Legislature(2003 - 2004)

05/07/2003 01:44 PM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE HEALTH, EDUCATION AND SOCIAL SERVICES                                                                        
                       STANDING COMMITTEE                                                                                     
                          May 7, 2003                                                                                           
                           1:44 p.m.                                                                                            
TAPE(S) 03-27                                                                                                                 
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Fred Dyson, Chair                                                                                                       
Senator Lyda Green, Vice Chair                                                                                                  
Senator Bettye Davis                                                                                                            
Senator Gretchen Guess                                                                                                          
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Gary Wilken                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
^BRIEFING: MEDICAID FUNDING AND PROGRAM ISSUES                                                                                
Federal Center for Medicare and Medicaid Services:                                                                              
Mr. Richard Strauss, Federal Center for Medicare and Medicaid                                                                   
Central Office                                                                                                                  
Ms. Elizabeth Trias, Division of Medicaid and Children's Health,                                                                
Federal Center for Medicare and Medicaid Services - Seattle                                                                     
Mr. John Gaisford, Director, Division of Medicaid, Department of                                                                
Health and Social Services                                                                                                      
Mr. Ross Soboleff, Public Information Officer, Department of                                                                    
Health and Social Services                                                                                                      
                                                                                                                                
^CONFIRMATION HEARINGS:                                                                                                       
^BOARD OF CERTIFIED DIRECT ENTRY MIDWIVES                                                                                     
                                                                                                                                
Ms. Mila Cosgrove                                                                                                               
                                                                                                                                
^BOARD OF PHARMACY                                                                                                            
                                                                                                                                
Mr. Michael Pauley                                                                                                              
                                                                                                                                
^UA BOARD OF REGENTS                                                                                                          
                                                                                                                                
Mr. William Altland - David Parks - UAA Board of Regents                                                                        
                                                                                                                                
^MENTAL HEALTH TRUST AUTHORITY                                                                                                
                                                                                                                                
Mr. Nelson Page - Mental Health Trust Authority                                                                                 
Mr. John Malone - Mental Health Trust Authority                                                                                 
^BOARD OF OCCUPATIONAL AND PHYSICAL THERAPY                                                                                   
                                                                                                                                
Ms. Mary Ann Paul                                                                                                               
                                                                                                                                
^BOARD OF OPTOMETRY                                                                                                           
                                                                                                                                
Mr. John Cobbett                                                                                                                
Mr. Thomas Carter                                                                                                               
                                                                                                                                
^STATE MEDICAL BOARD                                                                                                          
                                                                                                                                
Mr. John Troxel                                                                                                                 
Mr. Robert Breffeilh                                                                                                            
Ms. Debbie Joslin                                                                                                               
Mr. G. Bert Flaming                                                                                                             
                                                                                                                                
^BOARD OF DISPENSING OPTICIANS                                                                                                
                                                                                                                                
Ms. Roberta Rawcliffe                                                                                                           
                                                                                                                                
BOARD OF DENTAL EXAMINERS                                                                                                     
                                                                                                                                
Mr. Kevin Gottlieb                                                                                                              
Mr. Robert Warren                                                                                                               
Mr. David Eichler                                                                                                               
                                                                                                                                
^BOARD OF NURSING                                                                                                             
                                                                                                                                
Ms. Mary Weymiller                                                                                                              
                                                                                                                                
^PROFESSIONAL TEACHING PRACTICES COMMISSION                                                                                   
                                                                                                                                
Ms. Cynthia Curran                                                                                                              
                                                                                                                                
^BOARD OF PSYCHOLOGISTS & PSYCHOLOGICAL ASSOCIATES                                                                            
                                                                                                                                
Mr. Lorin Bradbury                                                                                                              
Mr. John Miller                                                                                                                 
                                                                                                                                
CONFIRMATIONS ADVANCED                                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-27, SIDE A                                                                                                            
                                                                                                                                
CHAIR FRED DYSON  called the Senate Health,  Education and Social                                                             
Services  Standing  Committee  meeting  to  order  at  1:44  p.m.                                                               
SENATOR  DAVIS was  present. He  said the  committee would  first                                                               
take  up the  briefing by  the  Federal Center  for Medicare  and                                                               
Medicaid Services.                                                                                                              
                                                                                                                                
MR.  RICHARD STRAUSS,  Federal Center  for Medicare  and Medicaid                                                               
Services,  said  he  would  focus on  state  operations  for  the                                                               
Medicaid program.                                                                                                               
                                                                                                                                
MS.  ELIZABETH TRIAS,  Federal Center  for Medicare  and Medicaid                                                               
Services, said  she is  in the Seattle  regional office  with the                                                               
Division of Medicaid  and Children's Health. She  is the regional                                                               
office  national account  representative  and Mr.  Straus is  the                                                               
central office counterpart.                                                                                                     
                                                                                                                                
MR.  JOHN  GAISFORD  said  he  is Director  of  Medicaid  at  the                                                               
Department of Health and Social Services.                                                                                       
                                                                                                                                
CHAIR DYSON asked if anyone wanted to make a statement.                                                                         
                                                                                                                                
MR. STRAUSS  said that  one of their  major functions  is working                                                               
with the state on Medicaid  and Medicare issues in their capacity                                                               
as  the   national  account   representatives.  They   wanted  to                                                               
introduce  themselves to  the legislative  branch of  government,                                                               
because  a lot  of  the  issues they  deal  with  relate to  this                                                               
committee.                                                                                                                      
                                                                                                                                
MS.  TRIAS said  she couldn't  add much  more, but  said this  is                                                               
their second visit  with the Alaska legislature and  they hope to                                                               
gather some information on issues of concern to them.                                                                           
                                                                                                                                
MR. GAISFORD stated  that on a semi-annual basis  the central and                                                               
regional  offices visit  each state.  This time,  because of  the                                                               
state's financial  problems, they are  making a point  of talking                                                               
with  representatives of  the  states.  He said  that  this is  a                                                               
friendly and regular visit.                                                                                                     
                                                                                                                                
CHAIR DYSON said  he hears that we can't get  physicians to treat                                                               
federally  reimbursed  programs.  The physicians  represent  that                                                               
they can't  afford it and  lose money on  most of them  through a                                                               
combination of their insurance and  overhead. He asked if that is                                                               
true and what are they and the legislature going to do about it.                                                                
                                                                                                                                
MS.  TRIAS  replied  that  last  year  [access  to  Medicaid  and                                                               
Medicare  services] seemed  to be  the real  issue. She  believed                                                               
this was being addressed with some  part of a study by the Center                                                               
for Medicaid Services (CMS) in Baltimore.                                                                                       
                                                                                                                                
CHAIR  DYSON commented  that access  meant  inadequate supply  of                                                               
services due to government price  fixing that isn't reflective of                                                               
what the real market is.                                                                                                        
                                                                                                                                
MS. TRIAS agreed, in part, with his statement.                                                                                  
                                                                                                                                
SENATORS GUESS AND GREEN arrived at 1:50 p.m.                                                                                   
                                                                                                                                
SENATOR DAVIS said she knows  that all states are having problems                                                               
with these issues  and asked what kind of  assistance the federal                                                               
government is providing to them.                                                                                                
                                                                                                                                
MR. STRAUSS responded that he  mostly deals with the Medicaid and                                                               
the state  children's health  insurance programs.  Those programs                                                               
are  funded  as  a  state/federal   partnership  according  to  a                                                               
formula. He  explained there is  a certain amount  of flexibility                                                               
in terms of structuring programs  they might want to establish in                                                               
Alaska,  like  the Alaska  Natives  doing  outreach and  claiming                                                               
those costs in the Medicaid program.  The idea is to try and work                                                               
with the  Medicaid agency here  to see what  can be done  in that                                                               
capacity.  "Assuming that  these activities  are allowable,  then                                                               
there would  be money available  from the federal  perspective to                                                               
jointly share with you to do those functions..."                                                                                
                                                                                                                                
He said their focus as  national account representative is to try                                                               
to be more  of an advocate within the framework  of what they can                                                               
do for Alaska.                                                                                                                  
                                                                                                                                
SENATOR DAVIS  said she  was interested in  things they  might be                                                               
able to  assist states with,  like waivers that could  be granted                                                               
by the  federal government,  things that  other states  are doing                                                               
that might work here and comparisons.                                                                                           
                                                                                                                                
MR. GAISFORD  said they had  been talking this morning  about how                                                               
to improve  the way the  state gets  a federal match  with Indian                                                               
Health Service claims. The state is  working to try to expand all                                                               
the areas  they can match. They  did not look at  or address what                                                               
other states may be doing.                                                                                                      
                                                                                                                                
CHAIR DYSON asked if there were any limits on co-payments.                                                                      
                                                                                                                                
MR. STRAUSS answered there are  federal limits on what states can                                                               
charge for co-pays.                                                                                                             
                                                                                                                                
CHAIR DYSON asked if there was  anything the state could not have                                                               
co-payment on.                                                                                                                  
                                                                                                                                
MR.  STRAUSS  replied there  are  certain  mandatory groups  that                                                               
aren't  supposed  to  have  any  co-pays  and  there  is  certain                                                               
flexibility  with  some other  options,  both  with services  and                                                               
eligibility. Some groups would have nominal co-pays.                                                                            
                                                                                                                                
CHAIR DYSON asked, "Why nominal?"                                                                                               
                                                                                                                                
MR. STRAUSS replied  from a historical basis he  thought the idea                                                               
was to  give the client  the idea  that they are  responsible for                                                               
paying something, but not to be overly burdensome.                                                                              
                                                                                                                                
CHAIR DYSON  countered that federal requirements  let the federal                                                               
government define what is overly burdensome.                                                                                    
                                                                                                                                
MR. STRAUSS indicated the answer was yes.                                                                                       
                                                                                                                                
CHAIR DYSON said he talked with  major hospitals in our state and                                                               
found that when they bill  for services, those who are reimbursed                                                               
by Medicaid give  between a 40% and a 60%  discount. Someone said                                                               
that was for physician services.                                                                                                
                                                                                                                                
CHAIR DYSON  continued that those  who have a third  party payer,                                                               
like an insurance company, get  a similar discount, "and the poor                                                               
sap that pays his own bills gets to pay 100%."                                                                                  
                                                                                                                                
It seemed to  him that the current administration  should be very                                                               
uncomfortable  penalizing  people who  pay  their  own bills.  He                                                               
asked if  there was  any move  afoot in D.C.  to rectify  the old                                                               
American  tradition of  taking  responsibility  for yourself  and                                                               
paying your own bills.                                                                                                          
                                                                                                                                
MR. STRAUSS  said that was  a complex question  involving private                                                               
sector people  paying for themselves and  Medicaid people somehow                                                               
paying  less. From  his  perspective,  statutes, regulations  and                                                               
policies lay  out what he can  do. An easier question  for him to                                                               
answer would be  what can he do  to try to tailor  the program to                                                               
some  of  the  state's  specific  concerns,  like  the  issue  of                                                               
equitability.                                                                                                                   
                                                                                                                                
CHAIR DYSON responded:                                                                                                          
                                                                                                                                
     The net result  of government price fixing  is that the                                                                    
     costs get  shifted to the  other folks and they  end up                                                                    
     subsidizing the  clientele that Medicaid  underpays for                                                                    
     and so then  you're driving people out  of the category                                                                    
     of  paying their  own bills  and taking  responsibility                                                                    
     and making them,  at least in our  state, an endangered                                                                    
     species, if not extinct.                                                                                                   
                                                                                                                                
He said it apparently is a  result of not letting the marketplace                                                               
dictate the  cost of services  and the  net result is  that we're                                                               
getting more of what we don't want and less of what we do want.                                                                 
                                                                                                                                
MR. STRAUSS reinforced  some of his concerns  about having better                                                               
controls in place  on how people utilize the  services and co-pay                                                               
is one way of doing that.                                                                                                       
                                                                                                                                
CHAIR  DYSON  said  one  of  the  mandatory  services  is  family                                                               
planning  and there  is  a  court decision  saying  if the  state                                                               
provides any  pregnancy related services,  it has to  provide all                                                               
of them  including terminating an  unborn child. He asked  if the                                                               
federal government  considered termination of an  unborn child as                                                               
part of family planning.                                                                                                        
                                                                                                                                
MS.  TRIAS  replied  that abortions  are  not  considered  family                                                               
planning   services  and   they   are   allowed  under   Medicaid                                                               
regulations  if they  meet certain  criteria, like  being due  to                                                               
rape or incest or to save the life of the mother.                                                                               
                                                                                                                                
CHAIR DYSON said  he heard that some family  planning clinics are                                                               
not reporting statutory rape and asked  if that were proven to be                                                               
true, could they be disqualified from receiving federal funds.                                                                  
                                                                                                                                
MR. STRAUSS responded  that their relationship is  with the state                                                               
and not clinics.                                                                                                                
                                                                                                                                
MR. GAISFORD  added that they  have to enroll providers  who have                                                               
to be  licensed according to  state law. If they  were prosecuted                                                               
and found  guilty and  their license was  taken away,  they would                                                               
not  be  able  to  be  enrolled.  The  federal  government  would                                                               
intervene if they paid an unenrolled provider.                                                                                  
                                                                                                                                
CHAIR DYSON  wanted to know  what other jurisdictions  were doing                                                               
to crack down on Medicaid fraud.                                                                                                
                                                                                                                                
MS.  TRIAS  responded  that  she  is also  the  fraud  and  abuse                                                               
coordinator  for  region 10  in  Seattle.  They have  a  national                                                               
program called Medicaid Alliance  for Program Safeguards that has                                                               
an  individual  in each  of  the  regions,  a national  group  of                                                               
central  office people,  and a  southern  consortium in  Atlanta.                                                               
They have been trying to  address this by doing program integrity                                                               
reviews in  different states. From  that review, they  are trying                                                               
to assess how well the state  is carrying out their activities on                                                               
fraud and abuse in terms of  what methods are in place to address                                                               
the  issues.  They talked  to  the  Medicaid Fraud  Control  Unit                                                               
(MFCU)  to see  what kind  of relationship  they have  with state                                                               
people in terms  of their referrals and try to  work with them in                                                               
developing  detection systems  and  decision  support systems  to                                                               
enhance ability to detect  potentially fraudulent providers. Once                                                               
they have a  picture of what a  state is doing, they  try to work                                                               
with  the current  Health Care  Services  Division (formerly  the                                                               
Division of Medical Assistance).                                                                                                
                                                                                                                                
MR. GAISFORD  told them  that national  estimates indicate  a 10%                                                               
fraud  figure, but  Ms. Trias  added that  they don't  know where                                                               
that  figure came  from. Fraud  is difficult  to measure  and the                                                               
term "inappropriate payments" is used.                                                                                          
                                                                                                                                
MR.  GAISFORD said  that intent  is often  hard to  establish. In                                                               
many  cases the  provider doesn't  intend to  be fraudulent,  but                                                               
there  are bad  billing  practices.  Historically, state  systems                                                               
have  not been  that good.  They are  hoping to  implement a  new                                                               
system and  have put out an  RFP, but are now  in litigation with                                                               
one of  the respondents  over the  Alaska preferences.  There has                                                               
been an  initial finding in  their favor, however,  and attorneys                                                               
are assessing  whether or  not the  ruling is  firm enough  to go                                                               
forward  on.   The  federal  government  also   must  review  the                                                               
contract. They  hope to increase the  amount of work they  can do                                                               
in  this area.  He noted  that  SB 41  on the  minimum number  of                                                               
audits that can  be ongoing in a  state in a year  is of interest                                                               
to them, also.                                                                                                                  
                                                                                                                                
CHAIR DYSON  said he hoped  that most of Medicaid  billing frauds                                                               
were inadvertent.                                                                                                               
                                                                                                                                
MS. TRIAS  noted that technology is  great way to key  in on poor                                                               
billing  practices  and Alaska  needs  to  settle on  a  decision                                                               
support system.                                                                                                                 
                                                                                                                                
SENATOR  GREEN said  a couple  of years  ago an  announcement was                                                               
made that all Medicaid payments would  be paid within 11 days and                                                               
therefore any  review of  the billing was  many months  later and                                                               
had  to have  several  red  flags and  anomalies  for either  the                                                               
provider or  the recipient. She asked  if we are still  doing the                                                               
11 day  payment or is  there is system  in place that  checks the                                                               
billing immediately so that it  doesn't get paid unless it passes                                                               
muster.                                                                                                                         
                                                                                                                                
MR. STRAUSS  replied that  the answer to  that question  would be                                                               
more in  how the state  sets up its  system to make  the payments                                                               
within   the  framework.   On  the   federal   side,  there   are                                                               
requirements, which is  a different concern and  that is provider                                                               
participation.  There  are  requirements in  statute  for  timely                                                               
payment of claims; almost all of  them must be paid within a year                                                               
and  a percent  within  30 days,  etc. The  concern  is that  the                                                               
providers get the  money as fast as they can  along with the idea                                                               
that you don't pay for something that shouldn't be paid for.                                                                    
                                                                                                                                
MR. GAISFORD agreed  that the rule is 90% within  30 days and the                                                               
trick to that  is clean claims or claims  with enough information                                                               
to be correct.  He said there are hundreds of  thousands of edits                                                               
and audits that are checked  against each claim. The ones Senator                                                               
Green  was referring  to  are three  basic  kinds. Header  checks                                                               
happen when the claim first comes  in which makes sure the person                                                               
is  the right  person  to  receive the  services;  the second  is                                                               
medical checks or  is it the right kind of  service and provider;                                                               
and historic  audits. All claims  go through these  audits before                                                               
payment.  He elaborated  that historic  audits check  things like                                                               
seeing if the recipient is female  if a female procedure was done                                                               
and if an appendix has been taken out more than one time.                                                                       
                                                                                                                                
SENATOR GREEN  said it has to  be more difficult for  someone who                                                               
is getting prescriptions filled for street use.                                                                                 
                                                                                                                                
MR.  GAISFORD  said that  is  what  the  audits are  intended  to                                                               
identify. One  of their  cost containment  features is  to expand                                                               
the number of people they  have targeted as potential misusers of                                                               
that and  have them tied  to a particular provider  and pharmacy.                                                               
This is a very difficult thing to do.                                                                                           
                                                                                                                                
SENATOR GREEN said  she meant the Medicaid audit  where they talk                                                               
about waste,  which is  directed more  inward toward  the system.                                                               
She asked if 7% waste was a valid figure.                                                                                       
                                                                                                                                
MS. GAISFORD said they didn't know for sure.                                                                                    
                                                                                                                                
SENATOR GREEN said if you add  the estimated 7% waste and the 10%                                                               
erroneous  billing, that  is a  lot of  wasted federal  and state                                                               
dollars in a state like Alaska with a very meager population.                                                                   
                                                                                                                                
MR. STRAUSS  agreed that it is  a lot, but he  emphasized that he                                                               
identified the waste as inefficiency in the system.                                                                             
                                                                                                                                
MS.  TRIAS  addressed  Senator Green's  concern  with  edits  and                                                               
audits saying  the state has  the option of using  prepay review,                                                               
which looks at providers billings.                                                                                              
                                                                                                                                
SENATOR GREEN asked if Alaska does that.                                                                                        
                                                                                                                                
MR. GAISFORD added that we do prior authorizations.                                                                             
                                                                                                                                
MS.  TRIAS  said on  the  recipient  side  that they  could  lock                                                               
someone into  using one pharmacy  and that wouldn't be  viewed as                                                               
punitive.                                                                                                                       
                                                                                                                                
CHAIR DYSON  asked if they  require states to have  fraud control                                                               
and investigation and had they  ever disqualified a state because                                                               
of not meeting standards.                                                                                                       
                                                                                                                                
MS. TRIAS said they hadn't done that.                                                                                           
                                                                                                                                
MR. STRAUSS said  that they don't disqualify states,  but they do                                                               
recoup money from states.                                                                                                       
                                                                                                                                
MS.  TRIAS  responded  to  a question  Senator  Green  had  about                                                               
Medicaid  fraud saying  that they  have  discovered in  a lot  of                                                               
instances there  is an error in  the billing done by  the billing                                                               
clerk who didn't realize, for instance, some change in code.                                                                    
                                                                                                                                
TAPE 03-27, SIDE B                                                                                                            
                                                                                                                              
CHAIR DYSON  said he thought  they were  being far too  naïve. He                                                               
thought they should be running  stings in every state and holding                                                               
their feet to the fire.                                                                                                         
                                                                                                                                
MR. STRAUSS  commented that they  had participated in  a pharmacy                                                               
sting in  California and  are not totally  naïve. Both  the state                                                               
and   the  federal   government  benefit   from  preventing   and                                                               
identifying  fraud. They  share in  funding of  the programs  and                                                               
recognize  that  the  state administers  their  program.  If  the                                                               
federal  government held  the  state's feet  to  the fire,  there                                                               
would be  some push back  because they would  not be doing  it in                                                               
the right way.                                                                                                                  
                                                                                                                                
CHAIR DYSON said their point is  that the ones who ultimately pay                                                               
are the other needy people who don't have the funds.                                                                            
                                                                                                                                
MR.  STRAUSS said  that he  was  sure they  would participate  in                                                               
funding anything the state was going to do on  fraud.                                                                           
                                                                                                                                
CHAIR  DYSON said  he really  appreciated all  the work  they are                                                               
doing  and  that  they  have  a  huge  job  ahead  of  them.  The                                                               
legislators are eager to help.                                                                                                  
                                                                                                                                
MR.  STRAUSS said  that he  heard them  say today  that they  are                                                               
interested   in   provider  participation,   inequitable   co-pay                                                               
treatment, family  planning, fraud and abuse,  waste, and quality                                                               
issues.                                                                                                                         
                                                                                                                                
CHAIR  DYSON indicated  agreement  and commented  that Ms.  Trias                                                               
said that there  were discussions going on  about what government                                                               
price fixing  in medical  services is doing  in, what  she calls,                                                               
access.                                                                                                                         
                                                                                                                                
MS. TRIAS said she would get  that information to Mr. Strauss who                                                               
would get that to him.                                                                                                          
                                                                                                                                
2:37 - 2:38 p.m. - at ease                                                                                                      
                                                                                                                                
CHAIR  DYSON announced  that they  would  begin the  confirmation                                                               
hearings.                                                                                                                       
                                                                                                                                
MS.  MILA  COSGROVE,  public  member nominee  for  the  Board  of                                                               
Certified  Direct  Entry  Midwifes,  said she  is  interested  in                                                               
seeing direct entry midwifery care  being an option for women who                                                               
are having children.  She thought it important  that direct entry                                                               
midwives be regulated  so there are standards of  care and safety                                                               
and a medical review process.                                                                                                   
                                                                                                                                
SENATOR GREEN  said that  she had reviewed  the names  before the                                                               
committee today and she is  satisfied with their nominations. She                                                               
would not be  able to stay to  forward the names on  to the joint                                                               
bodies.                                                                                                                         
                                                                                                                                
CHAIR DYSON said there was no objection to that.                                                                                
                                                                                                                                
2:43 - 2:44 p.m. - at ease                                                                                                      
                                                                                                                                
CHAIR  DYSON called  the  meeting  back to  order  and asked  Mr.                                                               
Pauley to tell the committee why  he was interested in serving on                                                               
the Board of Pharmacy.                                                                                                          
                                                                                                                                
MR. MICHAEL PAULEY,  nominee for the Board of  Pharmacy, said the                                                               
governor appointed him to fill out  the remainder of the term for                                                               
the public seat on the board.  He has worked as a legislative aid                                                               
in Juneau and  in Washington D.C. and had an  opportunity to work                                                               
with legislation that dealt with controlled substance issues,                                                                   
which is one of their big priorities.                                                                                           
                                                                                                                                
MS. DEBBIE  JOSLIN, nominee for  the Medical Board, said  she has                                                               
been appointed by the governor as  the public member of the board                                                               
and said  that there  is only  one other woman  on the  board and                                                               
that it would be good to have another one.                                                                                      
                                                                                                                                
CHAIR DYSON thanked the nominees for their comments and said                                                                    
they would forward all the names to the joint session. There                                                                    
were no objections and he adjourned the meeting at 2:47 p.m.                                                                    

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