Legislature(2017 - 2018)CAPITOL 106
05/11/2017 03:00 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Becky Hultberg, Ak State Hospital & Nursing Home Assoc. | |
| Presentation: Gina Bosnakis, Bosnakis & Associates, and Jeff Ranff, Ak Assoc. of Health Underwriters | |
| Presentation: Tom Chard, Alaska Behavioral Health Assoc. | |
| Presentation: Kyle Mirka, Alaskans for Sustainable Healthcare Costs Member | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
JOINT MEETING
HOUSE STATE AFFAIRS STANDING COMMITTEE
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE
May 11, 2017
3:08 p.m.
MEMBERS PRESENT
HOUSE STATE AFFAIRS STANDING COMMITTEE
Representative Jonathan Kreiss-Tomkins, Chair
Representative Adam Wool
Representative Chris Birch
Representative DeLena Johnson
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE
Representative Ivy Spohnholz, Chair
Representative Sam Kito
Representative Geran Tarr
Representative David Eastman
Representative Jennifer Johnston
Representative Colleen Sullivan-Leonard
Representative Dan Saddler (alternate)
MEMBERS ABSENT
HOUSE STATE AFFAIRS STANDING COMMITTEE
Representative Gabrielle LeDoux, Vice Chair
Representative Chris Tuck
Representative Gary Knopp
Representative Andy Josephson (alternate)
Representative Chuck Kopp (alternate)
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE
Representative Bryce Edgmon, Vice Chair
Representative Matt Claman (alternate)
OTHER LEGISLATORS PRESENT
Representative Harriet Drummond
COMMITTEE CALENDAR
PRESENTATION: ALASKA STATE HOSPITAL & NURSING HOME ASSOCIATION
- HEARD
PRESENTATION: BOSNAKIS & ASSOCIATES AND ALASKA ASSOCIATION OF
HEALTH UNDERWRITERS
- HEARD
PRESENTATION: ALASKA BEHAVIORAL HEALTH ASSOCIATION
- HEARD
PRESENTATION: ALASKANS FOR SUSTAINABLE HEALTHCARE COSTS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BECKY HULTBERG, President/CEO
Alaska State Hospital and Nursing Home Association (ASHNHA)
Juneau, Alaska
POSITION STATEMENT: Presented an overview of the Alaska State
Hospital and Nursing Home Association.
GINA BOSNAKIS
Gina Bosnakis and Associates
Anchorage, Alaska
POSITION STATEMENT: Presented an overview of the Alaska
Association of Health Underwriters.
JEFF RANF, Member
Alaska Association of Health Underwriters
Anchorage, Alaska
POSITION STATEMENT: Testified during discussions regarding
medical cost transparency.
TOM CHARD, Executive Director
Alaska Behavioral Health Association
Juneau, Alaska
POSITION STATEMENT: Presented a PowerPoint overview about
sustainable health care costs.
KYLE MIRKA
Alaskans for Sustainable Healthcare Costs Coalition
Anchorage, Alaska
POSITION STATEMENT: Presented a PowerPoint overview of the
Alaskans for Sustainable Healthcare Costs.
ACTION NARRATIVE
3:08:31 PM
CHAIR JONATHAN KREISS-TOMKINS called the joint meeting of the
House State Affairs Standing Committee and the House Health and
Social Services Standing Committee to order at 3:08 p.m.
Representatives Wool, Birch, Johnson, Kreiss-Tomkins, Eastman,
Saddler (alternate), Johnston, Sullivan-Leonard, Tarr, Kito, and
Spohnholz were present at the call to order. Also in attendance
was Representative Harriet Drummond.
CHAIR SPOHNHOLZ said that she and Chair Kreiss-Tomkins had been
in discussion regarding ways to address the cost and price of
health care in the state, as the state paid for the health care
of its employees and retirees. She added that the state also
had to manage the Medicare and Medicaid budgets. She pointed
out that the State of Alaska had health care costs which
exceeded those in the Lower 48. She stated that they wanted to
expand the conversation and get some facts and information out
regarding health care price transparency.
^PRESENTATION: BECKY HULTBERG, AK STATE HOSPITAL & NURSING HOME
ASSOC.
PRESENTATION: BECKY HULTBERG, AK STATE HOSPITAL & NURSING HOME
ASSOC.
3:14:38 PM
CHAIR KREISS-TOMKINS announced that the first order of business
would be a presentation by Becky Hultberg, Alaska State Hospital
and Nursing Home Association.
3:14:46 PM
BECKY HULTBERG, President/CEO, Alaska State Hospital and Nursing
Home Association (ASHNHA), reported that the Alaska State
Hospital and Nursing Home Association was the member
organization for the hospitals and skilled nurses' facilities in
Alaska, which included the community hospitals, emergency rooms,
and nursing homes. ASHNHA treated the underserved and
marginalized, those with insurance and those without insurance.
She emphasized that it was critically important to recognize
that behind the dollars were real people with real lives. She
stated that when talking about hospitals it was easy to only
think about the large centers in larger areas, but it was
important to remember the small, unaffiliated hospitals that
operated on very thin margins and were having difficulty with
growing costs and falling revenue. She explained that the
reimbursement environment was becoming more challenging, as
hospitals take all patients regardless of the ability to pay.
She pointed out that a high percentage of the payer mix was
government, specifically Medicare and Medicaid, which already
reimbursed less than the cost of care, and with a 5 percent
Medicaid reduction starting on July 1, 2017. She declared that
there was unprecedented uncertainty at the state and federal
level, as the American Health Care Act would force a reduction
of almost $1.5 billion in Medicaid reimbursement on Alaska
hospitals, as well as an additional $500 million for treating
the uninsured over the next ten years. She pointed to the
current fiscal challenges. She expressed caution for simple
answers to very complex problems, as cultural, economic, and
structural reasons influenced the health care market, different
than normal markets. She pointed out that if this was an easy
problem to solve, there would not be "this vigorous national
debate." She reported that there were ten different factors
affecting health care costs. She directed attention to employer
sponsored health care and the tax treatment of health care,
noting that people get tax breaks for buying health insurance,
which incentivizes benefit plans that drive costs up. She
reported that most people with insurance got it through their
jobs and the amount that employers paid for coverage was tax
deductible for the company and tax exempt for the worker. This
encouraged more expensive health plans with richer benefits, as
these rich plans meant higher utilization of services and higher
costs. She moved on to third party payment, which incentivized
people to consume more care than otherwise needed. She said
that, as low deductibles or small co-payments encouraged people
to use health care at a higher rate, driving up costs, many
private sector employers were moving toward high deductible
coverage to align incentives and slow premium growth. She moved
on to the fee for service system, which rewarded the volume of
procedures, doing more instead of being efficient, and
incentivized over-treatment. She stated that, as most insurers,
including Medicare, paid providers separately for each task,
service, or treatment, the volume of service instead of outcomes
was incentivized. In this fee for service system, the economic
incentives to providers and payers were not aligned. She stated
another factor, the high cost of prescription drugs from federal
policies which constrained normal market forces, as prescription
drugs were often one of the fastest growing components of a
health plan. She noted that this was one aspect of the health
insurance system that could be addressed through smart, market-
based reform. She reported that the high use of new medical
technology, new drugs, and new services in the United States
comes at a high cost as they often cost more than what was
replaced. She emphasized that the United States had higher
provider rates than other industrialized, more heavily regulated
countries, even though generalizations about rates were
difficult and it did not capture the complexity. She reported
that an aging population needed more medical care and the
overall costs were rising. She relayed that the unhealthy
lifestyles in the US, which led to high rates of obesity and
chronic conditions, forced higher payment by everyone. She
pointed to high administrative costs, which included the costs
of insurance, billing, processing, regulations, and insurance
broker fees. She offered an example of the 21,582 pages of
hospital guidance from the Centers of Medicare and Medicaid
Services. She emphasized that the industry was already
overregulated at all levels, with more local and federal
proposals poised to add to this. She declared that "regulation
equals cost." She shared that culture and expectations of
health care made the system more expensive, as we expected to
not have to wait, even as waiting lists were not uncommon in
other countries. She reported that much of our health care
expense came in the last month of life, and that too often
interventions added to suffering and only prolonged life at a
terrible cost. She declared that these were hard issues, and
that she was not making any value judgements. However, she
pointed out that some of the cost discussion was related to
significant ethical and deeply personal components that had to
be acknowledged. She pointed out that these societal choices
had an impact on health care costs. She stated that providers
had "to be at the table as true partners" for any discussions
regarding growing health care costs while maintaining access to
critical health care services. She reported that the factors
were much more complex than merely pointing fingers at providers
for health care costs and were driven by systems and decisions
not often thought about and possibly taken for granted. She
declared that the question would be for whether the public was
willing to listen, to do the work, to have the difficult
conversations, and to engage in the shared sacrifice that would
be necessary for reform. She stated that this would require
spending the time learning and then having real conversations,
with a commitment to deep and long-term engagement. She shared
her realization, after a long career in health care, that this
was a huge challenge. She pointed out that hospitals were the
community safety net, with thousands of dedicated employees who
spent their careers helping things go right. She emphasized
that, although health care reform was hard, complex, and
required sacrifice, it was the most important thing to do and
was worth the commitment.
3:25:36 PM
CHAIR KREISS-TOMKINS expressed his support to ensure that
providers had a voice in the health care discussions.
3:26:37 PM
REPRESENTATIVE JOHNSTON acknowledged that the public sector had
driven up a lot of the health care costs. She directed
attention to the increased use of the emergency rooms since
Medicaid expansion and asked if that was the case in Alaska.
MS. HULTBERG replied that there was not enough recent data,
although there was an emergency room project being undertaken to
tie the emergency rooms together through an electronic
information exchange system. This would provide a better care
linkage to providers in the community and was based on the seven
best practices developed in the State of Washington. She
reported that this program saw Medicaid visits drop by about 10
percent in Washington. She acknowledged that a challenge from
Medicaid expansion had been that this initial access to care had
instituted an increase for use of the emergency rooms, even as
this was not always the appropriate place. She added that the
hospitals were trying to address this at the front end.
REPRESENTATIVE JOHNSTON asked about the drop in uncompensated
care in emergency rooms prior to Medicaid expansion.
MS. HULTBERG replied that the anecdotal reasons were for an
increase to the numbers of people newly insured on the
individual market through the health exchange.
3:29:48 PM
REPRESENTATIVE TARR stated that Ms. Hultberg was making a case
for a single payer [insurance program]. She referenced the tax
breaks which encouraged higher spending and lower deductibles
which encouraged more use and asked how those behaviors were
substantiated.
MS. HULTBERG offered to provide direction toward some economic
studies which demonstrated evidence to support the correlation
with these two factors as a part of the growing cost escalation
in health care. She explained the origin of employer-based
health care as being post-World War II when wage controls had
prevented any raise in wages, so health care benefits were
offered.
REPRESENTATIVE TARR asked if there was any conversation
regarding the current federally prohibited deductibles on
Medicaid.
MS. HULTBERG reported that the new Centers for Medicare and
Medicaid Services administrator was the architect of the
"Healthy Indiana Plan," which "pushed the envelope" in terms of
Medicaid plans by creating health savings accounts. She offered
her belief that there could be an increase of incentives to
apply these principles to the Medicaid population. She stated
that, however, this was a challenge because this population had
few resources and it was necessary to ensure access to care.
3:32:15 PM
CHAIR KREISS-TOMKINS asked about market-based reforms to contain
the cost increases for pharmaceutical drugs.
MS. HULTBERG said that a few key elements included allowing
Medicare to negotiate drug prices just as they set health care
rates. She pointed out how long it took to get patent
protections and how long those patent protections lasted. She
spoke about the "orphan" drugs which were developed for very
targeted conditions, hence were not economic to develop. Even
so, these orphan drugs could be used for "a whole host of other
things where there's a large population" even though these
orphan drugs had very long patent protections. She opined that
these and other smart market-based reforms could have an impact
on drug costs.
3:33:33 PM
CHAIR SPOHNHOLZ asked about strategies regarding the high use of
new medical technology, even as research often showed this was
not the best practice, and about the impact of unhealthy
lifestyles on health care.
MS. HULTBERG replied that it was a difficult and complex
question for how to get people to take better care of
themselves. She opined that it was necessary to not let medical
technology proliferate as it had, as this use was going to be
covered and would continue to drive the cost upward. She
offered her belief that the bigger message was for a way to
align the incentives for providers, to do more stuff to more
people, with payers, to receive high quality and low-cost care.
She stated that the incentive should be for the objective and
not for the revenue.
CHAIR SPOHNHOLZ observed that a realignment of compensation
would resolve many problems. She asked if there should be more
proactive compensation for nutritionists and personal trainers
to offer support for a healthy lifestyle.
MS. HULTBERG reported that discussions with primary care
physicians indicated that many chronic conditions were caused by
lifestyle factors and were very challenging to manage. She
suggested that it was not a good use of time for a primary care
physician to be the nutritional counselor or the social worker.
She declared that it was possible for a primary care-based
system to have reimbursement payment for all these professional
services.
3:38:33 PM]
REPRESENTATIVE WOOL asked the reason behind her statement that
more people having insurance and more people using health care
would make things more expensive.
MS. HULTBERG explained that in a system where the patient was
not responsible for the overall cost of the service, they would
utilize services at a higher rate. She said that the question
was for how to manage that utilization so that health care
resources were being appropriately and necessarily used. She
pointed to an economic function that people consume more when
something does not cost much. She asked how that could be
managed to avoid unnecessary utilization and emphasized that
Alaska State Hospital and Nursing Home Association advocated for
access to coverage.
REPRESENTATIVE WOOL asked at what point something was determined
to not be new technology, and if so, why was it still so
expensive. He offered an example of an MRI, and asked why that
was still so expensive, even though this was not new technology.
He asked if this was partially due to a fee for service
structure.
MS. HULTBERG opined that the fee for service system did play a
role in the proliferation and cost of these services, although
it was most likely not the only cause. She stated that "we have
a very advanced medical system, we have the latest technology,
people come to the United States from all over the world because
of the technology advances that we've made in our health care
system." She declared, "that is a good thing" because those
advances were lifesaving, although they had a very high cost.
She opined that it was necessary to recognize and understand
that the technology advances that brought dramatic improvement
in health also cost a lot of money. She added that it was
necessary to use the most effective and lowest cost technology
possible.
MS. HULTBERG, in response, said that there were always new
advances in technologies and she pointed to the increased use of
specific technologies in the United States compared to the rest
of the world.
3:42:40 PM
REPRESENTATIVE SULLIVAN-LEONARD asked for feedback from those
discussions with the Alaska congressional delegation regarding
any changes to the Patient Protection and Affordable Care Act.
MS. HULTBERG reported that the two Alaska Senators were "in a
listen and learn mode" and that their respective staff were
researching any effects on Alaska.
3:44:50 PM
REPRESENTATIVE BIRCH offered his belief that "you can't really
manage what you can't measure." He shared some figures from a
report in the Anchorage newspaper for the profits by Providence
Alaska Medical Center last year. He asked if she had any
reports for gross dollars billed, write-offs against that, and
then the actual cost of delivery.
MS. HULTBERG said that she did not have any hospital by hospital
data and suggested that he review the Medicare cost reports,
even though these were "pretty complex to interpret." She
declared that measurement was difficult in health care because
different systems counted different things in different ways.
She acknowledged that this information would be helpful,
although it was difficult to find. She stated that hospital
costs were one piece in the overall spend for health care,
cautioning that the numbers from one hospital did not
necessarily translate to the entire industry.
REPRESENTATIVE BIRCH reflected on an education environment with
average dollars per student as a measure and asked if this
compared to a similar metric for healthcare.
3:49:01 PM
REPRESENTATIVE SADDLER asked about any effect of the
philosophical or legal background for which health care was
provided, and if this affected pricing. He listed various views
of health care in the United States: a service available for a
fee; a hybrid social and business obligation; a moral obligation
with profit being reprehensible; and a basic human right that
government should do what it can to provide. He asked about the
philosophical expectation behind health care pricing and the
business model.
MS. HULTBERG replied that he had "hit on one of the factors that
makes health care unique, and not like a normal market." She
said that opinions were different. She stated that, at a macro
level, we want healthcare to function as a normal market
economic system. She reported that the Emergency Medical
Treatment & Labor Act (EMTALA) ensured that everyone had access
to care through an emergency room. She stated that these issues
had not yet been addressed from a cultural standpoint. She
declared that there was both a moral and a market aspect,
emphasizing that health care was a complex conversation about
economics as well as an ethical, moral discussion about personal
care.
REPRESENTATIVE SADDLER asked if it was necessary to make that
decision before making decisions about a price system to address
these expectations.
MS. HULTBERG said that there were still things to make the
system function more efficiently and effectively within the
construct of the current framework. She said, to a certain
degree, the determinations for health care as a right or as a
market were going to be made at the federal level. She declared
that the state could think about a better way to align
incentives, manage care, and target areas with high costs from
end of life care and chronic conditions.
3:53:22 PM
REPRESENTATIVE JOHNSON asked which targeted reforms would curb
Medicaid fraud and abuse.
MS. HULTBERG opined that although there were some high-profile
examples of Medicaid fraud, she did not believe that Medicaid
fraud would "move the needle that much on cost." She suggested
to target high risk providers. She said that, although there
was not a lot of Medicaid fraud in the hospital world, the
compliance burden and the cost burden to survive the many audits
and to ensure the appropriate reporting was huge. She was not
sure that the balance had been struck, and she questioned that
an increase of audits would "find a lot more money in our
Medicaid program." She reported that additional layering of
regulatory systems would only add cost to the providers, so
instead it would be more beneficial to do a better job of
targeting.
REPRESENTATIVE JOHNSON asked how to define the fine line for
over-use or over-prescribing instead of actual fraud.
MS. HULTBERG offered her belief that it was necessary for payers
and providers to work together to align incentives to change the
economic model. She stated that high quality, reasonable cost
care was the end goal for both groups in the economic system.
She added that utilization reviews were another strategy to
pursue.
^PRESENTATION: GINA BOSNAKIS, BOSNAKIS & ASSOCIATES, AND JEFF
RANFF, AK ASSOC. OF HEALTH UNDERWRITERS
PRESENTATION: GINA BOSNAKIS, BOSNAKIS & ASSOCIATES, AND JEFF
RANFF, AK ASSOC. OF HEALTH UNDERWRITERS
3:57:03 PM
CHAIR KREISS-TOMKINS announced that the next order of business
would be a presentation by Bosnakis and Associates.
3:57:39 PM
GINA BOSNAKIS, Gina Bosnakis and Associates, reported that she
had a small employee benefits firm. She said that she worked
with employers for the best fit for their health insurance needs
and budgets and that she worked daily with employees. She said
that employers were paying on average over $14,000 annually per
employee. She reported that when a surgeon or facility was out
of network, the employee would have to pay more than the
anticipated 20 percent. She declared that insurance technology
was very confusing. She reported that an out of network
provider cost the employee a deductible plus 40 - 60 percent or
more, versus the 20 percent owed if they were in network, as
well as any charges that were considered over reasonable. She
declared that transparency would be a good step in the right
direction to better allow patients to determine the cost ahead
of time. She said that it was necessary to obtain the procedure
code and the names of all the providers for a patient to
determine the cost. She said that a lot of factors contributed
to having the highest health care costs in the country, so that
anything which could assist Alaskans to lower those costs was
positive. She offered an example of the cost for a total hip
replacement in Anchorage, $23,200, whereas in Seattle, the same
procedure was $11,700. She acknowledged that, although the
industry was heavily regulated, transparency would be a big help
for patients.
4:01:20 PM
JEFF RANF, Member, Alaska Association of Health Underwriters,
stated that many Alaska medical providers simply did not have to
be transparent, and often found reasons for not being required
to post their price data for consumers. He declared that every
other industry produced cost data prior to work and services
being performed and that it was time for the Alaska medical
industry to come into line with the rest of the country. He
emphasized that he was not implying that this was a simple
problem with simple solutions, but instead that it was a
complicated, decades old issue. If this was easy, it would have
been addressed and resolved long ago. He stated that it was
imperative to address why medical cost transparency was so
important as it focused on the consumer, not on the insurer. He
pointed out that it was the consumer who paid the bill balance
beyond the insurance coverage because the provider did not offer
full disclosure and the insurance company was not clear for the
coverages. He pointed out that the providers were not required
to be contracted with the insurance companies, so the consumer
needed to be educated to the workings of the system. He noted
that the providers did not readily provide a cost sheet to the
consumer. He reported that, in Alaska, as many providers did
not agree with the reimbursement schedule from the insurance
company and then did not contract with them, the consumer ended
up paying. He offered the question for whether medical
transparency would control costs. He declared that cost was a
separate issue and that only specific legislation to address
pricing would ultimately control cost. He reported that many
states had that legislation, which was often referred to as
managed care. He added that transparency, as a pro-active first
step in understanding medical pricing, placed the consumer in a
more traditional consumer role to receive care and services and
agree with the provider and insurer for the share of the cost.
He identified this transaction as being more open for the
consumer. He expressed his "sincere desire" that the state
enact legislation for how to best protect the consumer. He
expressed his agreement with Ms. Hultberg that physicians and
provider groups needed to be at the table to resolve this
problem in the current free market system.
4:06:54 PM
REPRESENTATIVE SULLIVAN-LEONARD asked why a hip replacement in
Anchorage was so much more expensive than this same procedure in
Seattle.
MS. BOSNAKIS stated that there were many reasons, and she
offered her belief that the biggest culprit in the cost of care
in Alaska versus the rest of the United States was the
regulation through the Division of Insurance called the "80th
percentile." She said that it was complicated but that it meant
that 8 out of 10 submissions with the same procedure code in a
region would determine the usual and customary charges.
However, if there was only one specialist in a more remote area,
they would set their own charges, and the insurance companies
would have to pay that rate. She said that this would "not be
dealt with easily."
4:08:57 PM
REPRESENTATIVE WOOL referenced a study which indicated that the
United States was the only developed country without price
controls on health care. He asked why a CT scan was so
expensive when the technology had been around for a long time
and was used all over the world.
MR. RANF, in response, stated that there was not any price
control in Alaska as there was not any managed care legislation.
He offered his belief that managed care was not legal in Alaska.
He explained that groups of physicians or providers could not
come together to form a collective to provide services and
negotiate the prices with the claims payers. Consequently, the
80th percentile tended to drive up the prices as physicians
could raise their fees and the price increases would go up
unabated with no upper limit. He pointed out that in the State
of Washington, there was regulation which did not allow prices
to go up unabated, and there was an upper limit.
4:11:34 PM
CHAIR SPOHNHOLZ asked for further explanation to his statement
that managed care was not legal in the State of Alaska.
MR. RANF offered his belief that legislation had been passed
several decades ago and that people had reported that it was not
legal for provider groups to come together and negotiate pricing
with the claims payers. He offered to research a more in-depth
response.
4:13:01 PM
CHAIR KREISS-TOMKINS asked if the passage of the Anchorage
municipal ordinance on price transparency had resulted in any
changes to pricing or market behavior.
MS. BOSNAKIS replied that, as this was recent legislation, it
was too early to determine any effects. She offered her belief
that it would take at least a year and reported that this
municipal ordinance had "a much heavier hand than anything that
we've looked at on a state level." She declared that this
transparency for procedure codes and the names of the providers
was the only way to "step into this easily."
MR. RANF stated that this had been discussed at the association
level and there was currently not any indication for market
change. He expressed agreement that "time is going to tell"
although he opined that there could be "a fair amount of
pushback from the provider community." He stated that the
consumer had to oversee the decisions for their health care,
which he opined was currently very difficult for the everyday
consumer.
4:15:39 PM
REPRESENTATIVE SADDLER asked about the effect of the certificate
of need requirement for high cost medical technology and health
care services.
MR. RANF replied that the certificate of need was a
controversial statute. He offered his belief that it had
virtually no effect on provider groups applying and receiving
approval, and he offered an example from Montana which had
determined that this was driving up costs. He offered his
belief that it had not done anything to control costs.
^PRESENTATION: TOM CHARD, ALASKA BEHAVIORAL HEALTH ASSOC.
PRESENTATION: TOM CHARD, ALASKA BEHAVIORAL HEALTH ASSOC.
4:17:34 PM
CHAIR KREISS-TOMKINS announced that the final order of business
would be a PowerPoint presentation about sustainable health care
costs.
4:18:17 PM
TOM CHARD, Executive Director, Alaska Behavioral Health
Association, explained that the Alaska Behavioral Health
Association was a member driven non-profit for mental health and
substance abuse treatment providers in Alaska. He pointed out
that, on slide 2, that there were many different types of
behavioral health provider services in Alaska. He referenced
Senate Bill 74, which made the private for-profit providers much
more able to provide behavioral health services, and to
hopefully be able to bill Medicaid for these services. He
pointed out that the prison system, the school classrooms,
homeless shelters, foster families, law enforcement and domestic
violence shelters were also behavioral health providers. He
reported that much of the behavioral health budget cut savings
in the Department of Health and Social Services budget
subsequently "show up [as expenses] in Corrections or Education
or other places." He shared that there was a membership survey
in 2015, prior to Medicaid expansion, to get a "rough check on
what was going on." He noted that at that time Medicaid
comprised about 50 percent of revenue for its member providers,
grants comprised about 20 percent, and private pay comprised
about 15 percent, along with a myriad of other revenue sources.
After Medicaid expansion, the portion of Medicaid revenue had
grown while the grants were shrinking. He pointed out that a
provider that had multiple sources of revenue also had multiple
reporting and system requirements.
4:22:05 PM
MR. CHARD shared a brief breakdown of expenses for behavioral
health providers in the state, noting that wages and benefits
were the two highest cost drivers. He reported that these had
grown to about 75 percent, even though they did not have any
fancy new technology. He said that this cost was for counselors
and clinicians providing the service. He reported that this
sampling found that, in 2015, 20 percent of the organizations
were operating in the red and that 70 percent of the providers
were in the red during a $100,000 pay cycle, which he declared a
crisis level. He expressed his shock and referenced the report
findings of an independent consultant hired by the Division of
Behavioral Health, which concluded that more than 75 percent had
fiscal health which was vulnerable and at-risk and were running
operating deficits. He noted that this was still the current
state of the behavioral health provider system. He added that
part of the problem was a need for reimbursement rates to be
increased, and although Medicaid expansion saved the state a lot
of money, the reimbursement rate to providers did not cover the
cost of care. He offered the belief that an investment in
behavioral health services would reflect a cost savings across
the budget. He encouraged the committee to consider this
problem from a provider and a patient perspective, asking what
the main cost drivers were. He declared that promoting earlier
intervention, group and family engagement, and holistic health
care were all general points. He pointed to the 11 efficiencies
to reduce the administrative burden which had been studied in a
joint investigation with the department and the providers. He
added that reductions of uncertainty and support of work force
development initiatives were important, as well as examination
of appropriate scopes of practice by practitioners. He declared
that removal of the Federal Institute for Mental Disease
exclusion would also help, and examination of the Alaska Health
Care Authority opportunity to include State of Alaska grantees
would help bring down the costs.
^PRESENTATION: KYLE MIRKA, ALASKANS FOR SUSTAINABLE HEALTHCARE
COSTS MEMBER
PRESENTATION: KYLE MIRKA, ALASKANS FOR SUSTAINABLE HEALTHCARE
COSTS MEMBER
4:28:34 PM
KYLE MIRKA, Alaskans for Sustainable Healthcare Costs Coalition,
directed attention to slide 2, and stated that the coalition
consisted of employers concerned with the current health care
environment in Alaska and was working with Alaskans to
understand and find solutions about the drivers affecting rising
health care costs. He stated that Alaska had the highest
healthcare costs in the United States, which continued to rise
faster than anywhere else. He noted that employers paid most of
the cost burden, even though they did not have the cohesive
platform to address this increasing strain on the bottom line.
He moved on to slide 3, sharing that the coalition was striving
to educate employers and break down the barriers of individual
businesses while discussing the issues affecting all of them.
He shared a desire for an influence over the 80th percentile
rule, which he recognized as a main driver for the skyrocketing
increase of health care costs in Alaska. He directed attention
to slide 4 and listed a few facts, which included that Alaska
had the highest cost of health care in the United States, and
the medical consumer price index reflected a 4 percent increase
annually in Anchorage compared to a 2.2 percent increase in
Seattle. He declared that cost transparency was critical in
Alaska. He stated that remote locations, small populations, and
the high cost of certain goods and services were not enough
reason for these high costs. He reported that the cost of
medical professional services in Alaska averaged 400 percent of
the Medicare reimbursement rate, which had already been adjusted
to the state. He declared that the 80th percentile regulations
which set the usual and customary rates contributed a 3 - 5
percent annual inflation to the cost of health care services.
He addressed slide 5, which outlined some of the specific
stories and the significant issues with health care. He pointed
to slide 6, which called attention to the fact that these cost
drivers were affecting everyone, whether it was retail,
nonprofit, or construction. He said that slide 7 showed two
interesting newspaper articles about the cost of health care,
and that slide 8 showed that costs were going up, and employees
out of pocket expenses were increasing. He spoke about medical
tourism, a great thing for the state as it offered substantial
savings for out-of-state travel, although leaving the state
could be a challenge. He expressed a desire to, instead, get
the in-state costs under control. He moved on to slide 9 and
slide number 10, which listed medivac as a very expensive
service and would require state assistance to reduce those air
ambulance costs. He read from slide 11 and spoke about the
adverse impact of the 80th percentile on the employer premiums.
He declared that this was now a consumer penalty as providers
could raise their fees at will. He addressed the last slide and
offered his belief that transparency would empower the consumer
to shop around and make informed decisions on healthcare.
4:36:57 PM
REPRESENTATIVE JOHNSTON expressed her agreement that the 80th
Percentile was driving up the healthcare cost, suggesting that a
state agency set the price instead.
MR. MIRKA, in response, said that he would be encouraged by this
approach. He expressed his desire that the market would allow
the setting of the price, but that the 80th percentile went
against this as it allowed providers to charge whatever they
liked. He opined that a maximum allowable charge would be "a
path towards getting costs under control."
4:38:48 PM
REPRESENTATIVE TARR asked for his reaction to the changes and
proposals in Washington D.C., specifically to block grant
programs.
MR. MIRKA acknowledged that he had been following this, although
there were so many unknowns. He reiterated that the State of
Alaska had a very unique problem, and he did not believe that
the Patient Protection and Affordable Care Act was responsible
for these rising health care costs. He opined that the
conversations in Washington D.C. would not have a significant
impact on what Alaska was already experiencing.
4:40:45 PM
CHAIR KREISS-TOMKINS asked that he speak to the medivac cost in
Alaska and what Montana had done to control those costs.
MR. MIRKA declared that medivac was more expensive in Alaska
than other locations and it would be preferable to have it
subject to state regulations instead of federal regulations.
4:41:59 PM
CHAIR SPOHNHOLZ asked for examples to an earlier comment that
investments in behavioral health care would reduce overall
healthcare cost.
4:42:25 PM
MR. CHARD replied that emergency departments were flooded by
people with undiagnosed and untreated mental health and
substance abuse issues. He pointed out that a lot of this
emergency room work was case management and social work in a
very expensive setting. He offered his belief that investments
in community behavioral health in a less restrictive environment
was "far cheaper and would keep the emergency departments and
some of the higher acute settings from having to work on these
cases." He pointed out that the professionals in these settings
were more expensive.
CHAIR SPOHNHOLZ offered her belief that this might tie in well
with the emergency department data base system that Alaska State
Hospital and Nursing Home Association was currently piloting.
MR. CHARD added that the Alaska Behavioral Health Association
had just started talks with Alaska State Hospital and Nursing
Home Association to ensure that the primary care provider for an
individual had contact information included in the database.
4:44:46 PM
REPRESENTATIVE WOOL asked Mr. Mirka about the difference in cost
for rotator cuff surgery, $87,000 in Anchorage and $17,000 in
Seattle. He asked if the price controls in the State of
Washington were strong, and whether other states had similar
controls.
MR. MIRKA offered his belief that, although the general
percentage of cost differentials for services and procedures did
vary, the primary driver for these cost differentials was the
80th percentile rule.
4:46:29 PM
REPRESENTATIVE BIRCH mused about the obligations for day surgery
facilities on whether to accept emergency care patients and
asked how this obligation was distinguished.
4:47:35 PM
MS. HULTBERG replied that it had to do with the Emergency
Medical Treatment and Labor Act, a federal statute which
determined that when you operated an emergency room or hospital,
you had to treat people through that setting regardless of their
ability to pay. She added that this federal statute was
predicated on licensing and whether Medicare and Medicaid were
accepted.
4:48:35 PM
REPRESENTATIVE SADDLER asked about the Alaskans for Sustainable
Healthcare Costs Coalition membership, and the legal obligation
of Medicare and Medicaid to cover behavioral health.
4:49:08 PM
MR. MIRKA reported that the coalition had no discrimination for
its membership and that many members would come on a periodic
basis.
REPRESENTATIVE SADDLER noted that there were not any members
listed on the coalition website.
4:49:44 PM
REPRESENTATIVE JOHNSON expressed her appreciation for the
representation from private industry, as health care costs had a
significant impact on them.
4:50:40 PM
REPRESENTATIVE SADDLER repeated his question for the membership
of Alaskans for Sustainable Healthcare Costs Coalition.
4:51:04 PM
MR. MIRKA listed his two businesses in Anchorage, as well as
Denali Federal Credit Union, Northwest Auto, and Valley Concrete
as members.
4:51:51 PM
REPRESENTATIVE JOHNSTON reflected that mental health support was
grant and private insurance based prior to Medicaid expansion.
She asked for an estimate to the administrative cost of making
this transition to Medicaid based compared to the previously
grant based costs. She expressed her concern for the outcome
should this become "unraveled."
4:52:45 PM
MR. CHARD explained that his association membership included
mental health and substance abuse treatment providers. He said
that the mental health treatment providers had were primarily
been grant based and had already made the transition to
Medicaid, whereas the substance abuse treatment providers were
now making the transition. He acknowledged that the substance
abuse treatment providers had a large challenge and were hiring
"extra back office folks to do the Medicaid billing and
compliance." He added that different quality assurance programs
were being put in place to meet the Medicaid standards. He
added that it was necessary to review the mission of the clinic,
as Medicaid had a medical necessity framework. He pointed out
that many of the substance abuse providers had a holistic care
approach, which was sometimes "hard to fit into that medical
necessity box." He said the cost to transition depended heavily
on the current capacity as well as the anticipated volume.
REPRESENTATIVE JOHNSTON said that this should be followed as it
would become part of the policy discussion.
4:55:32 PM
REPRESENTATIVE WOOL referenced an earlier comment that Medicaid
expansion was causing some to lose more money as it did not
suitably reimburse many businesses. He noted that people
released from prison were now eligible for Medicaid expansion
and behavioral health counseling. He asked for verification
that more use of this service created greater loss and whether
this was a result of the 80th percentile regulation. He asked
for an update to "the 16-bed situation."
4:56:25 PM
MR. CHARD replied that Medicaid offered an array of services,
and he offered an example of the cost to make a pizza and the
maximum that could be charged, which was less than the cost to
make the pizza. He noted that the Department of Health and
Social Services was very aware of the potential increase in use
and was working to correct the issue. He stated that the
Institute of Mental Deficiency was a throwback to the 1960s when
the Social Security Act first created the Medicaid program. As
they did not want to build community hospitals, the number of
beds had been capped at 16 beds. With Medicaid expansion, large
substance abuse providers not previously under that rule were
not able to bill Medicaid. He said that the congressional
delegation was working to correct this problem.
4:58:04 PM
REPRESENTATIVE SADDLER asked about the legal underpinning for
coverage to behavioral health under Medicaid, and whether this
expansion would bring prosperity to the behavioral health
community.
MR. CHARD acknowledged that, although there were a few growing
pains that needed to be fixed, more people were getting the
necessary treatment, and that was a good thing. He expressed
agreement that the Patient Protection and Affordable Care Act
"double down on some parity legislation that was previous to it"
as the act had made mental health and substance abuse treatment
services part of the essential health benefits package which
required that both Medicaid and private insurance programs have
those services as part of the minimum plan. He noted that there
had been congressional discussions for the Patient Protection
and Affordable Care Act which questioned whether mental health
and substance abuse should be part of the minimum plans, and he
offered his understanding that states would have the option to
waive those requirements. He stated his belief that this "would
a bad thing for the State of Alaska." He reiterated that
investment in mental health and substance abuse treatment
services was keeping costs down, and removal of this access to
treatment would directly impact prisons, law enforcement, and
classrooms.
5:00:19 PM
REPRESENTATIVE EASTMAN offered his assumption that as more
people were getting treatment, more people were being diagnosed,
and he asked about the remaining gap for those remaining to be
diagnosed.
MR. CHARD replied that the national surveys on drug use and
health provided state by state estimates on the need for mental
health and substance abuse treatment services. He offered to
research and respond to the question.
5:01:31 PM
ADJOURNMENT
There being no further business before the committee, the House
Health and Social Services Standing Committee and House State
Affairs Standing Committee joint meeting was adjourned at 5:01
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Tom Chard ABHA 5.11.17.pdf |
HSTA 5/11/2017 3:00:00 PM |
Price and Cost of Healthcare in Alaska |
| Kyle Mirka ASHCC 5.11.17.pdf |
HSTA 5/11/2017 3:00:00 PM |
Price and Cost of Healthcare in Alaska |
| Becky Hultberg Follow-up 5.19.17.pdf |
HSTA 5/11/2017 3:00:00 PM |
Price and Cost of Healthcare in Alaska |
| AHA Drug Price Recommendations 5.19.2017.pdf |
HSTA 5/11/2017 3:00:00 PM |
Price and Cost of Healthcare in Alaska |
| BPC Health Care Cost Drivers Brief 5.19.17.pdf |
HSTA 5/11/2017 3:00:00 PM |
Price and Cost of Healthcare in Alaska |
| Kaiser Healthcare & 2008 Election Study 5.19.17.pdf |
HSTA 5/11/2017 3:00:00 PM |
Price and Cost of Healthcare in Alaska |