Legislature(2021 - 2022)DAVIS 106
03/03/2022 11:30 AM House WAYS & MEANS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Long-term Forecast of Medicaid Enrollment and Spending in Alaska | |
| Presentation(s): Alaska Cares Trends and Forecast | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
March 3, 2022
11:34 a.m.
MEMBERS PRESENT
Representative Ivy Spohnholz, Chair
Representative Andy Josephson
Representative Calvin Schrage
Representative Andi Story
Representative Mike Prax
MEMBERS ABSENT
Representative Adam Wool, Vice Chair
Representative David Eastman
COMMITTEE CALENDAR
PRESENTATION(S): LONG-TERM FORECAST OF MEDICAID ENROLLMENT AND
SPENDING IN ALASKA
- HEARD
PRESENTATION(S): ALASKA CARES TRENDS AND FORECAST
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
TED HELVOIGHT, PhD, Vice President
Evergreen Economics
Eugene, Oregon
POSITION STATEMENT: Provided a PowerPoint presentation, titled
"Long-Term Forecast of Medicaid Enrollment and Spending in
Alaska."
ALBERT WALL, Deputy Commissioner
Office of the Commissioner
Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Answered questions during the presentation
on the Long-term Forecast of Medicaid Enrollment and Spending in
Alaska.
RENEE GAYHART, Director
Division of Health Care Services
Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Answered questions during the presentation
about the Long-Term Forecast of Medicaid Enrollment and Spending
in Alaska.
EMILY RICCI, Chief Health Administrator
Division of Retirement and Benefits
Department of Administration
Juneau, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation on
Alaska CARES Trends and Forecast.
ACTION NARRATIVE
11:34:12 AM
CHAIR IVY SPOHNHOLZ called the House Special Committee on Ways
and Means meeting to order at 11:34 a.m. Representatives Story,
Josephson, Schrage, and Spohnholz were present at the call to
order. Representative Prax arrived as the meeting was in
progress.
^PRESENTATION(S): Long-term Forecast of Medicaid Enrollment and
Spending in Alaska
PRESENTATION(S): Long-term Forecast of Medicaid Enrollment and
Spending in Alaska
11:35:31 AM
CHAIR SPOHNHOLZ announced that the first order of business would
be the Long-term Forecast of Medicaid Enrollment and Spending in
Alaska presentation.
11:36:21 AM
TED HELVOIGHT, PhD, Vice President, Evergreen Economics,
provided a PowerPoint presentation, titled "Long-Term Forecast
of Medicaid Enrollment and Spending in Alaska" [hard copy
included in the committee packet]. The first long-term forecast
started in 2005 and was completed in 2006 directed by the Alaska
state legislature due to concerns about fast-rising expenses in
Medicaid spending. The 20-year projection looks at trends in
enrollment, utilization of Medicaid services, and spending. The
highly structured modeling program called the MESA modeling
approach includes long term demographic projections based on the
Department of Labor population forecast. Enrollment in
Medicaid, utilization of Medicaid services, intensity of
Medicaid use, and spending on Medicaid are all steps that are
considered to build the forecast of Medicaid enrollment and
spending. Different demographics influence Medicaid usage
expectations.
11:43:41 AM
MR. HELVOIGHT showed a graph on slide 5 which shows the
significant changes in Medicaid in the last decade with
substantial growth beginning in fiscal year 2016 (FY 16). He
identified the colors on the fiscal model and their
corresponding definitions. The state portion of spending has
remained flat since FY 21. Federal Medicaid expansion has
demonstrated an increase in spending for federal funds.
Medicaid enrollment grew by 61 percent; recipients of Medicaid
services grew by 42 percent; federal spending increased by 95
percent; and Alaska General Fund spending on Medicaid decreased
by nearly 12 percent. At the same time, roughly 65,000 more
Alaskans receive care through Medicaid compared with earlier in
the decade. Dependent on the eligibility of the individual on
Medicaid, federal participation varies.
11:51:03 AM
ALBERT WALL, Deputy Commissioner of Medicaid and Healthcare
Services, Office of the Commissioner, Department of Health and
Social Services (DHSS), described that Medicaid as a program is
like a contract with the federal government. If an individual
applies, they will receive a federal match that is dependent on
their eligibility criteria. He offered to provide a breakdown
of eligibility groups. The state is responsible for the
remaining balance dependent on the eligibility group that isn't
covered by the federal government.
11:53:07 AM
CHAIR SPOHNHOLZ noted that if the state opted out of Medicaid,
then it wouldn't be on the hook for paying; however, a large
percentage of Alaskans wouldn't receive coverage. Alaska Native
people are fully covered by the federal government.
11:55:01 AM
MR. HELVOIGHT said that the rate of growth in Alaska's
population has slowed considerably in recent decades. The
Department of Labor (DOL) projects slow growth to continue. The
senior population will experience relatively strong growth
through the 20-year projection period. Population growth will
be slowest for children. The last population forecast was
published in April 2020. In 1999, there were fewer than 100,000
enrollees. Today, there are about 267,000 enrollees, and by
2042, there will be more than 300,000.
12:00:31 PM
RENEE GAYHART, Director, Division of Health Care Services,
Department of Health and Social Services, responded to
Representative Story and said she would follow up with
information about the adult population from ages 20-64 who have
a disability.
12:02:08 PM
MR. HELVOIGHT responded to Representative Prax and clarified
that Medicaid expansion opened an eligibility category for those
that were previously not eligible for Medicaid services.
Medicaid for life is not assumed. Medicaid is expected to grow
slowly according to the forecast but may experience a slight dip
after the national public health emergency is removed.
12:07:11 PM
MR. WALL explained that the expansion population is predicted to
continue growing. Redeterminations of eligibility were not
completed due to the COVID-19 pandemic public health emergency.
An additional 6.2 percent pay increase was given through
Medicaid to keep recipients stable during the COVID-19 pandemic
public health emergency. After the emergency expires,
redeterminations will occur on a month-to-month basis.
12:12:02 PM
MR. HELVOIGHT said that the red line on slide 9 represents
historical data for growth in Medicaid reimbursement rates and
the dotted line represents the forecast. The blue line
represents growth in reimbursement rates for Medicaid services.
Medicaid reimbursement rates will continue to grow at a slower
rate than overall healthcare price inflation in Alaska. The
consumer price index (CPI) has a 4-5 percent per year increase,
which by historical standards is above the general price
inflation and may not remain consistent. Medical health care
cost inflation may be slower in coming years due to a reversion
to the mean.
12:17:47 PM
MR. HELVOIGHT detailed that healthcare spending increases with
age. Spending per-recipient on Medicaid services will continue
to be much greater for seniors than for children or adults under
65. The bar graph on slide 10 represents average spending per
recipient not per enrollee. He emphasized that many who are
enrolled in Medicaid do not utilize any health services and are
not included in the calculation. Differences in growth rates
are due to the anticipated ending of the federal financial
partnership (FFP) enhancement that is part of the federal COVID-
19 pandemic public health emergency. The forecast assumes no
other future changes to the federal medical assistance
percentage (FMAP) except for the previously mentioned 6.2
percent per the health emergency stipulations which will be
removed.
12:21:02 PM
MR. HELVOIGHT highlighted slide 12, which shows how price
inflation will drive spending growth. He defined the colors on
the fiscal model and noted that the red growth line is compared
to medical price inflation. Population, enrollment,
utilization, and intensity of use will have a relatively low
impact on spending growth.
12:25:02 PM
MR. HELVOIGHT mentioned that this forecast puts an emphasis on
chronic conditions. Most Medicaid recipients do not have a
diagnosed chronic condition. Prevalence of a diagnosed chronic
condition increases with age. Medical spending on a child
without a chronic condition compared to a senior without a
chronic condition are about the same. Today, 80 percent of all
spending is on beneficiaries diagnosed with one or more chronic
conditions. This rate is expected to grow to 84 percent by
2042.
12:28:33 PM
MR. HELVOIGHT detailed that the red line on slides 15-17
represents actual spending. The blue dots represent the
forecast presented to the legislature back in 2006. The dashes
represent the current forecast. Cost containment efforts put
forth by the legislature worked to reduce spending. Spending
has been much lower than was projected in 2006. Projected
spending growth is lower than earlier forecasts. On slide 16
the actual recipient count closely tracked the 2006 projection
until the Medicaid expansion in FY 16. Recipient counts likely
were impacted by the Alaska recession. Slide 17 shows that
spending per recipient is much lower today than what was
projected in 2006. Cost containment initiatives by DHSS will
likely continue to suppress growth in spending. Recipients that
do not have one or more diagnosed chronic conditions spend on
average $3,500 per year across all age groups.
CHAIR SPOHNHOLZ recalled a figure that the 50,000 people who
represent 20 percent of Medicaid recipients are responsible for
80 percent of spending due to chronic conditions.
^PRESENTATION(S): Alaska CARES Trends and Forecast
PRESENTATION(S): Alaska CARES Trends and Forecast
12:35:50 PM
CHAIR SPOHNHOLZ announced that the final order of business would
be the Alaska CARES Trends and Forecast presentation.
12:36:10 PM
EMILY RICCI, Chief Health Administrator, Division of Retirement
and Benefits, Department of Administration, provided a
PowerPoint, titled "AlaskaCare Trends." She introduced
AlaskaCare as an umbrella term for the State of Alaska self-
insured health plans. The entity sponsoring a self-insured
health plan assumes the risk for the claims occurred by members.
These plans are managed by the Division of Retirement and
Benefits. Across the self-insured health plans the state paid
nearly $800 million in FY 21 and covered over 90,000 lives.
12:38:39 PM
MS. RICCI said the AlaskaCare employee plan covers 16,000
members including dependents. Inclusion of different categories
of employees depends on bargaining units. The impact of the
COVID-19 pandemic was significant on the AlaskaCare plan with an
increase of inpatient facility and pharmacy costs. Employee
plan demographics have seen a slight decrease in the number of
employees and a decrease in average age.
12:43:58 PM
MS. RICCI showed slide 6, which demonstrates a tremendous
increase in the amount paid per member per month in 2020. In
2021, there is a decrease in the amount paid per member per
month but there is a sharp increase in the number of services
utilized. Slide 7 shows that employee plan members deferred
fewer services than other plans and incurred higher claims
afterwards. The surge in the employee plan in the summer and
fall more than offset the dip in services. Expensive new
cellular and gene therapies were used to treat and cure
previously untreatable illnesses. She affirmed, in response to
Representative Sponholz, that high-cost clients represent a
small portion, 5 percent, of enrollees but utilize about 20
percent of the costs.
12:51:14 PM
MS. RICCI discussed challenges that face the health plan,
including new gene therapies, which, though they have incredible
health benefits, are very expensive. The gene therapy network
ensures that if members are receiving gene therapy services,
they receive them through a qualified facility that has agreed
to network contracting. For example, Zolgensma, which is used
for rare gene abnormalities, can cost $2.1-2.7 million per
treatment. Inpatient facility cost negotiations are underway to
create new contract terms with broader facility access for
members. Increasing pharmacy costs are being addressed through
negotiated contract terms that implemented prescription drug
formulary and established a pharmacy copay program that allows
both members and the plan to benefit from drug coupons for
specialty medications.
12:55:20 PM
MS. RICCI responded to Representative Josephson and said that
health information is private, de-identified, and protected by
federal privacy laws. Any insurance plan involves actuaries who
annually make predictions for the upcoming year including total
cost per plan and how much is needed in reserve if premiums are
not sufficient to cover claims and evaluate the employee versus
employer contribution rates. Funds are collected on a biweekly
basis through personnel and are accumulated into the Group
Health and Life fund which is a state account set aside to pay
out claims as they come in. Unused funds made it possible to
keep employer contributions and employee premiums relatively
flat. A rise in employee contributions is expected going
forward.
1:02:00 PM
MS. RICCI detailed the AlaskaCare Retiree plan, which includes
the defined benefit health plan in which 75,000 members are
covered including retirees and their dependents. Annual claims
cost $571 million in 2021. In the retiree plan, due to some
unique factors, pharmacy costs were higher than typical because
of Medicare. In 2019, the drop in cost was attributed to the
implementation of a group Medicare part D plan where federal
dollars were leveraged to reduce the cost of pharmacy care for
members without impacting their benefits.
1:04:05 PM
MS. RICCI showed slide 13, which gives a trend breakdown for the
AlaskaCare Retiree Plan multi-year spend. She highlighted 2019,
which saw an overall drop in all categories. The drop is
attributed to pharmacy changes and the leveraged federal monies
that offset pharmacy cost for members. Demographic trends have
an important role for AlaskaCare's retiree plan. The cost for
covering individuals who are eligible for Medicare is
significantly different from those who are not. The yellow box
on slide 14 represents the percentage of the retired population
that is eligible for Medicare. From 2017 to 2021 there was a 10
percent change of individuals who became eligible for Medicare.
The Medicare fee schedule is substantially lower than what
commercial insurance plans can negotiate. Slide 15 shows that
as the population ages, members who are eligible for Medicare
increases while pre-Medicare members decrease. Before 2019, the
Division of Retirement and Benefits (DRB) received pharmacy
subsidies through a federal program called the Retiree Drug
Subsidy (RDS) Program. In 2019 the DRB implemented an enhanced
Medicare Part D employer Group Waiver Plan. This provided
additional coverage for members and allowed expansion of certain
vaccines to all members of the retirement population. The state
also benefited from additional federal subsidies, including
almost $50 million dollars in 2019 for pharmacy discounts and
rebates. This amount has grown to almost $65 million as of
2021.
MS. RICCI mentioned that there are still challenges associated
with specialty medication. Specialty medication represented 37
percent of retiree pharmacy spend, or $110 million in 2020 and
represents just 1 percent of total prescriptions. This was an
increase from $89 million, or 24 percent in 2019, driven by an
increase in specialty prescriptions and more costly medications.
In collaboration with the Retiree Health Plan Advisory Board,
the division is working to modernize the plan to improve
benefits and manage costs. In 202[2] the division implemented
the addition of preventative care services, including
colonoscopies and vaccines. They also implemented clinical
reviews of specialty medications to address the rising costs.
1:14:50 PM
MS. RICCI, in response to Representative Josephson, said there
is a lot of unpredictability in the health plan. She expressed
her hope that the state is in a much better situation than it
was back in 2006. Federal subsidies created a $1 billion
benefit to accrue actuarial liability in one year. If those
subsidies were removed, the state would experience significant
changes in the cost of the benefits offered. Health insurance
will continue to be dynamic, particularly with the retiree plan.
1:15:48 PM
CHAIR SPOHNHOLZ provided closing remarks.
1:16:20 PM
ADJOURNMENT
There being no further business before the committee, the House
Ways and Means committee meeting was adjourned at 1:16.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AlaskaCare Presentation, DrB, 3.2.22.pdf |
HW&M 3/3/2022 11:30:00 AM |
|
| MESA Forecast Presentation, Evergreen Economics, 3.2.22.pdf |
HW&M 3/3/2022 11:30:00 AM |