                                               
audits for  fee-for-service (FFS)  [slide 26].   She  stated that                                                               
the National  Correct Coding  Initiative [NCCI]  edits previously                                                               
pertained  to Medicare;  however,  about two  years  ago it  also                                                               
applied  to  Medicaid  and  the  state  has  mandatory  quarterly                                                               
updates it needs to apply.                                                                                                      
                                                                                                                                
3:57:30 PM                                                                                                                    
                                                                                                                                
MS. BRODIE directed attention to  slide 27, "States that Contract                                                               
with Managed Care  Organizations (MCOs)," which related  to a map                                                               
that  indicates the  number of  states with  100 percent  managed                                                               
care and those without managed care.                                                                                            
                                                                                                                                
REPRESENTATIVE  WOOL asked  whether population  or the  number of                                                               
providers  determined  those  managed   care  and  those  without                                                               
managed care.  He related  his understanding that Alaska does not                                                               
have sufficient providers to have a proper managed care system.                                                                 
                                                                                                                                
MS. BRODIE answered that the type  of care varies for each state.                                                               
Granted, Alaska  does not have  a large population;  however, she                                                               
said she was  unsure whether Alaska could  attract big businesses                                                               
who  provide managed  care.   She  indicated that  there was  not                                                               
currently any managed care organization in Alaska.                                                                              
                                                                                                                                
MR. SHERWOOD  remarked that typically managed  care organizations                                                               
charge per  member per  month fees, with  an assumption  of risk.                                                               
Thus states must  meet a certain population  size before entities                                                               
would  be willing  to  assume  the risk.    Further,  one of  the                                                               
advantages and reasons managed care  organizations are willing to                                                               
take on  that risk  is that they  can negotiate  favorable rates.                                                               
In areas without  multiple providers for the  same service, these                                                               
entities often  lack a good  bargaining position, which  may well                                                               
contribute to  the lack  of managed care  in Alaska;  however, he                                                               
could  not   attest  to   that  being   the  only   reason  these                                                               
organizations do  not operate  in Alaska.   In response  to Chair                                                               
Seaton,  he answered  that the  managed care  organizations would                                                               
negotiate rates  with the direct  health care providers,  such as                                                               
hospitals,  pharmacies, and  physicians  who  provide the  actual                                                               
services.    Typically  these managed  care  organizations  would                                                               
offer a  certain number  of providers a  contract with  a certain                                                               
rate, he explained.                                                                                                             
                                                                                                                                
4:00:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR referenced  the patient-centered medical home                                                               
model which  the Anchorage Neighborhood  Health Center  used, and                                                               
asked whether  this was a  good alternative for managed  care and                                                               
administration of the continuum of care.                                                                                        
                                                                                                                                
MR. SHERWOOD  replied that the  department was  seriously looking                                                               
at this  as a way  to bring  "more explicit care  management into                                                               
the system" when it was  not possible to access more conventional                                                               
managed care organizations.                                                                                                     
                                                                                                                                
CHAIR SEATON  asked whether a  community with a  community health                                                               
service would  fit under  this model, as  the services  were most                                                               
often in  a regional center or  a larger hospital.   He asked for                                                               
more definite parameters for managed care in Alaska.                                                                            
                                                                                                                                
MR. SHERWOOD  shared that he was  not a managed care  expert.  He                                                               
explained that there were a  number of degrees of care management                                                               
which were  included in the area  of managed care.   He said that                                                               
the  more   recent  models,  community  care   organizations  and                                                               
accountable  care  organizations,  looked  at  providing  bundled                                                               
payment for services  and allowed for sharing of  cost and reward                                                               
for efficiencies.   He  noted that  the department  was reviewing                                                               
these models,  and had had  discussions with  entities interested                                                               
in pursuing  these models, although these  discussions were still                                                               
in  preliminary stages.   He  declared that  most communities  in                                                               
Alaska  still needed  some  services outside  their  system.   He                                                               
pointed  out that  this would  become a  point of  negotiation so                                                               
that the "hard cases" were not just shipped out.                                                                                
                                                                                                                                
MS.  BRODIE acknowledged  that there  were some  patient-centered                                                               
medical  home models,  including  a pilot  program at  Providence                                                               
Alaska Medical Center in Anchorage.   She spoke about the managed                                                               
care  operations  and their  contracts  with  the state  Medicaid                                                               
agencies for provision of all  services for an agreed upon amount                                                               
per member  per month.   As neither  the managed  care operations                                                               
nor the  state had planned  for the  costs of the  very expensive                                                               
specialty  drugs which  had come  on  the market,  it had  become                                                               
necessary for re-negotiation of  these contracts, with removal of                                                               
pharmacy coverages because of the specialty drugs.                                                                              
                                                                                                                                
4:04:47 PM                                                                                                                    
                                                                                                                                
MS.  BRODIE directed  attention  to  slide 28,  "Compliance/Anti-                                                               
Fraud," and declared  that fraud in Medicaid was a  reality.  She                                                               
stated that the department had  a fraud control unit which worked                                                               
with  the Department  of Law  and  program integrity  unit.   She                                                               
shared  that   the  program  integrity   unit  worked   from  the                                                               
commissioner's office  and worked  closely with the  Divisions of                                                               
Behavioral Health,  Senior and Disabilities Services,  and Health                                                               
Care Services.   She noted  that the  task force worked  on every                                                               
area  of fraud,  but that  it was  "always a  politically popular                                                               
reduction."  She  acknowledged that she did not  have figures for                                                               
the return of  investment for the fraud unit, but  stated that it                                                               
did bring to a stop these fraudulent claims.                                                                                    
                                                                                                                                
REPRESENTATIVE   WOOL  asked   if   this  was   a  reference   to                                                               
reimbursement for false claims by providers.                                                                                    
                                                                                                                                
MS. BRODIE replied it could be providers or recipients.                                                                         
                                                                                                                                
REPRESENTATIVE WOOL asked for an example for recipient fraud.                                                                   
                                                                                                                                
MS. BRODIE  explained that  a recipient may  not be  eligible for                                                               
Medicaid, as they may not have  been honest about their income or                                                               
their resources.   She stated that, in some  cases, the recipient                                                               
could be in collusion with the provider.                                                                                        
                                                                                                                                
REPRESENTATIVE TARR referenced the  Medicaid Task Force which was                                                               
responsible for reviewing this, and  asked whether the task force                                                               
had been responsible  for uncovering new ways  to identify fraud,                                                               
or had this been recognized by other means.                                                                                     
                                                                                                                                
MS.  BRODIE explained  that there  was now  a coordinated  effort                                                               
across departments  and divisions  to address fraud,  whereas the                                                               
effort had previously been "in silos."                                                                                          
                                                                                                                                
MR.  SHERWOOD  explained that  there  had  been systems  changes,                                                               
offering as an  example that each attendant in  the personal care                                                               
program was  required to  enroll as a  rendering provider.   This                                                               
collaboration  of  resources  allowed the  department  to  better                                                               
review claims for work if the department suspected any fraud.                                                                   
                                                                                                                                
4:08:43 PM                                                                                                                    
                                                                                                                                
MS. BRODIE  skipped slide  29, and addressed  slide 30,  "FY 2014                                                               
Medicaid  Expenditures by  Division,"  which  depicted where  the                                                               
money  was spent  by  division.   She  relayed  that Health  Care                                                               
Services  spent  53  percent, Senior  and  Disabilities  Services                                                               
spent 33 percent,  Behavioral Health spent 12  percent, and Adult                                                               
Dental and the Office of  Children's Services Medicaid each spent                                                               
1 percent.   She  clarified that Health  Care Services  was basic                                                               
medical care,  the in-patient and out-patient  hospital care, the                                                               
physician services,  the lab  and x-ray  services, and  any other                                                               
basic   medical  service.     She   explained  that   Senior  and                                                               
Disabilities Services  included home and community  based waivers                                                               
and nursing  homes.   She noted  that Behavioral  Health Services                                                               
covered  behavioral health.   She  explained that  the Office  of                                                               
Children's  Services Medicaid  paid for  children in  facilities,                                                               
and  that the  Adult Preventative  Dental had  a specific  yearly                                                               
limit for an individual's dental work.   She noted that two years                                                               
of this service,  which was the cost of a  set of dentures, could                                                               
be combined  in one year, with  a subsequent loss of  any benefit                                                               
for the following year.                                                                                                         
                                                                                                                                
MR.  SHERWOOD reported  that this  addition was  the most  recent                                                               
level of coverage,  and he offered his belief  that its expansion                                                               
had  brought concern  for potential  growth  in the  use of  this                                                               
service.   There had  been a  request for it  to have  a separate                                                               
budget structure from the other services.                                                                                       
                                                                                                                                
CHAIR  SEATON asked  whether  the remainder  of  dental care  was                                                               
included in health care services.                                                                                               
                                                                                                                                
MR.  SHERWOOD  clarified  that  all  children's  dental  and  any                                                               
emergency  dental, treatment  for acute  pain and  infection that                                                               
could  lead  to hospitalization,  were  included  in health  care                                                               
services.                                                                                                                       
                                                                                                                                
MS.  BRODIE  moved on  to  slide  31, "Services  Requiring  Prior                                                               
Authorization to Contain Costs,"  which specifically outlined the                                                               
services which needed prior authorization.   She pointed out that                                                               
the high  cost imaging was  for MRIs performed by  physicians who                                                               
owned the MRI  machine, as assurance by a  third party contractor                                                               
for medical necessity was required.                                                                                             
                                                                                                                                
4:12:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TARR  asked  what  was  included  by  the  waiver                                                               
services for a child with special needs.                                                                                        
                                                                                                                                
MR.  SHERWOOD  explained  that the  waiver  services  were  prior                                                               
authorized as a  total service plan for an  individual.  However,                                                               
use  of  another  service  would  not be  authorized  if  it  was                                                               
duplicative.    He  allowed that  this  sometimes  required  more                                                               
research to  better understand what  some services  would entail,                                                               
in order to avoid overlap.                                                                                                      
                                                                                                                                
REPRESENTATIVE  TARR   asked  if   every  waiver   established  a                                                               
comprehensive plan that included community support.                                                                             
                                                                                                                                
MR.  SHERWOOD expressed  his agreement  that  a complete  picture                                                               
which   identified   adequacy   with  other   supports,   without                                                               
duplication, was the  goal for a plan  of care.  He  noted that a                                                               
goal was also to promote independence and integration.                                                                          
                                                                                                                                
4:16:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  VAZQUEZ  asked  which  division  funded  the  Tax                                                               
Equity and Fiscal Responsibility Act (TEFRA) program.                                                                           
                                                                                                                                
MR. SHERWOOD replied  that TEFRA was an  eligibility option which                                                               
did not  pay for a  specific service.  He  said that most  of the                                                               
services available to a child on  TEFRA would be paid through the                                                               
Division of Health  Care Services, and was  typically the primary                                                               
and acute  care services.   He allowed  that there might  be some                                                               
behavioral  health  or  personal   care  services  through  TEFRA                                                               
eligibility.   He  declared  that  this was  the  Tax Equity  and                                                               
Fiscal Responsibility  Act of 198[2],  and it included  an option                                                               
to allow  eligibility for  children to be  considered as  if they                                                               
were living  in an institution  and met that  institutional level                                                               
of care.   He explained that  parental income and assets  did not                                                               
count  for  eligibility determination  if  a  child lived  in  an                                                               
institution.  He offered some  background for the act, explaining                                                               
that some  children in  institutions and  hospitals could  not go                                                               
home because Medicaid  paid the bills while in  the hospital, but                                                               
would not  offer coverage at  home.  This special  option allowed                                                               
for coverage of  children who met an institutional  level of care                                                               
when  they returned  home  to  the care  of  their  parents.   He                                                               
reported   that  Alaska   also  covered   in-patient  psychiatric                                                               
hospital  level of  care, and  intermediate  care facilities  for                                                               
individuals with intellectual disabilities.                                                                                     
                                                                                                                                
MS. BRODIE  returned attention to  slide 31, noting  that certain                                                               
drugs also required prior authorizations.                                                                                       
                                                                                                                                
CHAIR   SEATON   asked  what   types   of   drugs  required   the                                                               
authorization.                                                                                                                  
                                                                                                                                
MS. BRODIE  replied that behavioral  drugs and the  new specialty                                                               
drugs were  included.  She  noted that  the drug for  Hepatitis C                                                               
cost a  lot, but that,  as the  Medicaid population had  a higher                                                               
rate than the  general population, it was  included under certain                                                               
criteria.    One of  these  criteria  included sobriety  for  six                                                               
months and  stage 3 for fibrosis  of the liver.   She stated that                                                               
there had since  been negotiation with other  drug companies, and                                                               
the price had  been lowered, so the department  had redefined the                                                               
criteria for coverage to include stage  2.  She reported that new                                                               
types of drugs were coming that would also be high cost.                                                                        
                                                                                                                                
4:20:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   TARR  asked   about   limitations  for   certain                                                               
combinations of drugs for treatment  under the Patient Protection                                                               
and Affordable  Care Act,  and whether there  would be  this same                                                               
impact on Medicaid,  in order to deliver the  best health outcome                                                               
possible.                                                                                                                       
                                                                                                                                
MS. BRODIE  replied that the  department reviewed  these requests                                                               
on  a  one by  one  basis  because there  were  so  many new  and                                                               
experimental drugs,  as well  as new therapies.   She  added that                                                               
this  was even  more typical  for children,  and that  there were                                                               
fair hearing rights if the initial request was denied.                                                                          
                                                                                                                                
MR.  SHERWOOD  added  that  some of  the  drug  coverage  through                                                               
various  insurance plans  used tiered  pricing and  were given  a                                                               
very high  co-pay.   He noted  that, although  Medicaid typically                                                               
restricted the amount  of co-pay, the tiered pricing  was not the                                                               
same degree  of consideration as the  limits on cost sharing   He                                                               
directed attention  to the  adequacy for the  number of  drugs in                                                               
the insurer's formulary.                                                                                                        
                                                                                                                                
REPRESENTATIVE TARR  asked if  there should  be more  concern for                                                               
the number  of drugs available in  the pool to ensure  the option                                                               
for a drug that worked.                                                                                                         
                                                                                                                                
MR. SHERWOOD expressed his agreement.                                                                                           
                                                                                                                                
4:23:51 PM                                                                                                                    
                                                                                                                                
CHAIR  SEATON, referencing  slide  31, asked  if  Ms. Brodie  had                                                               
addressed cost containment for behavioral health.                                                                               
                                                                                                                                
MS. BRODIE explained  that all behavioral health  services had to                                                               
have  prior  authorization,  and  that their  plan  of  care  was                                                               
similar  to  that of  the  Division  of Senior  and  Disabilities                                                               
Services.                                                                                                                       
                                                                                                                                
MS. BRODIE  addressed slide 32,  "Other Savings," and  noted that                                                               
including  the rendering  providers  on claims  was an  important                                                               
aspect for  the detection of  fraud.   She reported that,  as the                                                               
behavioral   health  providers   did  not   list  the   rendering                                                               
providers,  this  next step  would  be  for  them to  detail  the                                                               
rendering,  referring,  ordering,  and prescribing  providers  on                                                               
claims.  This information was  necessary to better facilitate the                                                               
detection of fraud.                                                                                                             
                                                                                                                                
REPRESENTATIVE  WOOL  asked for  the  definition  of a  rendering                                                               
provider.                                                                                                                       
                                                                                                                                
MS. BRODIE  explained that  this was  an individual  who provided                                                               
the services.   She offered an  example for a PCA  (personal care                                                               
attendant)  agency which  employed many  attendants who  provided                                                               
the services to  recipients.  She reported that  the agency would                                                               
bill the department for these services,  but, in the past, it was                                                               
unclear who  exactly provided the  services.  She stated  that it                                                               
was  now  required to  list  the  individuals who  provided  each                                                               
service.  She pointed out  that, currently, the behavioral health                                                               
providers did not have to  list exactly who provided the services                                                               
to  the Medicaid  recipients.   She offered  her belief  that, as                                                               
these  recipients  were  a very  vulnerable  population,  it  was                                                               
necessary for  the department to  know the service  providers and                                                               
each of  their backgrounds in order  to ensure the safety  of the                                                               
recipients.                                                                                                                     
                                                                                                                                
MS. BRODIE  continued with  slide 32,  and allowed  that auditing                                                               
providers was not  a popular subject.  She shared  that steps had                                                               
recently been  taken to  help the providers  by removing  some of                                                               
the  burden, and  she explained  that the  problem in  Alaska was                                                               
that not  many of  the providers only  provided one  service, but                                                               
provided an array of services.   She reported that, as a provider                                                               
could   be  audited   for  one   specific  service,   they  could                                                               
subsequently be  audited for  another service.   She  shared that                                                               
current practice was  to now audit all the lines  of service by a                                                               
provider.    She addressed  that  another  savings would  be  for                                                               
partnerships with  the tribes to  look for efficiencies,  as they                                                               
had a huge health care network.                                                                                                 
                                                                                                                                
4:28:19 PM                                                                                                                    
                                                                                                                                
MS.  BRODIE  moved on  to  slide  33, "Additional  Savings,"  and                                                               
listed that  commercial insurance  recoupment would  save general                                                               
fund dollars.   She  reported that the  department worked  with a                                                               
company which  researched existing  insurance policies  for every                                                               
Medicaid recipient, as  the custodial parent may not  be aware of                                                               
these  policies.   She spoke  about the  substitution to  generic                                                               
medication, and offered  an anecdote for a drug that  was soon to                                                               
be available  as a generic,  which could save the  state millions                                                               
of  dollars.   She  pointed  out  that generic  medications  were                                                               
required,  if available,  although  this could  be overruled  for                                                               
medical necessity.                                                                                                              
                                                                                                                                
CHAIR SEATON  asked about the  percentage of  prescriptions which                                                               
required the brand name.                                                                                                        
                                                                                                                                
MS.  BRODIE  replied  that  some   drugs  did  not  have  generic                                                               
equivalents, and she offered to research the response.                                                                          
                                                                                                                                
MS. BRODIE returned  attention to slide 33, and  explained that a                                                               
negative  balance  was  possible  when a  provider  had  made  an                                                               
adjustment to  its claim,  and the result  was that  the provider                                                               
owed  money to  the  department.   She said  that,  as more  than                                                               
155,000   claims  were   processed  each   week,  this   happened                                                               
routinely.  She  explained that every May the  department sent an                                                               
amnesty  letter  to  each  provider   with  a  negative  balance,                                                               
offering that  each of these  providers pay  or be subject  to an                                                               
audit.   She reported that this  letter had a 98  percent success                                                               
rate.   She explained that  surveillance and  utilization reviews                                                               
were   detailed  reviews   of   claims  for   patterns  of   over                                                               
utilization,  offering an  example of  a drug  seeker going  from                                                               
emergency room to  emergency room, or to  clinics, for medication                                                               
without a prescription.  She  shared that, although they were not                                                               
able  to  do as  many  reviews  as  preferred, the  division  was                                                               
mandated  for a  certain number.   She  shared that  each of  the                                                               
Medicaid agencies had quality assurance sections.                                                                               
                                                                                                                                
MS.  BRODIE   discussed  slide   34  "Independent   Review,"  and                                                               
explained  the  pain  management  contract which  allowed  for  a                                                               
nationally certified,  independent pain management  specialist to                                                               
review  the prescriptions  for pain  medications to  ensure these                                                               
were  the  proper  medication  and  the  proper  dosage  for  the                                                               
condition.  She allowed that,  although many doctors did not like                                                               
the  oversight,  there had  been  a  stop to  these  questionable                                                               
prescriptions.  She explained that  the contract for psychotropic                                                               
medication review  for children in Office  of Children's Services                                                               
(OCS), the Division of Juvenile  Justice (DJJ) custody, and those                                                               
on Medicaid, was  being rolled out one at a  time, beginning with                                                               
OCS.   She shared that  there was national concern  that children                                                               
in  state  custody  or  on  public  assistance  were  being  over                                                               
medicated, and  that this review  would ensure that this  did not                                                               
happen in Alaska.                                                                                                               
                                                                                                                                
4:35:06 PM                                                                                                                    
                                                                                                                                
MS.  BRODIE  referred  to  slide  35,  "Future  Cost  Containment                                                               
Strategies,"  and  explained  that  updates  to  regulations  for                                                               
payment for  durable medical equipment  were coming,  which would                                                               
allow for the use of used  equipment.  She noted that there would                                                               
not be  a drastic  savings, as  some equipment  could not  be re-                                                               
used.                                                                                                                           
                                                                                                                                
REPRESENTATIVE TARR  noted that this  had been a  suggestion from                                                               
the Key Campaign during its visit to the capital.                                                                               
                                                                                                                                
MR.  SHERWOOD  expressed  agreement  that  soon  to  be  released                                                               
regulations, with a  price schedule, would allow  for the payment                                                               
for  gently used  durable medical  equipment.   He declared  that                                                               
there would not be any  special structure, but it would reimburse                                                               
providers for used equipment.                                                                                                   
                                                                                                                                
MS.  BRODIE  continued and  stated  that  collecting the  patient                                                               
share  of  cost for  waiver  recipients,  which maintained  their                                                               
eligibility for  Medicaid, had regulation changes  beginning July                                                               
1, 2015,  to now allow the  state to collect on  a monthly basis,                                                               
similar to that for the working disabled.                                                                                       
                                                                                                                                
MR. SHERWOOD  said that this  cost of care obligation  applied to                                                               
people who needed long term care,  nursing home care, or home and                                                               
community based waiver care services.   He stated that there were                                                               
some  modest  co-pays  for  other  services  applied  to  adults,                                                               
although the  recipients for these  long term services were  in a                                                               
special  category  which required  payment  of  all their  income                                                               
above a certain level toward their cost of care.                                                                                
                                                                                                                                
MS. BRODIE  discussed a project  for the acuity rate  which would                                                               
now  pay  for   the  service  provided.     She  explained  that,                                                               
regardless of the  needs for an individual in  an assisted living                                                               
home,  the  department  currently   paid  the  same  rate,  which                                                               
eliminated any  incentive for  the assisted  living home  to work                                                               
with  people having  higher needs.   Under  the proposed  plan, a                                                               
person  with more  needs would  receive  a higher  payment.   She                                                               
opined that this  would open up more living  assistance for those                                                               
with higher needs.                                                                                                              
                                                                                                                                
MS.  BRODIE  discussed the  automated  service  plan, a  computer                                                               
system that  she declared was  working.  She explained  that this                                                               
system  would   "talk  directly"   to  the   Medicaid  Management                                                               
Information  System   (MMIS)  system   and  upload   the  service                                                               
authorizations  for individuals,  instead of  the current  manual                                                               
process.                                                                                                                        
                                                                                                                                
CHAIR SEATON  asked for an  explanation to the  automated service                                                               
plan.                                                                                                                           
                                                                                                                                
MR.  SHERWOOD explained  that the  automated service  plan was  a                                                               
computer  system that  automated  the process  for evaluation  of                                                               
individuals for long term services  and support, such as waivers,                                                               
nursing  homes,  and  personal  care,  administered  through  the                                                               
Division of  Seniors and Disabilities  Services.  He  pointed out                                                               
that this  would put  all assessment and  care planning  into the                                                               
system, and allow it to  be transferred between the providers and                                                               
the agency for approvals.  This  data could be transferred to the                                                               
MMIS  system for  prior authorizations,  and would  eliminate the                                                               
need to  manually process the  information.  He opined  that this                                                               
plan  would  gain  substantial efficiencies,  especially  as  the                                                               
demand for these covered services  had historically been growing,                                                               
but the number of staff had not increased.                                                                                      
                                                                                                                                
4:42:38 PM                                                                                                                    
                                                                                                                                
MS. BRODIE  explained slide 36, "Expenditures  Avoided," and said                                                               
that  the blue  was  the  status quo,  and  that  the brown  line                                                               
reflected  health  care  price   inflation.    She  reminded  the                                                               
committee  that  health care  had  its  own inflation  index,  as                                                               
depicted  here.   She pointed  out  that the  enrollment and  the                                                               
utilization and  intensity of  services both  added to  the cost,                                                               
although  nothing compared  to the  health care  price inflation.                                                               
She stated that the focus needed to be on this inflation.                                                                       
                                                                                                                                
MR.  SHERWOOD offered  his belief  that this  argued the  need to                                                               
partner with  other players to  finance health care  services, if                                                               
there  was going  to be  reform.   He pointed  out that  Medicaid                                                               
alone would  not influence  the spending,  as the  department was                                                               
required to pay  enough to ensure adequate access  to health care                                                               
and  could not  simply  freeze or  lower its  rates  in order  to                                                               
compete for  provider participation.   He allowed  that, although                                                               
the  department  could hold  off  raising  prices for  a  period,                                                               
eventually it would  run into an access issue.   He declared that                                                               
it was critical for everyone to reduce health care inflation.                                                                   
                                                                                                                                
CHAIR SEATON  asked about the  calculated medical  inflation rate                                                               
used on the chart.                                                                                                              
                                                                                                                                
MR. SHERWOOD replied that it was just under 3 percent.                                                                          
                                                                                                                                
MS.  BRODIE   directed  attention  to  slide   37,  "Expenditures                                                               
Avoided,"   which  depicted   the  cost   differences  from   the                                                               
initiatives already  put in place.   She noted that the  top line                                                               
reflected what spending  would have been with no  change, and the                                                               
bottom line depicted the projected  savings through 2033, without                                                               
including the aforementioned initiatives.                                                                                       
                                                                                                                                
CHAIR SEATON  asked if  the average  annual increase  reflected a                                                               
combination  of all  the  different  factors including  increased                                                               
enrollment and medical price inflation.                                                                                         
                                                                                                                                
MS. BRODIE expressed her agreement.                                                                                             
                                                                                                                                
4:47:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE VAZQUEZ reflected that  slide 3 stated that Alaska                                                               
had  158,853  enrolled in  Medicaid  in  2014, whereas  slide  13                                                               
stated a total of 165,783 Medicaid  recipients.  She asked for an                                                               
explanation for this discrepancy.                                                                                               
                                                                                                                                
MS. BRODIE explained  that this would depend on how  the data was                                                               
pulled.   She pointed to  slide 3,  which stated that  Alaska had                                                               
158,853  enrollees with  138,300 people  using the  services, and                                                               
reported  that this  information was  drawn from  the eligibility                                                               
system.   Information on the slide  with the bar graph  was taken                                                               
from the MMIS and was based  on claims actually paid, although it                                                               
did  not incorporate  all the  recipients who  used services,  as                                                               
some  behavior health  providers  had  not yet  been  paid.   She                                                               
stated that the information from  slide 13 was drawn specifically                                                               
from the  numbers reported to  the Medicaid budget.   She pointed                                                               
out  that  these  were  all   drawn  from  different  sources  at                                                               
different points in time.                                                                                                       
                                                                                                                                
REPRESENTATIVE  VAZQUEZ  said  that,  although she  was  able  to                                                               
understand the  concept for enrolled  individuals, slide  13 lead                                                               
her  to  believe that  these  enrollees,  now Medicaid  recipient                                                               
beneficiaries, totaled  165,783.  She  asked if there  were 7,000                                                               
more recipients than enrollees.                                                                                                 
                                                                                                                                
MS.  BRODIE explained  that  there could  be  duplication to  the                                                               
categories, offering an example of  a child being included in one                                                               
category, and  then, after becoming  disabled, being  included in                                                               
the second  category, as  well.   She pointed  out that  an adult                                                               
could be  initially in  the adult category,  then become  part of                                                               
the adult disabled category, and  then also move into the elderly                                                               
category.     She  explained  that  the   expenditures  for  each                                                               
individual were for that specific category.                                                                                     
                                                                                                                                
REPRESENTATIVE VAZQUEZ asked for an example.                                                                                    
                                                                                                                                
MR. SHERWOOD  offered another  example.  He  described a  64 year                                                               
old who  started the  year eligible  in the  disability category,                                                               
and  received  services.   Then,  during  the year,  this  person                                                               
turned  65  years of  age  and  again  received services.    This                                                               
individual would  then be  included in  the elderly  category for                                                               
those services received.  He  reported that some individuals were                                                               
also  subject to  retroactive  eligibility determinations,  which                                                               
could  be  reflected  in  the  data  depending  on  when  it  was                                                               
reported.  He noted that this  could be typically for disabled or                                                               
for  those  eligibilities  acquired   through  the  Fair  Hearing                                                               
process.                                                                                                                        
                                                                                                                                
CHAIR SEATON asked for further information.                                                                                     
                                                                                                                                
REPRESENTATIVE  VAZQUEZ, addressing  Mr. Sherwood,  declared that                                                               
after  a  family  eligibility determination,  the  children  were                                                               
enrolled individually  in Medicaid,  and not  as a  family block.                                                               
She stated that she did  not understand the discrepancy for 7,000                                                               
more recipients than enrollees.                                                                                                 
                                                                                                                                
4:53:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TARR  noted  that  she  understood  the  examples                                                               
offered by Mr. Sherwood.  She  asked whether a child eligible for                                                               
dental services  through Denali Kid  Care, but not  diagnosed for                                                               
autism spectrum disorder, would  have their dental service billed                                                               
through  the  general  children category,  and  then  have  their                                                               
subsequent early  intervention services  for autism  provided and                                                               
billed through  the disabled children  category.  She  noted that                                                               
the same child  would have then billed through  two categories of                                                               
service.                                                                                                                        
                                                                                                                                
CHAIR SEATON  asked for actual  data to support  the explanations                                                               
for discrepancy.                                                                                                                
                                                                                                                                
REPRESENTATIVE  TARR asked  about  [indisc.] and  whether it  was                                                               
included  in the  projections.   She  noted that  a  goal of  the                                                               
Patient Protection and  Affordable Care Act was  to decrease this                                                               
by widening the pool of  individuals purchasing health care.  She                                                               
asked if there was a standard  amount of reduction, or was it too                                                               
early to realize any effect from these cost control measures.                                                                   
                                                                                                                                
MR. SHERWOOD  said that he  did not  have a number  he associated                                                               
with the act and how all  the provisions would work together.  He                                                               
acknowledged that  some assumptions  were built  in when  the act                                                               
was costed out, although these  were relative to specific changes                                                               
to specific government programs.  He  stated that he did not know                                                               
if there was a more general estimate.                                                                                           
                                                                                                                                
REPRESENTATIVE   STUTES   referenced   slide  22,   which   read:                                                               
"controlling growth in Medicaid," and  surmised that this was the                                                               
opposite  of what  would  happen with  Medicaid  Expansion.   She                                                               
expressed her concern for how these related.                                                                                    
                                                                                                                                
MS. BRODIE explained  that this was about  controlling the dollar                                                               
costs for Medicaid from the general fund.                                                                                       
                                                                                                                                
REPRESENTATIVE  VAZQUEZ   asked  how  reimbursement   rates  were                                                               
determined for Medicaid doctors.                                                                                                
                                                                                                                                
MR.  SHERWOOD explained  that the  department  used the  resource                                                               
based  relative value  system to  determine  payment levels,  the                                                               
same system  as used by Medicare.   This system used  a number of                                                               
different factors  for calculation  to capture the  various costs                                                               
of practice in delivering a  particular service to an individual.                                                               
He  reported that  these factors  were  multiplied together,  and                                                               
that Alaska  used a  basic Medicare formula  with an  adjuster, a                                                               
multiplier  which  increased  the   Medicare  rate  by  about  30                                                               
percent.   He offered  to provide  more explicit  information for                                                               
specifics to the formula.                                                                                                       
                                                                                                                                
REPRESENTATIVE VAZQUEZ asked  if this formula was  used for other                                                               
providers.                                                                                                                      
                                                                                                                                
MR. SHERWOOD  said that the  rate for facilities,  hospitals, and                                                               
nursing  homes  was   based  on  the  cost   of  doing  business,                                                               
established  from  the  cost  reports submitted  by  each.    The                                                               
department would then calculate  rates using an inflation factor,                                                               
and then re-base every four years  based on the cost reports.  He                                                               
reported  that   for  other  services   the  department   used  a                                                               
collection  of historical  methods,  which  included studies  for                                                               
cost  or price  that  fixed a  rate  which may  or  may not  have                                                               
included  an  inflation  factor.    He  said  that  most  of  the                                                               
behavioral  health rates  were not  regularly inflated,  although                                                               
other rates  were inflated.   He said  that the  same methodology                                                               
used  for   physicians  was   used  for   similar  practitioners,                                                               
including  physician  assistants, advanced  nurse  practitioners,                                                               
and community health  aides.  He reported that  facilities in the                                                               
tribal  health  system  were  paid  at  a  federally  established                                                               
encounter  rate  that  was done  in  conjunction  between  Indian                                                               
Health  Service  and  the  Centers   for  Medicare  and  Medicaid                                                               
Services.   He stated that  for pharmacies the department  used a                                                               
formula  for  both  a  dispensing  fee and  a  national  cost  of                                                               
acquisition.                                                                                                                    
                                                                                                                                
CHAIR  SEATON, referencing  the pharmaceuticals,  asked if  there                                                               
was anything  in statute to  prevent negotiation of  lower prices                                                               
for drug purchases.                                                                                                             
                                                                                                                                
MR. SHERWOOD  replied that a  federal statute required  that drug                                                               
manufacturers  provide rebates  to  Medicaid agencies.   He  said                                                               
that this  statute also dictated how  much of the rebate  went to                                                               
the federal  government and how  much to  the state.   He pointed                                                               
out that  states were allowed to  negotiate supplemental rebates,                                                               
although  recent  changes in  federal  law  to mandatory  rebates                                                               
diminished the opportunity for many supplemental rebates.                                                                       
                                                                                                                                
CHAIR SEATON  asked that the  department notify the  committee if                                                               
there were any statutory roadblocks for lowering costs.                                                                         
                                                                                                                                
5:02:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE VAZQUEZ  asked about  the recommendations  from an                                                               
audit on the  Department of Health and Social  Services issued by                                                               
the Division of Legislative Audit in 2014.                                                                                      
                                                                                                                                
MR. SHERWOOD  replied that he  was generally familiar  with this,                                                               
and that there were recommendations  every year, with some repeat                                                               
recommendations  when the  department was  still in  progress for                                                               
resolution to these.  He  asked if Representative Vazquez had any                                                               
specifics,   noting   that  he   did   not   recollect  all   the                                                               
recommendations related to Medicaid in 2014.                                                                                    
                                                                                                                                
CHAIR SEATON asked if Representative  Vazquez was referencing the                                                               
initial required performance audit.                                                                                             
                                                                                                                                
MR. SHERWOOD explained that there  was the Statewide Single Audit                                                               
each  year which  audited all  programs receiving  federal funds,                                                               
including Medicaid, and that the  Department of Health and Social                                                               
Services  was  also currently  involved  in  the process  of  the                                                               
performance audit, which was not yet complete.                                                                                  
                                                                                                                                
CHAIR  SEATON  acknowledged that  the  performance  audit of  the                                                               
Department of  Health and  Social Services was  the first  of the                                                               
audits to all the departments.                                                                                                  
                                                                                                                                
REPRESENTATIVE TARR  reported that the Department  of Corrections                                                               
had been the first of these performance audits.                                                                                 
                                                                                                                                
REPRESENTATIVE  VAZQUEZ declared  that  "legislative audits  have                                                               
been done for years and  I'm interested in the latest legislative                                                               
audit,  the   recommendations,  and   what  specific   steps  the                                                               
department is taking to implement those recommendations."                                                                       
                                                                                                                                
MR. SHERWOOD said they would provide the information.                                                                           
                                                                                                                                
REPRESENTATIVE  TARR  suggested  that  it  would  be  helpful  to                                                               
understand the unexpected  outcome if the rates were  too low, as                                                               
an increase  of rates can  be beneficial  to the state  by adding                                                               
federal  dollars to  defer the  cost, and  then realizing  a cost                                                               
savings.                                                                                                                        
                                                                                                                                
5:06:07 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Health  and  Social  Services   Standing  Committee  meeting  was                                                               
adjourned at 5:06 p.m.                                                                                                          

Document Name Date/Time Subjects
Medicaid 101 Presentation March 2015.pdf HHSS 3/19/2015 3:00:00 PM
Medicaid