Legislature(2015 - 2016)CAPITOL 106
10/27/2015 10:00 AM House HEALTH & SOCIAL SERVICES
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Medicaid Redesign and the Provider Tax | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE HEALTH 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 |