Legislature(2015 - 2016)CAPITOL 106

10/27/2015 10:00 AM HEALTH & SOCIAL SERVICES

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Audio Topic
10:08:28 AM Start
10:09:43 AM Overview(s): Medicaid Redesign and the Provider Tax
12:09:56 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview & Update on Medicaid Redesign and the TELECONFERENCED
Provider Tax
Presentations:
- NCSL: Innovations in Health Care Payment and
Delivery - State Team Report by Rep. Vazquez
- Medicaid Redesign: Update on Technical
Assistance Contract and Stakeholder Meetings;
& Health Care Provider Tax Feasibility Study
by Dept. of Health & Social Services / Contractor
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
      HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                     
                        October 27, 2015                                                                                        
                           10:08 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Paul Seaton, Chair                                                                                               
Representative Liz Vazquez, Vice Chair                                                                                          
Representative Neal Foster                                                                                                      
Representative Louise Stutes                                                                                                    
Representative David Talerico                                                                                                   
Representative Geran Tarr                                                                                                       
Representative Adam Wool (via teleconference)                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Andy Josephson                                                                                                   
                                                                                                                              
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW(S):  MEDICAID REDESIGN AND THE PROVIDER TAX                                                                            
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MONIQUE MARTIN, Healthcare Policy Advisor                                                                                       
Department of Health and Social Services                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a PowerPoint presentation                                                                       
entitled, "Medicaid Redesign & Expansion Technical Assistance                                                                   
Contract Update," and dated 10/27/15.                                                                                           
                                                                                                                                
BECKY HULTBERG, President and CEO                                                                                               
Alaska State Hospital and Nursing Home Association                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided comments on Medicaid redesign from                                                              
the providers' and stakeholders' prospective.                                                                                   
                                                                                                                                
JARED KOSIN, Executive Director                                                                                                 
Office of Rate Review                                                                                                           
Division of Health Care Services                                                                                                
Department of Health and Social Services                                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Provided  an overview  and  update on  the                                                             
Health Care Provider Tax Feasibility Study and Recommendation.                                                                  
                                                                                                                                
BECKY HULTBERG, President and CEO                                                                                               
Alaska State Hospital and Nursing Home Association                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided comments  regarding the health care                                                           
provider tax.                                                                                                                 
                                                                                                                              
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:08:28 AM                                                                                                                   
                                                                                                                                
CHAIR PAUL  SEATON called  the House  Health and  Social Services                                                             
Standing   Committee    meeting   to   order   at    10:08   a.m.                                                               
Representatives  Stutes, Talerico,  Vazquez,  Tarr, Foster,  Wool                                                               
(via  teleconference), and  Seaton were  present at  the call  to                                                               
order.  Representative Josephson was also present.                                                                              
                                                                                                                                
^OVERVIEW(S):  MEDICAID REDESIGN AND THE PROVIDER TAX                                                                           
      OVERVIEW(S):  MEDICAID REDESIGN AND THE PROVIDER TAX                                                                  
                                                                                                                              
10:09:43 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON announced  that the only order of  business would be                                                               
to receive  updates on the  various reform and  redesign projects                                                               
currently  underway relating  to Medicaid.   The  purpose of  the                                                               
updates is  to ensure that  members of the committee  have access                                                               
to the process  in order to contribute to Medicaid  reform as the                                                               
meetings and draft [proposals] are  taking place.  The three main                                                               
topics  are  a  report  from the  National  Conference  of  State                                                               
Legislatures,  Medicaid redesign,  and the  Health Care  Provider                                                               
Tax Feasibility Study and Recommendation.                                                                                       
                                                                                                                                
10:11:02 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE VAZQUEZ  reported that  in August  [2015], several                                                               
members of  the legislature,  representatives from  the executive                                                               
branch, and representatives from  the provider community attended                                                               
meetings   sponsored  by   the  National   Conference  of   State                                                               
Legislatures (NCSL) on the topic  of "State Strategies to Improve                                                               
Health  System Performance."    [In the  committee  packet was  a                                                               
document  from  the  National Conference  of  State  Legislatures                                                               
entitled,   "State   Strategies    to   Improve   Health   System                                                               
Performance,  Monday, August  17-Wednesday, August  19 -  Denver,                                                               
CO, Alaska Team  Report."]  Attending the  conference from Alaska                                                               
were:    Margaret  Brodie,  Director  of  Health  Care  Services,                                                               
Department  of Health  and Social  Services  (DHSS); Jay  Butler,                                                               
Chief  Medicaid  Officer,  DHSS;  Senator  Cathy  Giessel;  Anita                                                               
Halterman,  Chief of  Staff,  Office  of Representative  Vazquez;                                                               
Senator  Anna  MacKinnon;  Nancy  Merriman,  Executive  Director,                                                               
Alaska  Primary  Care  Association; Representative  Paul  Seaton;                                                               
Heather Shadduck,  Chief of Staff,  Office of Senator  Kelly; and                                                               
Representative  Liz Vazquez.   At  the  conference the  following                                                               
vision and action plan were discussed:                                                                                          
                                                                                                                                
     Vision:  To be focused  on health, not healthcare.  All                                                                    
     goals, strategies  and action steps need  to ultimately                                                                    
     keep people  and families healthier (not  just a better                                                                    
     sick system).                                                                                                              
                                                                                                                                
     Action Plan Goal 1:  Better Family Health Outcomes by                                                                      
       Utilizing Services Appropriately to Reduce Public-                                                                       
     Payer System Cost.                                                                                                         
                                                                                                                                
   · Better use  of state  data will improve  health, create                                                                    
     efficiencies, and reduce cost                                                                                              
   · Better address  the social determinants of  health into                                                                    
     primary care                                                                                                               
   ·      Including referrals to social services                                                                                
   · Demonstration(s)  for   coordinated  care   for  better                                                                    
     health outcomes and reduced costs                                                                                          
   · Evaluate need for integration  of behavioral health and                                                                    
     primary care                                                                                                               
   · Braiding  services into  K-12 education.   Outreach  to                                                                    
     schools, starting fall 2015                                                                                                
   · Need a  State Plan Amendment for  regulatory change for                                                                    
     lower-level behavioral providers                                                                                           
   · Anita Halterman, Margaret  Brodie, and Heather Shadduck                                                                    
       will convene meeting to discuss collaboration, re:                                                                       
     behavioral health and primary care integration                                                                             
   · Update group on Dec. 17                                                                                                    
                                                                                                                                
REPRESENTATIVE VAZQUEZ advised there  is a shortage of behavioral                                                               
health providers  and thus  a need to  review the  regulations in                                                               
order to  make changes  to increase access  to mental  health and                                                               
primary care services under Medicaid.   She returned to the goals                                                               
of the action plan.                                                                                                             
                                                                                                                                
     Goal 2:  Better Use of State Data Will Improve Health,                                                                     
     Create Efficiencies, and Reduce Cost.                                                                                      
                                                                                                                                
   · Begin with a focus on claims data                                                                                          
   ·      Inventory what data is currently present in                                                                           
     Alaska - task commitment from Representative Vazquez's                                                                     
     office and Ms. Brodie                                                                                                      
   · Communicate  to policymakers  why  data  (on a  broader                                                                    
     scale) is important                                                                                                        
   ·      Include what data is important, more than just                                                                        
        claims data, - population health data and health                                                                        
     outcome measures                                                                                                           
   · Screen data vendors by end of November 2015                                                                                
   ·      Ms. Brodie will meet with vendors at the National                                                                     
      Association of Medicaid Directors meeting and report                                                                      
     back Dec. 17th                                                                                                             
   · Use  prescreen vendor  data  to  pull together  Alaska-                                                                    
     specific examples                                                                                                          
   ·      Engage   current   fraud,    misuse,   and   abuse                                                                    
       activities (to look at cost savings potential) and                                                                       
     collect anecdotal examples                                                                                                 
   · Communicate to this meeting group                                                                                          
   · Make  case  to Finance  Committee  on  the need  for  a                                                                    
     request for proposal (RFP) (April 2016)                                                                                    
   · Not more money, but a reallocation of resources                                                                            
   · Issue RFP IF ...                                                                                                           
   ·      Outsourcing is more effective                                                                                         
   ·      Proven return on investment                                                                                           
   ·      RFP includes strong evaluation and accountability                                                                     
   ·      Ability to withhold funds if vendor does not meet                                                                     
     contract obligations                                                                                                       
                                                                                                                                
10:18:15 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  VAZQUEZ  said  that   after  discussions  at  the                                                               
conference,  each state  prepared a  presentation.   She directed                                                               
attention to the Alaska  Team's PowerPoint presentation entitled,                                                               
"Innovations in Health  Care Payment and Delivery  - Alaska," and                                                               
dated 8/17/15-8/19/15,  which was also provided  in the committee                                                               
packet.      Areas   addressed    in   the   presentation   were:                                                               
accountability;  sustainability;   transparency;  person-centered                                                               
care  across  the  continuum; data  analytics;  Tribal/non-Tribal                                                               
equity  [slide  2].    Representative  Vazquez  referred  to  the                                                               
previously stated  vision statement  and pointed  out that  it is                                                               
more compassionate  to have  better health care,  and it  is also                                                               
more  cost  effective.    The   following  reachable  goals  were                                                               
identified:   to reduce cost in  the system by moving  people off                                                               
of  government health  programs; to  talk about  health in  plain                                                               
English to engage stakeholders;  to ensure reform is sustainable,                                                               
particularly as  pertains to  Medicaid [slide  3].   She directed                                                               
attention  to Goal  2 of  the previously  mentioned action  plan,                                                               
Better   Family    Health   Outcomes   by    Utilizing   Services                                                               
Appropriately to  Reduce Public-Payer  System Cost,  and restated                                                               
the  steps  to attain  the  above  goal  [slides  4, 5,  and  7].                                                               
Representative  Vazquez closed,  observing that  the work  of the                                                               
group is an ongoing process.                                                                                                    
                                                                                                                                
10:22:39 AM                                                                                                                   
                                                                                                                                
CHAIR  SEATON  suggested  that the  committee  provide  ideas  to                                                               
Representative  Vazquez who  is  taking the  lead  for the  state                                                               
team.   He  added that  the NCSL  meeting brought  several states                                                               
together, and the  discussion of the various  models for Medicaid                                                               
reform would  be very helpful  when determining what is  best for                                                               
Alaska.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  VAZQUEZ  recalled  at   the  NCSL  conference  in                                                               
Seattle   [2015]   there   was    keen   interest   in   Medicaid                                                               
presentations;  in fact,  it is  estimated  that Medicaid  [cost]                                                               
comprises 20 percent of most state budgets.                                                                                     
                                                                                                                                
CHAIR SEATON introduced the presentation  on Medicaid Redesign by                                                               
the Department of Health and Social Services (DHSS).                                                                            
                                                                                                                                
10:24:49 AM                                                                                                                   
                                                                                                                                
MONIQUE  MARTIN, Healthcare  Policy Advisor,  DHSS, informed  the                                                               
committee the Medicaid Redesign  & Expansion Technical Assistance                                                               
Contract  was  awarded   in  June,  2015,  to   an  Alaska  firm,                                                               
Agnew::Beck  Consulting,   which  has  subcontracted   to  Health                                                               
Management  Associates (HMA)  and  Milliman,  Inc., an  actuarial                                                               
firm.   She advised  that the original  contract was  amended and                                                               
both the contract  and amendment are posted on  the DHSS website.                                                               
The  amendment related  to  additional  stakeholder processes;  a                                                               
webinar  to  follow each  Key  Partner  Work Session  and  sector                                                               
engagement sessions with stakeholders -  such as the Alaska State                                                               
Hospital & Nursing  Home Association and the  Alaska Primary Care                                                               
Association - were  added to the contract [slide 2].   Ms. Martin                                                               
said  the first  component presented  under the  contract was  an                                                               
environmental assessment  that examined  the current  U.S. health                                                               
care delivery system  and key factors to improve  the health care                                                               
delivery  system  in  Alaska,  including  financing  authorities,                                                               
models of care,  and Medicaid experiences in other  states.  Next                                                               
presented were  alternative models for the  expansion population,                                                               
including  actuarial analyses,  what  other states  have done,  a                                                               
private  option, costs,  and wellness  incentives.   In  general,                                                               
looking   at  the   Medicaid  program's   traditional  population                                                               
revealed  opportunities for  reform.   A  recommended package  of                                                               
reforms  incorporating information  from  all sources  is due  to                                                               
DHSS  1/15/16, and  - at  the end  of the  contract -  action and                                                               
evaluation plans are due to DHSS 5/16/16 [slide 3].                                                                             
                                                                                                                                
10:30:58 AM                                                                                                                   
                                                                                                                                
MS.  MARTIN provided  a list  of key  partner organizations  that                                                               
included   community  and   advocacy   organizations,  and   many                                                               
providers  [slide   4].     Round  1   meetings  began   with  an                                                               
informational  webinar on  7/27/15; a  Key Partners  Work Session                                                               
was held  8/18/15, followed on  9/2/15 by a webinar  with updates                                                               
on the  topics that  were previously discussed.   The  August and                                                               
September Round 1  meetings included a presentation  of the draft                                                               
environmental   assessment,  models   of   care,  and   financing                                                               
opportunities.   Also, there  was discussion on  the vision  of a                                                               
high-functioning  health  care  delivery system  in  Alaska,  and                                                               
discussion  about  a   "meeting  in  a  box"   which  allows  the                                                               
department's partners  to present to their  audiences independent                                                               
of DHSS  [slide 5].  To  describe models of care,  DHSS created a                                                               
chart to compare  the present system of health care  in Alaska to                                                               
other  approaches,  from  primary case  management  to  full-risk                                                               
managed care [slide  6].  Round 2 meetings began  10/9/15 and the                                                               
contractor  has compiled  a list  of  potential initiatives  that                                                               
change  daily  as  more  analyses   are  received;  the  proposed                                                               
initiatives   include   descriptions,   key   features,   federal                                                               
requirements,  information  technology   (IT)  needs,  rates  and                                                               
payment   structures,  statutory/regulatory   changes,  actuarial                                                               
analysis, and  questions from  stakeholders [slide  7].    Reform                                                               
initiatives   under   consideration   include  a   primary   care                                                               
improvement initiative,  and others  that already  had priorities                                                               
established  in Round  1 [slide  8].   Ms. Martin  said important                                                               
dates  remaining  in  the  contract are  the  Key  Partners  Work                                                               
Session 11/10/15 and  a webinar on 11/19/15,  followed by further                                                               
actuarial analyses.   During  this time,  DHSS will  continue its                                                               
presentations to  keep interested parties informed.   On 1/15/16,                                                               
the final  report is  due to  DHSS, and  the contractors  will be                                                               
available for legislative hearings any  time after that, and then                                                               
the report will be followed by  a final webinar on 1/21/16 [slide                                                               
9].                                                                                                                             
                                                                                                                                
10:37:48 AM                                                                                                                   
                                                                                                                                
MS. MARTIN  stressed that key  partners and stakeholders  want to                                                               
continue to  work with DHSS  on Medicaid reform; she  displayed a                                                               
graphic with  many reforms  that are  currently underway  at DHSS                                                               
beginning  in 2014,  and proposed  to extend  to 2020  and beyond                                                               
[slide 10].  She explained that  DHSS wants to hear from vendors,                                                               
providers,  and  stakeholders on  the  many  ways to  reform  the                                                               
Medicaid  program.   Slide 11  listed  many public  presentations                                                               
that have  been made  or are  planned, and  she pointed  out that                                                               
Alaskans  can stay  informed by  accessing meeting  materials and                                                               
webinar recordings on  the DHSS website, by  subscribing to email                                                               
updates,  and  by requesting  a  presentation  by the  department                                                               
[slide 12].  Ms. Martin  closed, noting that other reform efforts                                                               
concern  the  Tribal  health   system  partnership  1115  waiver,                                                               
related   to   transportation    and   referral,   for   Medicaid                                                               
beneficiaries   who  are   also  Indian   Health  Service   (IHS)                                                               
beneficiaries.   The department initially sought  an ll15 waiver;                                                               
however, the administration  was notified in August  of a pending                                                               
Centers for  Medicare and Medicaid Services  (CMS) policy change.                                                               
In addition,  there is another  contract underway  regarding home                                                               
and community based services 1915(i)  and 1915(k) waivers that is                                                               
also pending CMS implementation.                                                                                                
                                                                                                                                
10:43:14 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON asked for a definition  of a "meeting in a box," and                                                               
also  how legislators  could  organize a  town  hall meeting  for                                                               
those interested in Medicaid reform and redesign.                                                                               
                                                                                                                                
MS. MARTIN  explained a meeting  in a box  is a tool  that allows                                                               
anyone to present - to those  who are not technical experts - the                                                               
models of  care and the  financing authorities called for  in the                                                               
contract.   The  contract is  moving quickly,  and DHSS  wants to                                                               
provide the  most current information; she  offered assistance in                                                               
this regard.                                                                                                                    
                                                                                                                                
CHAIR SEATON inquired  as to whether the  initiatives depicted on                                                               
slide 10 are separate presentations.                                                                                            
                                                                                                                                
MS.  MARTIN said  the initiatives  are grouped  by category;  for                                                               
example, "Process  and Infrastructure Improvements"  is connected                                                               
to   "Telemedicine    Initiative"   "Data   Analytics    and   IT                                                               
Infrastructure  Initiative"  and  to "Medicaid  Business  Process                                                               
Improvement Initiative" [slide 10].                                                                                             
                                                                                                                                
CHAIR SEATON questioned whether  there are separate presentations                                                               
focused on each category.                                                                                                       
                                                                                                                                
MS.   MARTIN  said   yes;  webinars   can  delve   into  specific                                                               
initiatives,  or all  of them.     In further  response to  Chair                                                               
Seaton, she  confirmed that she  can provide  updated information                                                               
at any time.                                                                                                                    
                                                                                                                                
10:46:48 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE TARR observed from  the presentation that there is                                                               
ample provider  and stakeholder engagement  in this regard.   She                                                               
asked how consumers are reached for their perspective.                                                                          
                                                                                                                                
MS. MARTIN  explained that the  reforms are at a  technical stage                                                               
involving financing, waivers, and  care models; however, DHSS has                                                               
talked  with  providers,  advocates,   and  recipients.    It  is                                                               
envisioned  that as  initiatives are  recommended, there  will be                                                               
another  stakeholder  process  to  examine how  user  groups  are                                                               
affected, although  some suggestions  have already  been received                                                               
from recipients.                                                                                                                
                                                                                                                                
REPRESENTATIVE  TALERICO  surmised  that after  the  analysis  is                                                               
received from the actuary, all  of the initiatives shown on slide                                                               
10 will have a breakdown of costs and variables.                                                                                
                                                                                                                                
MS. MARTIN  said a representative  from Milliman -  the actuarial                                                               
firm  in the  contract -  participates in  the Key  Partners Work                                                               
Sessions and webinars,  thus the firm is aware of  the hurdles to                                                               
delivering  care in  Alaska.   However, some  of the  report will                                                               
build actuarial analysis, and some  actuarial analysis will drive                                                               
final  recommendations.   For  example,  for  primary care,  some                                                               
models have "per  member per month" fees, and  there are regional                                                               
differences between costs and care.                                                                                             
                                                                                                                                
CHAIR SEATON  noted that one  of the  goals is to  provide better                                                               
service at a cheaper price, and he  expected that to be a part of                                                               
the actuarial analyses.                                                                                                         
                                                                                                                                
10:52:24 AM                                                                                                                   
                                                                                                                                
MS.  MARTIN  agreed that  the  actuarial  analyses will  look  at                                                               
reforms  to manage  health  conditions  and provide  preventative                                                               
services,  in   order  to   avoid  costly   hospitalizations  and                                                               
catastrophic illnesses.                                                                                                         
                                                                                                                                
CHAIR SEATON referred  to the Behavioral Health  and Primary Care                                                               
Integration Initiative,  and opined that  in some cases,  such as                                                               
the  immunological  basis of  depression  -  as opposed  to  just                                                               
psychological   interactions   -   primary  care   would   easily                                                               
transition into the care of  "a huge number of" behavioral health                                                               
problems.                                                                                                                       
                                                                                                                                
MS.  MARTIN responded  that there  was  extensive dialogue  among                                                               
stakeholder and  public groups regarding  a health home  model of                                                               
care.   A  health  home is  not just  a  typical doctor's  office                                                               
setting; a  behavioral health provider  can serve as  a patient's                                                               
health  home, so  that one  with  behavioral health  needs and  a                                                               
chronic  health condition  - such  as  diabetes -  can also  have                                                               
his/her primary behavioral health needs addressed.                                                                              
                                                                                                                                
CHAIR SEATON then  referred to a document found  in the committee                                                               
packet entitled, "The Response of  an Expert Panel to Nutritional                                                               
Armor  for  the Warfighter:    Can  Omega-3 Fatty  Acids  Enhance                                                               
Stress  Resilience,  Wellness,  and  Military  Performance?"  and                                                               
urged that the committee consider  these and other factors in its                                                               
study  of the  integration  of providers.   Furthermore,  another                                                               
issue that has  been identified is the  shortage of professionals                                                               
who supply  services, and he  suggested that Alaska could  join a                                                               
state compact on medical and  nursing licensing to help those who                                                               
want to  perform a residency in  Alaska, but who cannot  due to a                                                               
lack of  licensing.  He  asked whether the  aforementioned points                                                               
are part of the redesign and expansion process.                                                                                 
                                                                                                                                
MS. MARTIN  acknowledged that workforce  has been  discussed; for                                                               
example,  the  Behavioral   Health  Access  Initiative  addresses                                                               
opening   licensure   or   other   opportunities.      She   said                                                               
recommendations from the committee will be considered.                                                                          
                                                                                                                                
CHAIR  SEATON  encouraged DHSS  to  consider  participating in  a                                                               
state licensing compact.                                                                                                        
                                                                                                                                
REPRESENTATIVE   JOSEPHSON  urged   DHSS  to   examine  technical                                                               
redundancy  in state  licensure; in  fact, his  constituents view                                                               
the state licensing system as needlessly slow.                                                                                  
                                                                                                                                
11:00:20 AM                                                                                                                   
                                                                                                                                
CHAIR  SEATON observed  that budget  issues  mean workforces  are                                                               
constrained and  without employees to  fill in for absences.   He                                                               
cautioned that state personnel reductions  may impact the private                                                               
workplace  as well.   Chair  Seaton encouraged  the committee  to                                                               
review  the  materials  and  submit   comments  to  DHSS  on  the                                                               
presentation.                                                                                                                   
                                                                                                                                
11:03:49 AM                                                                                                                   
                                                                                                                                
BECKY  HULTBERG, President  and  CEO, Alaska  State Hospital  and                                                               
Nursing  Home  Association,  informed  the  committee  she  would                                                               
provide a brief  update of Medicaid redesign  from the providers'                                                               
and  stakeholders'  perspective,  and share  observations.    She                                                               
stressed  that Medicaid  redesign  is really  health care  system                                                               
redesign.   There are three  sources of payment for  health care:                                                               
Medicare, Medicaid,  and commercial or private  payers.  Medicare                                                               
is  spurring the  transformation  of the  health  care system  by                                                               
moving away from traditional payments  based on volume and toward                                                               
payments  that are  based on  value.   Medicaid also  has a  huge                                                               
impact on  the health  care system and  - from  the stakeholders'                                                               
perspective  - redesign  is difficult,  expensive, and  will take                                                               
time; in  fact, DHSS and  stakeholders are involved in  a process                                                               
that  is constrained  by  a  lack of  time  and  resources.   Ms.                                                               
Hultberg urged  for realistic expectations of  the consultant and                                                               
the  department.    Although  the  process  in  Alaska  has  just                                                               
started, the  federal Centers for Medicare  and Medicaid Services                                                               
(CMS) have enabled other states to  take steps.  For example, she                                                               
described  a $65  million grant  funded  by CMS  for a  five-year                                                               
initiative in  Washington, and other  funding received  by Oregon                                                               
and Colorado.   She pointed  out that transforming  a decades-old                                                               
health care  system is  "hard work," and  the contract  in Alaska                                                               
will advance  work that has been  done.  She advised  that CMS is                                                               
investing in  reform because a reduction  of "1 to 2  percent off                                                               
your cost-curve,  that is hundreds  of millions, if  not billions                                                               
of  dollars  in  the  future,  of savings."    The  Alaska  State                                                               
Hospital   and  Nursing   Home  Association   (ASHNHA)  is   very                                                               
supportive  of the  department's effort  and recognizes  that the                                                               
contractor needs to  produce an immediate action  plan, given the                                                               
state's fiscal situation,  and also a longer-term  reform plan to                                                               
shape the future.                                                                                                               
                                                                                                                                
11:10:13 AM                                                                                                                   
                                                                                                                                
MS.  HULTBERG said  a  coalition  of groups  known  as AK  Health                                                               
Reform is working  towards a mutual understanding  of health care                                                               
reform  and  focused  its  first work  session  on  the  Colorado                                                               
Regional  Care Collaborative  Organizations  (RCCO)  model.   The                                                               
second work  session focused on the  Oregon Coordinated Community                                                               
Care Organizations  model, which  generated interest.   The third                                                               
session  will   hear  from  the  Washington   State  Health  Care                                                               
Authority on  the topic of  managed care and, in  December, there                                                               
will be  a report  from consultants.   She  stated the  intent to                                                               
continue the  dialogue and to  share the group's vision  with the                                                               
legislature.  Ms. Hultberg observed  that ASHNHA and the partners                                                               
in AK  Health Reform support the  following:  1.) A  stronger and                                                               
enhanced  role  for primary  care  in  the health  care  delivery                                                               
system; 2.)  The fastest-growing  expense in the  Medicaid budget                                                               
is  long-term   services  and  support;  3.)   Behavioral  health                                                               
integration needs to be a  goal; 4.) Managed care organizations -                                                               
when management  of services is  outsourced to an insurer  - need                                                               
to  be  thoroughly  understood;  5.)  Change  takes  time  and  a                                                               
prepared infrastructure.   She said  ASHNHA and AK  Health Reform                                                               
strongly  encourage DHSS  and its  consultants to  consider pilot                                                               
projects to  demonstrate and test new  models of care for  use in                                                               
Alaska.     Finally,  long-term   reform  must   align  financial                                                               
incentives  because  as health  care  is  moving from  volume  to                                                               
value, CMS wants  to pay based on quality and  value, even though                                                               
for providers the current model is  to "do more, make more."  Now                                                               
the system is moving to a  different model, "do less, make more,"                                                               
which means using incentives so  that keeping people healthy, not                                                               
treating  them  when  they  are  sick, becomes  the  goal.    She                                                               
characterized  this  as a  fundamental  and  profound change  for                                                               
which the present infrastructure is unprepared.                                                                                 
                                                                                                                                
11:17:52 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  TARR asked  whether  there is  an opportunity  to                                                               
incentivize  organizations so  that they  will move  more quickly                                                               
and implement pilot programs.                                                                                                   
                                                                                                                                
MS. HULTBERG  said that  depends.  For  example, by  reducing the                                                               
use of  emergency rooms, shared  savings would be  an appropriate                                                               
first  step.   She  suggested  that  pilot   programs  should  be                                                               
encouraged.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  TARR  surmised  that because  hospitals  function                                                               
when  people are  sick, [reform]  will  fundamentally change  the                                                               
business model for hospitals.   She asked whether hospitals would                                                               
provide more  primary care,  or if  primary care  providers would                                                               
become more integrated with hospitals.                                                                                          
                                                                                                                                
MS. HULTBERG said  these are unanswered questions  that are being                                                               
discussed by  hospitals, physicians,  and health care  systems in                                                               
other states;  however, Alaska is  a different market due  to its                                                               
small population and  geography.  In fact, Alaska may  not fit in                                                               
the  new models  of value.   She  cautioned, "...  we need  to be                                                               
exploring them, but  it's not time to jump yet,  because we don't                                                               
know  if this  model, if  these  models, are  going to  translate                                                               
here, like  they have, like  they do  in Los Angeles."   However,                                                               
Alaska will  not be  able to  continue exactly as  it has  in the                                                               
past.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  VAZQUEZ asked  what groups  are ready  to proceed                                                               
with pilot projects.                                                                                                            
                                                                                                                                
MS.  HULTBERG  responded  that   Central  Peninsula  Hospital  is                                                               
willing, and Ketchikan General  Hospital has innovative programs.                                                               
Provider  groups other  than hospitals,  and communities,  may be                                                               
ready as well.                                                                                                                  
                                                                                                                                
11:22:46 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON  recalled that HB  148 authorizes  two demonstration                                                               
projects:   One project  is on  a global  payment model,  and one                                                               
project is  on reducing preterm births  in Alaska.  He  said that                                                               
if  other  providers are  ready  with  models, the  committee  is                                                               
interested.                                                                                                                     
                                                                                                                                
MS.  HULTBERG  added that  a  shared  savings project,  on  which                                                               
ASHNHA is  willing to  work with the  state, is  a hospital-based                                                               
project in the  Railbelt regarding emergency room (ER)  care.  In                                                               
Washington, the  project reduced Medicaid  fees for ER  visits by                                                               
10 percent.                                                                                                                     
                                                                                                                                
CHAIR   SEATON  advised   some  of   the  projects   may  require                                                               
legislative authorization.                                                                                                      
                                                                                                                                
REPRESENTATIVE TARR inquired how  the resources available to DHSS                                                               
will affect the speed at which  some of these initiatives will be                                                               
accomplished.                                                                                                                   
                                                                                                                                
MS. HULTBERG opined that DHSS  is capacity-constrained right now,                                                               
and the  costs of change in  other states is illustrative  of how                                                               
this issue is not only  hard, but resource-intensive.  She warned                                                               
that the ability to progress  will be significantly affected by a                                                               
lack  of  resources,  noting that  other  states  received  funds                                                               
through  federal  State  Innovation  Model  (SIM)  grants,  which                                                               
Alaska did not seek.                                                                                                            
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  for  more  information  on  the                                                               
availability of SIM grants.                                                                                                     
                                                                                                                                
MS. HULTBERG  said, "...  at this  point I  think the  more, more                                                               
critical issue is not, is  not there was an opportunity foregone,                                                               
... but the critical issue is what do  we do now?  How do we move                                                               
forward now?"                                                                                                                   
                                                                                                                                
11:30:21 AM                                                                                                                   
                                                                                                                                
JARED KOSIN, Executive Director,  Office of Rate Review, Division                                                               
of Health  Care Services, DHSS,  provided an overview  and update                                                               
on   the  Health   Care  Provider   Tax  Feasibility   Study  and                                                               
Recommendation.  Mr.  Kosin said DHSS awarded its  contract for a                                                               
feasibility  study  to  Myers   and  Stauffer,  Certified  Public                                                               
Accountants, in  June [2015].   Key  goals of  the project  are a                                                               
feasibility  study and  recommendation, a  draft tax  proposal, a                                                               
public  presentation,   and  subject   matter  expertise.     The                                                               
feasibility  report   and  recommendation,  and  the   draft  tax                                                               
proposal, are  due 12/1/15, and  must include  stakeholder input.                                                               
He  stressed that  stakeholder input  in  this type  of issue  is                                                               
critical,  so  DHSS  held  a series  of  in-person  meetings  and                                                               
webinars.   Mr. Kosin explained  there is a need  for stakeholder                                                               
engagement in  the health care  provider tax because  federal law                                                               
directs  that  there  are nineteen  possible  tax  classes,  with                                                               
numerous  provider types  within each  class.   In  an effort  to                                                               
focus the  study, DHSS  first asked  the contractor  to determine                                                               
whether  some classes  were unfeasible,  and  the contractor  was                                                               
able  to identify  classes in  which providers  do not  do annual                                                               
financial reporting,  or are not  licensed by the state,  such as                                                               
stand-alone imaging  facilities.   Immediately after  the review,                                                               
twelve of  the classes were  determined "probably  not feasible."                                                               
This narrowed  the scope of  the project to seven  classes, which                                                               
allowed  more  effective engagement  with  providers  who may  be                                                               
affected.    He  said  of the  classes  remaining,  nursing  home                                                               
services and hospitals  are the most obvious  tax categories that                                                               
are likely  to be feasible  and come under full  consideration in                                                               
Alaska.   The  second  scheduled stakeholder  meeting focused  on                                                               
nursing  homes  and hospital  services  only,  and the  next  two                                                               
webinars will  be opportunities to hear  responses from providers                                                               
and the general  public on the remaining possible tax  types.  At                                                               
the  present time,  the contractor  is building  and testing  tax                                                               
models  in order  to run  scenarios;  using a  scenario for  each                                                               
particular  tax,  the  models will  reveal  educated  conclusions                                                               
regarding  feasibility and  economics.    Although unfinished  at                                                               
this  time,  the  models  are   Excel  templates  with  different                                                               
sections; the first  section is the assessment basis,  or what is                                                               
being  assessed with  a  tax.   For  example,  at  a hospital  or                                                               
nursing home,  the model looks  at whether  to tax the  number of                                                               
beds, a flat  fee per entity, resident patient days  per year, or                                                               
a percentage of revenue.  The  models can run scenarios with each                                                               
possibility and  glean a  lot of  information from  each outcome.                                                               
The second  section is compliance,  and by federal  law providers                                                               
cannot  be  held harmless,  which  means  that with  health  care                                                               
services, the  state can collect  revenue from the  provider tax,                                                               
retain a  portion of the revenue  and, as many states  do, take a                                                               
portion  of  that  revenue  and  invest  it  back  into  Medicaid                                                               
payments.    The portion  invested  back  into Medicaid  payments                                                               
draws  down the  federal  match, thereby  funneling  some of  the                                                               
money  back  to  the  providers,  which  is  beneficial  in  that                                                               
reimbursements can go  up for services that  would otherwise need                                                               
higher  reimbursement. In  order  to prevent  abuse, the  federal                                                               
government ruled that states cannot  hold providers harmless, but                                                               
created  a safe  harbor  provision whereby  if  provider tax  and                                                               
Medicaid repayments  are limited to  6 percent of  the providers'                                                               
revenue,  it  is  presumed  to  not  violate  the  hold  harmless                                                               
provision.  Mr.  Kosin cautioned that the  federal government may                                                               
reduce the  limitation to  3 percent  or 3.5  percent, therefore,                                                               
DHSS does not want to build a  model on the existing limit.  Also                                                               
in the compliance section, the model  looks at whether or not the                                                               
tax is  broad-based, although  the state can  apply for  a broad-                                                               
based waiver, using  the P1/P2 test to qualify  for an exemption.                                                               
This  is important  to Alaska  because the  state has  very small                                                               
hospitals in remote areas providing  critical access to care, and                                                               
it may  not make  sense to  include them in  a provider  tax. The                                                               
model will  show if  Alaska can pass  the P1/P2  statistical test                                                               
for  a waiver.   In  addition, provider  taxes must  be uniformly                                                               
imposed in  a tax class;  if Alaska seeks  a tiered tax  rate for                                                               
smaller entities,  another waiver  would be  needed, and  a B1/B2                                                               
statistical test would  be required to qualify  for an exemption.                                                               
The final section  in the model is the  financial analysis, which                                                               
will  reveal  the  hypothetical   revenue  collected  under  each                                                               
scenario,  and will  allow  DHSS to  evaluate  whether the  state                                                               
should  reinvest   funds  into   its  Medicaid   payment  through                                                               
supplemental  payments.   He restated  that  the reinvestment  of                                                               
collected revenue  can draw  down federal  match dollars,  and in                                                               
some cases, result  in a net gain for providers,  and benefits to                                                               
the state.  Although this is  common in other states, Alaska must                                                               
use its model to determine if  it has the numbers and capacity to                                                               
utilize this approach.                                                                                                          
                                                                                                                                
11:45:03 AM                                                                                                                   
                                                                                                                                
MR.  KOSIN  closed,  noting  that  DHSS  is  finalizing  the  tax                                                               
classes, which are  now down to six,  allowing more consideration                                                               
of each.   He thanked ASHNHA  for its participation, and  that of                                                               
its contractor.   After the  models determine whether  a provider                                                               
tax is  feasible in Alaska,  DHSS will submit  recommendations to                                                               
the legislature.                                                                                                                
                                                                                                                                
REPRESENTATIVE  VAZQUEZ asked  for the  six classes  of providers                                                               
that have been identified as eligible for the provider tax.                                                                     
                                                                                                                                
MR. KOSIN  answered the six  classes include:  inpatient hospital                                                               
services,  outpatient hospital  services,  nursing facilities  or                                                               
nursing homes, outpatient  prescription drugs, ambulatory surgery                                                               
centers,  and others  such as  residential psychiatric  treatment                                                               
centers, personal  care attendant agencies, waiver  agencies, and                                                               
behavioral   health   services.      In   further   response   to                                                               
Representative Vazquez,  he said  the contractor has  concluded -                                                               
from looking  at other states -  that even though it  is called a                                                               
health  care provider  tax,  the  provider tax  is  viewed as  an                                                               
assessment or fee, and therefore  can be applied to nonprofit and                                                               
for-profit entities.   He cautioned that  any proposal introduced                                                               
to the  legislature would have  to be reviewed by  the Department                                                               
of Law regarding constitutionality.                                                                                             
                                                                                                                                
REPRESENTATIVE VAZQUEZ  then asked whether providers  that do not                                                               
accept Medicaid would be required to pay the tax.                                                                               
                                                                                                                                
MR. KOSIN  explained that would  depend on which tax  classes are                                                               
deemed feasible.  The attention at  this time is on nursing homes                                                               
and hospitals,  all of which  are subject to state  rate settings                                                               
and receive  Medicaid.   This question may  be relevant  to other                                                               
categories, however, and the answer  would be yes.  The threshold                                                               
is not whether a provider  is a Medicaid participant, but whether                                                               
a provider is in an identified class.                                                                                           
                                                                                                                                
REPRESENTATIVE   TARR  surmised   there  are   three  categories,                                                               
nonprofit, for-profit, and publically-owned.                                                                                    
                                                                                                                                
MR. KOSIN  explained DHSS distinguishes  between all  three types                                                               
of   entities  regarding   enhanced  Medicaid   payments  because                                                               
hospitals and nursing  homes are subject to  another federal law,                                                               
the upper payment  limit.  The upper payment  limit dictates that                                                               
Medicaid  cannot pay  more than  Medicare  pays for  the same  or                                                               
similar service.   This calculation distinguishes  between state-                                                               
owned and  non-state-owned facilities.   He expressed  doubt that                                                               
the state would assess a  fee against a state-owned facility, but                                                               
the answer is unclear.                                                                                                          
                                                                                                                                
11:52:33 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE TARR asked:                                                                                                      
                                                                                                                                
     Are  you  saying that  the  provider  tax dollars  that                                                                    
     would  be brought  in could  be ...  bundled with  your                                                                    
     state  dollars,  and then  you  know,  because of  your                                                                    
     percentage match,  you would  get more  federal dollars                                                                    
     that way?   Or  are you saying  there's a  mechanism by                                                                    
     which  you participate  in that,  and then  your actual                                                                    
     [federal   medical    assistance   percentage   (FMAP)]                                                                    
     changes?                                                                                                                   
                                                                                                                                
MR. KOSIN answered:                                                                                                             
                                                                                                                                
     ...  you  had  it  right  the first  time.    We  would                                                                    
     obviously generate revenue, and then  it would be up to                                                                    
     the legislature to  figure out - if they wanted  to - a                                                                    
     portion  of that  revenue could  go back  into Medicaid                                                                    
     payments ....   Instead  of somebody  paying a  fee for                                                                    
     service right  now, for a  hospital, we pay on  a daily                                                                    
     basis,  you can  actually pay  an enhanced  payment, on                                                                    
     top of  that, that  just kind of  goes along  with your                                                                    
     daily payment.   That enhanced payment  could be funded                                                                    
     using some of the revenue  you collected from the prior                                                                    
     tax, it  would then  be bundled,  with a  federal match                                                                    
     with Medicaid.   So you had it exactly  right the first                                                                    
     way you said it.                                                                                                           
                                                                                                                                
CHAIR SEATON opined that these will be dedicated taxes.                                                                         
                                                                                                                                
REPRESENTATIVE TARR  surmised that  the provider tax  dollars can                                                               
be  dual  purpose because  they  enhance  the federal  match  and                                                               
provide an opportunity for supplemental payments.                                                                               
                                                                                                                                
MR. KOSIN  said yes,  limiting his response  to drawing  down the                                                               
federal match,  which is  common in other  states.   However, how                                                               
the funding is dedicated is a legislative issue.                                                                                
                                                                                                                                
CHAIR SEATON commented on the complexity of this issue.                                                                         
                                                                                                                                
REPRESENTATIVE VAZQUEZ  asked whether there has  been an estimate                                                               
of the amount of tax that  could be collected from the identified                                                               
classes.                                                                                                                        
                                                                                                                                
MR. KOSIN answered no.                                                                                                          
                                                                                                                                
CHAIR  SEATON informed  the committee  that the  average provider                                                               
tax across  the U.S. is  2 percent, but  it is not  known whether                                                               
said  2  percent  relates  to   all  medical  costs,  or  to  the                                                               
provider's revenue.                                                                                                             
                                                                                                                                
MR. KOSIN  said he  was unaware of  the aforementioned  2 percent                                                               
estimate.   Last year,  the legislature inquired  as to  the safe                                                               
harbor  provision, and  asked for  an  estimate of  6 percent  of                                                               
hospital outpatient revenue.   He warned that  the estimate would                                                               
not reflect what  the tax may generate because  the percentage is                                                               
uncertain.   The key concern  is that the federal  government may                                                               
reduce the safe harbor provision from  6 percent to 3 percent, or                                                               
3.5 percent, and the tax base would  have to be known.  He stated                                                               
that the contractor will have a better answer at a later date.                                                                  
                                                                                                                                
11:58:25 AM                                                                                                                   
                                                                                                                                
BECKY  HULTBERG, President  and  CEO, Alaska  State Hospital  and                                                               
Nursing  Home Association,  acknowledged that  the topic  is very                                                               
complex.  She  pointed out that provider taxes  are almost always                                                               
hospital and nursing  home taxes; in fact,  forty-nine states tax                                                               
hospitals or  nursing homes primarily  as a mechanism  to enhance                                                               
provider payments, even though this  tax can generate revenue for                                                               
the states.   She  clarified that  it is a  tax used  to leverage                                                               
supplemental payments, and the big  question will be what will be                                                               
done with the revenue: What  portion is returned to providers and                                                               
what portion  is kept by the  state?   Ms.  Hultberg relayed that                                                               
whatever tax basis  is selected, the tax will  result in "winners                                                               
and losers."   Some provider groups - such as  ASHNHA - are happy                                                               
about  taxes, and  some are  not, and  she warned  that a  poorly                                                               
conceived  health care  tax could  be a  negative for  the health                                                               
care  industry  and the  state.    Consultants representing  both                                                               
sides need to find consistent data,  so ASHNHA can run its models                                                               
and take  a position.   Further,  Ms. Hultberg  expressed concern                                                               
about the  timeline in early  December for the completion  of the                                                               
contract, given  that the data  for the models is  uncertain, and                                                               
she encouraged DHSS to take the time that is needed.                                                                            
                                                                                                                                
CHAIR  SEATON returned  attention  to incentives  and the  change                                                               
from a  "fee for service  model to a value  model."  He  asked if                                                               
the value  model relates differently to  the tax than does  a fee                                                               
for service model.                                                                                                              
                                                                                                                                
MS. HULTBERG advised that California  has integrated systems, and                                                               
also  has provider  taxes.   As  CMS pays  for care,  it is  also                                                               
looking at provider taxes.                                                                                                      
                                                                                                                                
12:04:31 PM                                                                                                                   
                                                                                                                                
CHAIR SEATON  cautioned against  designing a  tax based  upon fee                                                               
for service.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TARR  asked  whether other  organizations  -  not                                                               
affiliated  with nursing  homes  or hospitals  -  are looking  at                                                               
possible tax classes.                                                                                                           
                                                                                                                                
MS.  HULTBERG  advised  that the  ASHNHA  consultant  is  focused                                                               
primarily on hospitals.                                                                                                         
                                                                                                                                
CHAIR SEATON observed that the  committee's focus is on promoting                                                               
health as a  way to lower health  care cost.  He  said there will                                                               
be  further  discussion,  not  on the  Medicaid  system,  but  on                                                               
practical initiatives  to have  a healthier  population resulting                                                               
in fewer costs to the Medicaid  system.  He directed attention to                                                               
an additional  document found in  the committee  packet entitled,                                                               
"Reducing Negative Health Outcomes  Through Prevention" and dated                                                               
10/8/15.  Both  documents will be posted on the  House Health and                                                               
Social Services Standing Committee website.                                                                                     
                                                                                                                                
REPRESENTATIVE  TALERICO  announced  a presentation  regarding  a                                                               
safety message used in the private  sector to avoid injury at the                                                               
workplace.                                                                                                                      
                                                                                                                                
CHAIR SEATON  solicited other initiatives  to save costs,  not by                                                               
restricting access to health care, but by reducing the need.                                                                    
                                                                                                                                
12:09:56 PM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Health  and  Social  Services   Standing  Committee  meeting  was                                                               
adjourned at 12:09 p.m.                                                                                                         

Document Name Date/Time Subjects
NCSL AK Team Report Innovations in Health Care Payment and Delivery_Presentation.pdf HHSS 10/27/2015 10:00:00 AM
Medicaid Reform: Project Updates
NCSL AK Team Report State Strategies to Improve Helath System Performance.pdf HHSS 10/27/2015 10:00:00 AM
Medicaid Reform: Project Updates
Medicaid Redesign_Potential Expansion Model+Initiatives_Overview_Draft_Oct 1.pdf HHSS 10/27/2015 10:00:00 AM
Medicaid Reform: Project Updates
Medicaid Redesign_October 21st Web presentation_DHSS & Agnew-Beck.pdf HHSS 10/27/2015 10:00:00 AM
Medicaid Reform: Project Updates
Provider Tax Feasibility_Stakeholder meeting_Cover page_Oct 2.pdf HHSS 10/27/2015 10:00:00 AM
Medicaid Reform: Project Updates
House HSS Medicaid Redesign Update_DHSS_10-27-15.pdf HHSS 10/27/2015 10:00:00 AM
Medicaid Reform: Project Updates