Legislature(2003 - 2004)

03/26/2003 01:32 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                                                               
                         March 26, 2003                                                                                         
                           1:32 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Fred Dyson, Chair                                                                                                       
Senator Lyda Green, Vice Chair                                                                                                  
Senator Gary Wilken                                                                                                             
Senator Bettye Davis                                                                                                            
Senator Gretchen Guess                                                                                                          
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 105                                                                                                             
"An  Act   relating  to  eligibility  requirements   for  medical                                                               
assistance for  certain children, pregnant women,  and persons in                                                               
a medical  or intermediate  care facility;  and providing  for an                                                               
effective date."                                                                                                                
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 108                                                                                                             
"An Act relating to payment  rates under the Medicaid program for                                                               
health  facilities and  to budgeting,  accounting, and  reporting                                                               
requirements for  those facilities; abolishing the  Medicaid Rate                                                               
Advisory Commission; and providing for an effective date."                                                                      
     MOVED SB 108 OUT OF COMMITTEE                                                                                              
SENATE BILL NO. 109                                                                                                             
"An  Act  repealing the  statute  that  sets priorities  for  the                                                               
Department   of  Health   and   Social  Services   to  apply   to                                                               
administration of  the medical assistance program  when there are                                                               
insufficient  funds  allocated  in  the  state  budget  for  that                                                               
program;  authorizing the  department  to  make cost  containment                                                               
decisions  that  may  include   decisions  about  eligibility  of                                                               
persons   and  availability   of  services   under  the   medical                                                               
assistance program; and providing for an effective date."                                                                       
     MOVED SB 109 OUT OF COMMITTEE                                                                                              
SENATE BILL NO. 30                                                                                                              
"An  Act  relating  to  information  and  services  available  to                                                               
pregnant women  and other persons; and  ensuring informed consent                                                               
before an abortion  may be performed, except in  cases of medical                                                               
     HEARD AND HELD                                                                                                             
PREVIOUS ACTION                                                                                                               
SB 105 - No previous action to consider.                                                                                        
SB 108 - No previous action to consider.                                                                                        
SB 109 - No previous action to consider.                                                                                        
SB 30 - See HESS minutes dated 3/17/03.                                                                                         
WITNESS REGISTER                                                                                                              
Commissioner Joel Gilbertson                                                                                                    
Department of Health &                                                                                                          
  Social Services                                                                                                               
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
POSITION STATEMENT: Commented on SB 105, SB 108 and SB 109.                                                                   
Mr. Bob Labbe, Deputy Commissioner                                                                                              
Department of Health &                                                                                                          
  Social Services                                                                                                               
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
POSITION STATEMENT: Commented on SB 105 and SB 109.                                                                           
Ms. Laraine Derr, President                                                                                                     
Alaska State Hospital and Nursing Home Association                                                                              
426 Main Street                                                                                                                 
Juneau AK 99801                                                                                                                 
POSITION STATEMENT:  Supported SB 108.                                                                                        
Mr. Jack Nielson, Executive Director                                                                                            
Medicaid Rate Advisory Commission                                                                                               
4710 Business Park Boulevard, Suite 44                                                                                          
Anchorage, AK 99503-7100                                                                                                        
POSITION STATEMENT: Commented on SB 108.                                                                                      
Mr. Chip Wagoner                                                                                                                
Alaska Catholic Conference                                                                                                      
No address provided                                                                                                             
POSITION STATEMENT: Supported SB 105.                                                                                         
Mr. Curtis Kendall                                                                                                              
Fairbanks AK                                                                                                                    
POSITION STATEMENT:  Commented on SB 105.                                                                                     
Mr. Robert Briggs                                                                                                               
Disability Law Center of Alaska                                                                                                 
Juneau AK                                                                                                                       
POSITION STATEMENT: Commented on SB 109.                                                                                      
ACTION NARRATIVE                                                                                                              
TAPE 03-13, SIDE A                                                                                                            
        SB 105-MEDICAID:CHILDREN/PREGNANT WOMEN/FACILITY                                                                    
CHAIR FRED DYSON  called the Senate Health,  Education and Social                                                             
Services  Standing  Committee  meeting  to  order  at  1:32  p.m.                                                               
Present  were  Senators  Davis  and Guess  and  Chair  Dyson.  He                                                               
announced SB 105 to be up for consideration.                                                                                    
SENATOR LYDA GREEN arrived at 1:34 p.m.                                                                                         
COMMISSIONER  JOEL GILBERTSON,  Department of  Health and  Social                                                               
Services (DHSS),  reminded the committee  that the  department is                                                               
undergoing a restructuring in an  effort to stabilize the state's                                                               
Medicaid  program  so that  the  state  can  continue to  have  a                                                               
vibrant  insurance product  for low  and middle  income Alaskans.                                                               
The Medicaid  program has  grown exponentially  and its  cost has                                                               
threatened  the viability  of  the program,  the  ability of  the                                                               
state to  maintain high eligibility  levels and to  keep optional                                                               
services funded  through the program.  The department has  done a                                                               
restructuring  in which  it will  be  administering the  Medicaid                                                               
program  budgetarily,  in addition  to  policy  through all  four                                                               
divisions  that have  some dealings  with  the Medicaid  program.                                                               
Right  now, some  Medicaid services  are being  provided in  four                                                               
different  divisions in  two different  departments and  he wants                                                               
responsible decision-making.                                                                                                    
COMMISSIONER GILBERTSON provided members  with a series of charts                                                               
showing the  total Medicaid  budget for FY04  to be  $935 million                                                               
and how the  Medicaid program, which currently has  all the funds                                                               
in the Division of Medical  Assistance (which will be replaced by                                                               
a new Division of Health  Care Services), will be distributed and                                                               
how  the services  will be  administered in  the department.  The                                                               
bulk, $630 million,  will remain in the remnants  of the Division                                                               
of Medical  Assistance. The remainder  will be broken  up between                                                               
the  Division  of Senior  Disability  Services,  the Division  of                                                               
Behavioral Health and the Office  of Children's Services. For the                                                               
first time  the waiver  program will  be administered  within one                                                               
division, which will administratively help the process.                                                                         
SENATOR GUESS  asked if  this is  what he is  proposing to  do or                                                               
whether it is currently the case.                                                                                               
COMMISSIONER  GILBERTSON  replied that  it  is  a combination  of                                                               
everything. The  budget is  proposed for  FY04; some  elements of                                                               
the  executive order,  which  will involve  some  aspects of  the                                                               
restructuring, will  be effective  on July 1;  the administration                                                               
retains  the  authority  to  move  forward on  a  number  of  the                                                               
restructuring items before July 1.                                                                                              
He  said the  federal government  is the  largest payer  into the                                                               
Medicaid program,  but the  state provides  a sizeable  amount of                                                               
Medicaid match  dollars. He explained  that the cost  of eligible                                                               
adults is  increasing and that  is associated with the  number of                                                               
pregnant women  coming on  board with  the Medicaid  program. The                                                               
total  eligibility  population  has   decreased  because  of  the                                                               
reduction in welfare rolls.                                                                                                     
He said  SB 105  would freeze  income levels  for the  Denali Kid                                                               
Care population  and the Medicaid  special income limits  at FY03                                                               
levels.  This would  solidify eligibility  levels for  Denali Kid                                                               
Care and  for pregnant  women at  200% of  poverty for  FY03. The                                                               
special  income  standard  for  seniors in  long  term  care  and                                                               
individuals receiving  home and  community based waivers  will be                                                               
locked  in at  300%.  This essentially  eliminates the  mandatory                                                               
cost of  living adjustment  (COLA) that  exists in  the programs.                                                               
The fiscal  note shows modest  savings to the department,  but it                                                               
is part  of a larger effort  to bring about cost  containment. It                                                               
is  an acknowledgement  by the  administration that  the Medicaid                                                               
program  has  reached  a  level  that  the  state  can  fund  and                                                               
maintain, but  that we  have reached  that point  where continued                                                               
expansion of  it threatens its  viability for people who  rely on                                                               
the services.  He said  that unchecked  expansion of  the program                                                               
could  lead to  more drastic  reductions  in the  future and  the                                                               
administration does  not support those  types of reductions  or a                                                               
roll  back  on  Medicaid  eligibility levels.  To  maintain  high                                                               
eligibility levels, we have to lock in the current population.                                                                  
SENATOR GUESS  referred to  the last column  of the  fiscal note,                                                               
which shows a savings of $3  million in general fund money but $6                                                               
million of federal government funds the state wouldn't receive.                                                                 
COMMISSIONER GILBERTSON said that is correct.                                                                                   
SENATOR GUESS  said at  the end  of FY09,  he estimates  that 263                                                               
pregnant  women would  not receive  Medicaid. She  asked if  DHSS                                                               
knows  the cost  to the  state of  low birth  weight babies  that                                                               
result from poor women who  are not covered for medical services.                                                               
She said that  fiscal notes are financial  analyses, not economic                                                               
analyses, especially in the case  of pregnant women. She asked if                                                               
the  state is  cutting costs  in one  place only  to pay  for low                                                               
birth weight babies who need services.                                                                                          
COMMISSIONER GILBERTSON replied  that he didn't know  if DHSS can                                                               
come up  with that data, but  he would work together  with her to                                                               
get it.                                                                                                                         
SENATOR GUESS asked why, instead  of using a percentage level, he                                                               
is choosing  to put a specific  number in statute, which  is very                                                               
difficult and more costly to change in the future.                                                                              
COMMISSIONER   GILBERTSON  replied   that  the   administration's                                                               
proposal  is  still  needs  based  and  the  dollar  amount  will                                                               
continue to  be relatively  high, about $50,000  for a  family of                                                               
four. A  decision to roll  back the program  and move to  a lower                                                               
percent would  eliminate individuals  who are  currently eligible                                                               
for the program.                                                                                                                
SENATOR GUESS  said it is an  interesting way to set  policy - in                                                               
statute for $3 million in savings  but 800 people. She noted, "If                                                               
you're poor  today, you'll  get coverage, but  if you're  poor in                                                               
six years, then sorry, that's where we're going to cut it off."                                                                 
She thought it would be  interesting to have an economic analysis                                                               
of  the  cost  to  the  state of  emergency  room  care  as  this                                                               
SENATOR GREEN  pointed out that  at the time this  was instituted                                                               
in  Alaska,  there  was  no  co-pay  or  financial  participation                                                               
requirement,  or  an  asset  test  for  people  coming  into  the                                                               
program. She opined:                                                                                                            
     If we wanted to do something to really change the face                                                                     
     of Denali Kid Care, those are things we would do. This                                                                     
     is a very soft approach and as people grow out of and                                                                      
       grow past the need for this, they should have the                                                                        
     responsibility and ability to move on.                                                                                     
SENATOR  GREEN  said  the program  was  originally  predicted  to                                                               
attract around  11,000 participants and  we're now at  26,000 and                                                               
have over  200 children in out-of-state  placement in psychiatric                                                               
care, which  no one  was ever  told about  when this  program was                                                               
instituted. Preventative care is how it was sold originally.                                                                    
SENATOR WILKEN  said he  found the totals  on page  3 interesting                                                               
and pointed  out that  the average monthly  eligibles in  '99 was                                                               
$62,000;  in  '04  it's  projected   to  be  about  $98,000.  The                                                               
eligibility headcount has  increased by 58% and  the average cost                                                               
per month  in six years has  more than doubled. The  same sort of                                                               
analysis of  eligible children  and costs can  be applied  with a                                                               
70% increase.                                                                                                                   
COMMISSIONER GILBERTSON  added that  Alaska has  high eligibility                                                               
standards  for   the  optional  programs.   The  administration's                                                               
position is that  it does not want  to see a roll  back of Denali                                                               
Kid Care from  200% of the poverty  level to 150%, but  it has to                                                               
acknowledge that  there has been  exponential growth in  the cost                                                               
of the  program and the  cost of  some of the  optional services.                                                               
The administration  does not  support allowing  additional growth                                                               
in high-income  areas to  the detriment  of services  provided to                                                               
low income Alaskans.                                                                                                            
SENATOR GUESS  asked the  amount of the  average increase  of the                                                               
percent of poverty in the last five years.                                                                                      
COMMISSIONER  GILBERTSON  replied  that DHSS  assumed  growth  at                                                               
2.24% per year, between 185-190.                                                                                                
CHAIR  DYSON  said he  identified  with  Senator Guess's  concern                                                               
about  putting a  set  amount  in statute.  He  also agreed  with                                                               
Senator Green that the numbers  are bizarrely high. He asked what                                                               
the commissioner's  rationale was for  the level at  which people                                                               
qualify to have their lifestyle  supported by someone else - what                                                               
used to be called charity.                                                                                                      
COMMISSIONER  GILBERTSON  understood  his concern  and  said  the                                                               
governor's  position is:  the state  is  at 200%  of the  poverty                                                               
level;   having  an   insurance   product   for  individuals   is                                                               
beneficial; and that  the Denali Kid Care program has  grown at a                                                               
far greater rate than what the  state expected or can afford. The                                                               
governor recognizes  the figures  are high,  but locking  them in                                                               
now will protect those dollar amounts.                                                                                          
CHAIR  DYSON asked  if the  state is  precluded from  using asset                                                               
disqualifiers for this program.                                                                                                 
COMMISSIONER  GILBERTSON answered  no, but  that is  under review                                                               
right now.                                                                                                                      
MR.  BOB LABBE,  Deputy  Commissioner, Department  of Health  and                                                               
Social Services, reminded the committee  that Denali Kid Care was                                                               
an expansion  of a prior  program that was approved  around 1990,                                                               
which  was the  first  federal expansion  for  kids and  pregnant                                                               
women based on the poverty level.  In the past, you could receive                                                               
Medicaid if you already received  welfare. There were discussions                                                               
about using  an asset test  at that time  and it was  decided not                                                               
to. He didn't  think it had been discussed with  the expansion of                                                               
the program to Denali Kid Care, but nothing precludes that.                                                                     
COMMISSIONER GILBERTSON said they would  make a decision about it                                                               
in the near future.                                                                                                             
SENATOR GUESS asked if pregnant women are counted as two people.                                                                
COMMISSIONER GILBERTSON replied pregnant  women are considered as                                                               
a family of two.                                                                                                                
CHAIR DYSON questioned the language on page 4, lines 7 and 27.                                                                  
SENATOR GREEN asked  if that could apply to a  situation in which                                                               
a  grandparent  is  caring  for   a  child  and  only  the  child                                                               
CHAIR DYSON  said it looks  like a 19-year  old male is  paid the                                                               
same as a 35-year old pregnant  woman and asked if that is DHSS's                                                               
SENATOR GUESS  replied that she  thought the language on  line 27                                                               
is  superfluous   because  a  pregnant   woman  would   never  be                                                               
considered as a family of one.                                                                                                  
CHAIR DYSON suspended  the hearing on the  bill momentarily. When                                                               
he called  the hearing back to  order, he said he  would probably                                                               
suggest an  amendment that progressively  reduces the  amounts as                                                               
   · line 9 from $3,130 to $3,000                                                                                               
   · line 11, $3,700 to $3,400                                                                                                  
   · line 13, $4,400 to $3,900                                                                                                  
   · line 14, $5,000 to $4,000                                                                                                  
   · line 15, $5,697 to $4,900                                                                                                  
   · line 17, $6,339 to $5,500.                                                                                                 
SENATOR GUESS said she would like  an explanation of how he chose                                                               
those numbers beforehand.                                                                                                       
        SB 108-HEALTH FACILITY MEDICAID RATES/ADV. COM'N                                                                    
CHAIR FRED DYSON announced SB 108 to be up for consideration.                                                                   
COMMISSIONER  JOEL GILBERTSON,  Department of  Health and  Social                                                               
Services  (DHSS),  said  SB  108  deals  with  rates  for  health                                                               
facilities  under the  Medicaid program.  It would  eliminate the                                                               
Medicaid Rate  Advisory Commission (MRAC), the  state's companion                                                               
to  the Bourne  amendment,  which deals  with  rate settings  for                                                               
facilities. Instead, it  would codify rate setting  in one office                                                               
of rate review in the department.                                                                                               
The  MRAC was  created in  1984 and  was largely  responsible for                                                               
establishing rate  settings for the state's  facilities. In 1989,                                                               
by executive order,  its function was changed to  simply serve in                                                               
an advisory  role and  the department  retained the  rate setting                                                               
authority.  In response  to the  Bourne amendment,  Alaska put  a                                                               
fair-rate-for-reasonable-cost   provision   under   Medicaid   in                                                               
statute. That  federal law  has been  repealed and  replaced with                                                               
public process  requirements dealing  with how  to go  about rate                                                               
SB 108  will bring  Alaska statutes  into alignment  with current                                                               
federal law and remove unnecessary  provisions, namely that there                                                               
are  two   separate  public  processes  for   rate  setting.  The                                                               
department does  a variety of rate  setting and will do  a larger                                                               
variety  after  restructuring  -  with things  like  foster  care                                                               
payments,   child  care   providers,  physicians,   dentists  and                                                               
COMMISSIONER  GILBERTSON said  under  the  restructuring all  the                                                               
rate  settings will  be  in one  office  under the  commissioner.                                                               
There will still  be a public process and  the methodologies will                                                               
go  through the  regulatory process.  The programmatic  work that                                                               
needs  to  occur  to  develop  the rate  setting  will  still  be                                                               
happening in the divisions that  administer the programs. He said                                                               
right  now   they  don't  have   the  flexibility  to   vary  the                                                               
methodologies for  rate setting  for facilities between  a 10-bed                                                               
facility and a  200-bed facility. This leads  to over-payment for                                                               
some  facilities   and  under-payment  for  others.   The  actual                                                               
consolidation will  result in a  small savings if the  other cost                                                               
containment measures are adopted and these bills are passed.                                                                    
SENATOR  GRETCHEN GUESS  asked if  the two  public processes  are                                                               
being reduced to one.                                                                                                           
COMMISSIONER  GILBERTSON replied  yes, but  there would  still be                                                               
the public process for rate setting in the regulation process.                                                                  
MS. LARAINE  DERR, President, Alaska  State Hospital  and Nursing                                                               
Home  Association (ASHNHA),  said the  Bourne amendment  has been                                                               
sacred  because it  creates a  fair and  reasonable rate.  ASHNHA                                                               
members   are   willing  to   go   along   with  the   governor's                                                               
recommendation and  would be involved  in a partnership  with the                                                               
administration to develop  regulations. A letter from  one of her                                                               
members said:                                                                                                                   
     For my part,  please convey to the  legislators that we                                                                    
     are  very concerned  about being  able to  maintain the                                                                    
     level  of access  to  critical  services and  recommend                                                                    
     they carefully  consider - this  isn't in  the priority                                                                    
     list, but  we need to  be able to make  decisions about                                                                    
     what our  citizens should  have and  have some  sort of                                                                    
     tool  to make  objective decisions.  Therefore, we  are                                                                    
     concerned about the removal of the Bourne amendment.                                                                       
She added  that she hadn't had  a meeting with ASHNHA  members to                                                               
talk about all three pieces of  legislation, but they would be in                                                               
town on [April] 9th and 10th.                                                                                                   
SENATOR  BETTYE  DAVIS  asked when  the  Medicaid  Rate  Advisory                                                               
Commission's status was changed to advisory.                                                                                    
MR.  JACK NIELSON,  Executive  Director,  Medicaid Rate  Advisory                                                               
Commission, replied in 1989.                                                                                                    
SENATOR DAVIS asked what the  commission had been doing, since it                                                               
had been on the books for all those years.                                                                                      
MR. NIELSON replied that current  statute requires the commission                                                               
to advise  the department on  payment rates for  facilities. They                                                               
have  been participating  in public  hearings  on facilities  and                                                               
providing  advice  to  the department  on  staff  proposals.  The                                                               
commission is  also a  central point where  facilities can  go to                                                               
learn what is happening with payment rates and Medicaid policy.                                                                 
SENATOR DAVIS asked if that role could be filled.                                                                               
MR. NIELSON  replied that  they would continue  to do  the public                                                               
hearings on the rates, but the commission wouldn't be involved.                                                                 
TAPE 03-13, SIDE B                                                                                                            
SENATOR  GARY WILKEN  moved to  pass SB  108 from  committee with                                                               
individual recommendations  and the  attached fiscal  note. There                                                               
were no objections and it was so ordered.                                                                                       
        SB 105-MEDICAID:CHILDREN/PREGNANT WOMEN/FACILITY                                                                    
CHAIR FRED DYSON brought SB 105 before the committee again.                                                                     
COMMISSIONER  JOEL GILBERTSON,  Department of  Health and  Social                                                               
Services  (DHSS), told  members  he had  an  amendment to  remove                                                               
language on page 4, line 27.                                                                                                    
SENATOR LYDA  GREEN moved to remove  language on page 4,  line 27                                                               
[Amendment 1]. There were no objections and it was so ordered.                                                                  
SENATOR GARY  WILKEN said he wanted  to look further at  the four                                                               
graphs that the commissioner had.                                                                                               
MR.   CHIP  WAGONER,   Alaska  Catholic   Conference,  said   the                                                               
Conference  is made  up of  the three  Roman Catholic  Bishops in                                                               
Alaska. The conference is the vehicle  used to allow the group to                                                               
speak on  public policy  matters as they  relate to  moral values                                                               
and  Catholic social  teaching.  One of  the  main components  of                                                               
Catholic social teaching  is a preferential option  for the poor.                                                               
He quoted:                                                                                                                      
     A  basic  moral  test  of   society  is  how  its  most                                                                    
     vulnerable members  are faring. Both  Catholic teaching                                                                    
     and tradition  calls us  to put the  needs of  the poor                                                                    
     and vulnerable first and to  give our greatest response                                                                    
     to those with the greatest needs.                                                                                          
He  said that  Jim  Wallace  wrote a  book  called  "The Soul  of                                                               
Politics" that went  through the Bible verse by  verse and looked                                                               
at all the  times the poor were mentioned. In  the Old Testament,                                                               
the subject  of the poor is  the second most prominent  theme. In                                                               
the New  Testament, one out of  every 16 verses talked  about the                                                               
poor. In  the gospels, one  out of  every 10 verses  talked about                                                               
the poor. He opined, "So, the call  of the Lord is to serve those                                                               
in need."                                                                                                                       
MR. WAGONER  asked them to consider  SB 105 in this  light and to                                                               
consider Denali  Kid Care in particular.  The Conference believes                                                               
the  bill needs  to  be  viewed in  the  context  of the  overall                                                               
Department  of  Health and  Social  Services'  budget, the  other                                                               
agency  budgets, the  state's current  fiscal  situation and  the                                                               
growth of  the Denali Kid  Care program since its  inception. The                                                               
governor was  faced with a Herculean  task to try to  continue to                                                               
provide  direct  services to  the  poor  and vulnerable  of  this                                                               
state. They  commended the department  for its commitment  to the                                                               
needs  of  the poor  and  vulnerable.  He stated,  "Overall,  the                                                               
budget   protects  those   direct  services   that  need   to  be                                                               
When  DHSS submitted  its application  to the  federal government                                                               
for  Denali  Kid  Care  using the  1997  population  figures,  it                                                               
figured there  were 201,713 (birth  to 18 years of  age) children                                                               
in the state  or 33% of the population. The  department hired the                                                               
Employee  Benefits  Research  Institute (EBRI)  to  estimate  the                                                               
number of  those children who  did not have health  insurance and                                                               
EBRI  determined  that  approximately  9%  were  uninsured.  They                                                               
figured that there  would be 18,154 children in  this program. In                                                               
2002, the  population of children  was 211,483 and was  still 33%                                                               
of the  overall population.  If DHSS  used EBRI's  formula, there                                                               
should have been  about 19,033 children in the  program, but that                                                               
is not  what happened.  Figures from  October '02  indicate there                                                               
are  39,854   children  in  the   program  or  double   what  was                                                               
The  growth could  be indicative  of  the value  of the  program.                                                               
Possibly, the state should continue  to pay the necessary amounts                                                               
to take  care of the  caseload increase and the  Conference would                                                               
have no objection if the  committee adopted that. A second option                                                               
would  be   to  cap  the   program,  such  as  the   governor  is                                                               
recommending,  which is  not an  unreasonable  approach. A  third                                                               
option would  be to cut  back the  program from the  200% poverty                                                               
level  to  150%,  which  they  do not  recommend.  Of  the  three                                                               
options, they  like the first one,  but other factors have  to be                                                               
taken into account.                                                                                                             
MR. WAGONER  said that  the program takes  care of  children and,                                                               
before Denali Kid Care, Alaska placed  41st in the list of states                                                               
in  terms  of  health  care  service to  children.  It  would  be                                                               
interesting to know where we stand  now. The best option would be                                                               
the first  one. One  of the reasons  the department  adopted this                                                               
program was  it felt it would  help three years down  the road in                                                               
obtaining  a  federal  matching assistance  percentage  increase,                                                               
also a goal of the current administration.                                                                                      
Denali Kid  Care is also  preventative. Over 40% of  the children                                                               
in  the 150-200%  poverty  level that  receive  services are  six                                                               
years old  or less. So,  most of the  care they are  receiving is                                                               
preventative.  So,  that  would  be saving  money  to  keep  them                                                               
covered as opposed to not having them covered.                                                                                  
MR. WAGONER  said at  the 200%  level, a family  of four  with an                                                               
income of  $45,264 qualifies for  Denali Kid Care. His  family of                                                               
four purchases health  insurance for $9,200 per  year. That would                                                               
equal 20% of  that family's income for  health insurance, leaving                                                               
a little  over $36,000  per year  for all  of the  family's other                                                               
MR. WAGONER  said one of  the options is  to not cut  the program                                                               
and look  elsewhere to  make the  cuts. He  has gone  through the                                                               
DHSS budget and didn't see any  place to cut without hurting some                                                               
other    vulnerable   population.    He    doesn't   think    the                                                               
administration's  position  is  unreasonable.   He  said  if  the                                                               
committee wants to consider a  cap, he has three recommendations.                                                               
The first  is to use  the 2003 poverty guidelines;  otherwise the                                                               
bill will  be two years  behind as  opposed to one  year. Second,                                                               
they  should try  to find  out  why they  have unexpected  growth                                                               
since 1997.  Third, he urged them  to put in an  automatic sunset                                                               
clause for the figures that are  used. So, after a certain amount                                                               
of  time, the  figures would  lapse and  go back  to the  200% of                                                               
poverty level.                                                                                                                  
SENATOR  WILKEN  asked if  there  is  a definition  of  household                                                               
income on page 4 and if it is net or gross.                                                                                     
MR. LABBE replied that in  general, gross income of the household                                                               
is used for  these kinds of calculations. The PFD  is not counted                                                               
as  income. He  said  the [calculation]  is  governed by  federal                                                               
definitions of income, because it is about the Medicaid program.                                                                
SENATOR GUESS said she wanted  to know DHSS's approach toward the                                                               
eligibility  of applicants  who currently  have other  insurance.                                                               
She  suggested  looking  at  places [to  cut]  where  people  are                                                               
already  covered and  have dual  coverage rather  than ratcheting                                                               
down the medical benefits for people based on their income.                                                                     
MR. LABBE answered that for  the regular Medicaid program, health                                                               
insurance is  not an eligibility  factor, because  eligibility is                                                               
generally  based on  income  and assets,  not  on an  applicant's                                                               
health insurance  status. He pointed  out that the  entire senior                                                               
population  that  is on  Medicaid  also  has Medicare,  which  is                                                               
health insurance. Also, people have private coverage sometimes.                                                                 
He explained that the Denali  Kid Care program was expanded using                                                               
funding  from  a block  grant  named  the State  Children  Health                                                               
Insurance  Program. Congress  appropriated the  block grants  for                                                               
uninsured  children. Children  insured by  another means  are not                                                               
supposed to be able to qualify for it. He noted:                                                                                
     We  have  constructed  our  policy  for  a  variety  of                                                                    
     reasons for  those who  are above  150% of  the poverty                                                                    
     line   and  if   they  are   insured,  we   deny  their                                                                    
     eligibility.  We also  deny their  eligibility if  they                                                                    
     drop insurance  within 12 months prior  to application.                                                                    
     This is to  avoid this crowd-out provision.  We have to                                                                    
     have what is called a  crowd-out provision and that was                                                                    
     ours -  the 12-month  - in fact,  it was  probably more                                                                    
     restrictive  than the  other states.  Most of  them, if                                                                    
     they have one,  is like six months, but we  chose to do                                                                    
     a  year and  enforced it  with a  few exceptions  which                                                                    
     were based on particular  kinds of hardship and there's                                                                    
     a  list,  a  handful,   basically  -  they're  approved                                                                    
     centrally and what not.                                                                                                    
     But  what we  haven't been  able  to get  a handle  on,                                                                    
     which has  been going on  for some time in  Alaska, has                                                                    
     been the  employers dropping health coverage  for their                                                                    
     employees. This  was going  on prior  to the  advent of                                                                    
     this program  and it's  continued to  go on  and that's                                                                    
     not anything that the  individual applicant has control                                                                    
     over.  So, it  could be  that part  of the  increase is                                                                    
     because the  people don't actually  have the  access to                                                                    
     insurance any more. Maybe there  was more of it back in                                                                    
     '97 or '98 when we were doing the analysis.                                                                                
SENATOR DYSON announced an at-ease from 2:45 - 2:53 p.m.                                                                        
MR. CURTIS KENDALL, Fairbanks,  supported Chair Dyson's amendment                                                               
and  was in  favor of  the bill,  but most  of his  comments were                                                               
indiscernible on the tape.                                                                                                      
SENATOR WILKEN moved to adopt Amendment 2.                                                                                      
SENATORS GUESS and DAVIS objected.                                                                                              
CHAIR DYSON explained  that the reductions are  $130, $272, $414,                                                               
$655, $797 and $939.                                                                                                            
SENATOR WILKEN  said in  looking at  page 4,  he tried  to equate                                                               
what $3,772 per  month is in his terms and  thinking about his 20                                                               
employees. He interpreted that monthly  income to equate to about                                                               
a $50,000  per year job,  a touch under  $25 per hour.  He wasn't                                                               
sure that  was an appropriate  level, although he  was supporting                                                               
the amendment. He didn't think  when this program was envisioned,                                                               
it was  meant to assist  those who  are making about  $50,000 per                                                               
year for  a family of four  with medical assistance. A  family of                                                               
six  with an  income  of about  $67,000 per  year  would also  be                                                               
SENATOR GUESS  said she thought  it is important to  realize that                                                               
these numbers  are pretax. She  said she objects to  Amendment 2,                                                               
because it will  create a policy change and she  only received it                                                               
today. Also, she truly believes it  is shortsighted to not do all                                                               
the committee  can to cover  pregnant women because,  "We're just                                                               
going to pay for it. We know that."                                                                                             
CHAIR DYSON said  he was quite sympathetic to  the pregnant women                                                               
and asked if she could suggest different amounts.                                                                               
SENATOR  GUESS replied  that she  just  got Amendment  2 and  has                                                               
philosophical problems  with putting numbers in  the bill because                                                               
she doesn't believe that is good  policy. She said she would flag                                                               
the issue  in general  and added  that when  she did  health care                                                               
research she found  that society pays when pregnant  women do not                                                               
have health care coverage.                                                                                                      
CHAIR DYSON  challenged her  to come  up with  a better  idea and                                                               
said  he would  support  her  in trying  to  get  it through  the                                                               
Finance Committee.                                                                                                              
SENATOR GUESS  responded that  she was  admonished by  the Senate                                                               
President  who  said that  legislators  are  not supposed  to  do                                                               
policy work in the Finance Committee.                                                                                           
SENATOR GREEN mentioned  that not every state has  a program such                                                               
as  this and  she reminded  them that  it has  no asset  test for                                                               
eligibility. She noted, "It's a very easy program to get into."                                                                 
She said  that brochures that solicit  applicants are everywhere.                                                               
She noted  that the bill does  not imply that pregnant  women are                                                               
not covered.                                                                                                                    
SENATOR WILKEN agreed that pregnant  women are not being excluded                                                               
from coverage.                                                                                                                  
SENATOR GUESS  said that wasn't  the purpose of her  comment, but                                                               
it  is  fact  that  if  eligibility is  reduced,  there  will  be                                                               
pregnant women that don't have  other insurance. She wanted to at                                                               
least keep coverage at the current standards.                                                                                   
COMMISSIONER GILBERTSON  said the Governor  wants to lock  in the                                                               
standard at  200% of the FY03  program, which is the  '02 poverty                                                               
standard.  He  advised members  that  there  might be  a  problem                                                               
because of  the state's ability  to implement standards  [set] in                                                               
an amendment, such as these.                                                                                                    
MR.  LABBE expressed  concern that  the standard  of coverage  is                                                               
tied to  the poverty  level and family  size for  this particular                                                               
program and,  unless it all  lines up to some  translated poverty                                                               
level,  it  might cause  a  technical  problem with  the  federal                                                               
government where  coverage is scaled  uniformly for  family size.                                                               
He thought conceptually the [department]  could make it work, but                                                               
it may need to adjust the numbers.                                                                                              
CHAIR DYSON suspended  the hearing on SB 105 while  they went out                                                               
into the hall and figured it out.                                                                                               
        SB 109-MEDICAID COST CONTAINMENT & PRIORITY LIST                                                                    
CHAIR FRED DYSON announced SB 109 to be up for consideration.                                                                   
COMMISSIONER  JOEL GILBERTSON,  Department of  Health and  Social                                                               
Services (DHSS),  said SB 109 is  the third bill in  the Medicaid                                                               
package that is necessary to  bring about fiscal stability to the                                                               
Medicaid program for Alaska. He explained:                                                                                      
     It would  eliminate the Medicaid options  list found in                                                                    
     AS 47.07.035.  This establishes a priority  list of how                                                                    
     the department  will go about bringing  cost savings in                                                                    
     years  in which  the legislature  does not  appropriate                                                                    
     sufficient funds  to carry out Medicaid  operations for                                                                    
     an entire  12-month period. Under the  options list, if                                                                    
     the Legislature  does not allocate funds  to fully fund                                                                    
     the  Medicaid program  for a  year,  the department  is                                                                    
     directed  to work  its  way down  the  options list  to                                                                    
     achieve  the  cost  savings  necessary  to  effectively                                                                    
     manage the program  within the amount of  money that is                                                                    
     appropriated by  the legislature.  The administration's                                                                    
     position  is  that  while  there   must  an  effort  to                                                                    
     administer  the  program  within the  confines  of  the                                                                    
     amount   of  funds   that  are   appropriated  by   the                                                                    
     Legislature,  the   options  list   is  not   the  most                                                                    
     effective  or the  most beneficial  way of  going about                                                                    
     cost  containment.  The  options  list  itself  is  not                                                                    
     reviewed annually and is not  necessarily a list of the                                                                    
     most beneficial ways of going about cost containment.                                                                      
As  an   example,  he   noted  DHSS   would  have   to  eliminate                                                               
prescription  drug  coverage and  wheel  chairs  before it  could                                                               
touch  the  eligibility  standards   for  individuals  with  high                                                               
incomes. He continued:                                                                                                          
     The  Governor's bill  will replace  that language  with                                                                    
     broad  direction to  the department  to engage  in cost                                                                    
     containment  necessary to  achieve  the  same level  of                                                                    
     savings  and will  provide instead,  as guidance,  that                                                                    
     first the  department must pursue all  other reasonable                                                                    
     cost  containment   measures  before   eliminating  any                                                                    
     eligibility group or service.                                                                                              
     Second, that the  department should aggressively pursue                                                                    
     strategies to maximize  federal financial participation                                                                    
     in  the  Medicaid  program and  third,  that  the  cost                                                                    
     containment decision should be  made in the manner that                                                                    
     best  reflects  the  needs and  interests  of  eligible                                                                    
     Medicaid  populations. We  believe  with this  guidance                                                                    
     and  direction,   the  department  will   have  greater                                                                    
     flexibility  in  achieving  the   same  level  of  cost                                                                    
     savings without  going through an options  list that it                                                                    
     is  the administration's  position  is not  effectively                                                                    
     managing  the program.  It doesn't  really balance  the                                                                    
     relative  benefits of  cost containment  tools and,  in                                                                    
     addition,  takes  things  off  the  table  until  other                                                                    
     things  are removed  first,  which  we believe  further                                                                    
     exacerbates  the acute  care  costs,  such as  removing                                                                    
     prescription drug  coverage before you  would eliminate                                                                    
     an eligibility  population who is  at the top  level of                                                                    
     our Medicaid  program. The intent  of the  options list                                                                    
     is preserved  in the  Governor's legislation,  which is                                                                    
     directing the  department to initiate  cost containment                                                                    
     measures  to   live  within  its  means   and  what  is                                                                    
     appropriated to it....                                                                                                     
SENATOR  GRETCHEN GUESS  asked if  the cost  containment measures                                                               
have to  be exhausted within the  BRU or the department  and what                                                               
the burden of proof is before services are dropped.                                                                             
COMMISSIONER  GILBERTSON   responded  that  the   department  has                                                               
regulatory  authority  to  enact  a number  of  cost  containment                                                               
measures  that   bring  about  large  savings   to  the  Medicaid                                                               
population without  actually affecting  eligibility or  a service                                                               
that's   provided,   for    example   pharmaceutical   usage   or                                                               
reimbursement rates to providers.  This would be done department-                                                               
wide where Medicaid services are provided.                                                                                      
SENATOR GUESS  asked how he  would make those decisions.  She was                                                               
concerned  that the  department  would decide  who  got what  and                                                               
when. She  asked, "How  are you  going to  decide dropping  off a                                                               
population versus dropping  off a procedure and where  is that in                                                               
the  bill?   It  makes  me   very  nervous  to  turn   over  that                                                               
She also wanted  to know if groups of people  would be ineligible                                                               
or individuals would be ineligible.                                                                                             
COMMISSIONER  GILBERTSON said  DHSS  is including  a fiscal  note                                                               
that shows no savings, because  the department doesn't anticipate                                                               
requiring any  additional cost containment  if the  budget passes                                                               
in  the  form  submitted  by  the  Governor.  He  understood  her                                                               
concern, but  thought the department  is in the best  position to                                                               
engage in that  type of policy decision-making.  He thought those                                                               
decisions would  be a  burden for the  Legislature. As  they move                                                               
forward,  his strategy  is to  maintain cost  savings within  the                                                               
program  without  going  towards eligibility  groups.  He  didn't                                                               
think that is necessary. He remarked:                                                                                           
     We  can  bring  about   tremendous  savings  by  moving                                                                    
     forward  on   a  broad   agenda  to   maximize  federal                                                                    
     resources to work with our  travel partners to see ways                                                                    
     we  can capture  a greater  amount of  federal revenues                                                                    
     for carrying  out the trust responsibility  the federal                                                                    
     government    has    for   Alaska    Native    Medicaid                                                                    
     beneficiaries  and working  with the  Denali Commission                                                                    
     to try and  build up capacity within  the tribal health                                                                    
     care system.  Also, we can  have tremendous  savings by                                                                    
     looking at  the way we  provide services in  doing case                                                                    
     management and  looking at  using preferred  drugs that                                                                    
     stay away  from eligibility populations.  Naturally, if                                                                    
     funds  are not  appropriated  to allow  us  to run  the                                                                    
     Medicaid  program  even  after these  cost  containment                                                                    
     measures   are  moved   forward,  we'll   have  to   do                                                                    
SENATOR GUESS  said she trusted  that during  any administration,                                                               
the  department would  try  to  do everything  it  can before  it                                                               
removes people  from the rolls  or removes procedures, but  he is                                                               
asking  the   legislature  to  hand  over   that  decision-making                                                               
authority  to the  department. She  questioned, "How  would costs                                                               
and benefits be weighed in the department?"                                                                                     
She  also wanted  clarification on  whether DHSS  would determine                                                               
that individuals not  receive a procedure or  group of procedures                                                               
or groups of individuals.                                                                                                       
MR. LABBE responded:                                                                                                            
     The  Medicaid program  structure provides  for coverage                                                                    
     for groups of individuals  that are either mandatory or                                                                    
     optional   in  categories   of   service  rather   than                                                                    
     individual procedures.  For instance, we may  not cover                                                                    
     physical therapy  for, in  this case,  adults. Children                                                                    
     are  mandatory for  the services.  I think  one of  the                                                                    
     things  I was  concerned about  is  if we  had a  large                                                                    
     budget  reduction and  we're starting  to  cut off  all                                                                    
     these  services, we're  only cutting  off services  for                                                                    
     the adult  population -  senior, disabled  adult. We're                                                                    
     not  touching  the  children. At  the  same  time,  the                                                                    
     committee  has  been  discussing  reducing  eligibility                                                                    
     levels  for  kids. It  may  make  more  sense to  do  a                                                                    
     balance and the way the  list is constructed, you would                                                                    
     never  get  to  the  other  discussion  of  eligibility                                                                    
     groups until  you essentially have gone  through all of                                                                    
     the services. So, you would  eliminate wheel chairs and                                                                    
     prescription  drugs   for  some   of  our   more  frail                                                                    
     population  and may  still  be  covering higher  income                                                                    
     individual children,  which is  why I've not  felt this                                                                    
     is an effective tool for a long time.                                                                                      
TAPE 03-14, SIDE A                                                                                                            
MR.  LABBE  said  they  can   make  decisions  on  groups,  broad                                                               
eligibility  guidelines  and  on  services,  but  the  department                                                               
doesn't  have  the ability  to  make  discrete decisions  on  one                                                               
individual's access to a single procedure.                                                                                      
SENATOR GUESS  noted that the  bill contains no  requirement that                                                               
the department submit a report to  the legislature yet it makes a                                                               
big change in  policy in one year. She recommended  that a report                                                               
to the legislature be required.                                                                                                 
CHAIR DYSON thought that might go into the "Measures" section.                                                                  
MR.  ROBERT  BRIGGS, staff  attorney,  Disability  Law Center  of                                                               
Alaska,  Juneau,  raised  some  important  points.  If  the  bill                                                               
passes,  the department's  exercise of  discretion will  still be                                                               
constrained  by   the  Administrative  Procedures  Act   and  the                                                               
department must comply with federal  mandates to provide services                                                               
that are sufficient in amount,  duration, and scope to accomplish                                                               
the  purposes of  the Act.  However, this  bill raises  potential                                                               
constitutional issues.  The Alaska Supreme  Court in the  case of                                                               
State v. Fairbanks North Star  Borough, 1987, found the issues of                                                               
delegation   of  legislative   appropriation  of   authority  and                                                               
separation of powers unconstitutional.                                                                                          
There is also  the potential argument that section 3  of the bill                                                               
raises equal  protection problems.  It basically talks  about how                                                               
cost  containment measures  will  be implemented  and appears  to                                                               
grandfather-in  the  benefits  of  those people  who  were  lucky                                                               
enough to  have their benefits  approved and in place  before the                                                               
cost containment measures are implemented.                                                                                      
CHAIR  DYSON  asked  if  Mr.  Briggs  was  suggesting  that  this                                                               
approach  would be  dubious if  scrutinized by  the court  if the                                                               
department didn't  do a fair  job of looking after  the interests                                                               
of people.                                                                                                                      
MR. BRIGGS said  he just wanted to raise the  question and hedged                                                               
that  his research  is dated  and relates  back to  the pro  rata                                                               
reductions bill.                                                                                                                
CHAIR DYSON pointed out that this bill is different.                                                                            
MR. BRIGGS agreed.                                                                                                              
SENATOR  GREEN  moved   to  pass  SB  109   from  committee  with                                                               
individual recommendations and the accompanying fiscal note.                                                                    
SENATOR DAVIS objected.                                                                                                         
The motion  to move SB  109 from committee carried  with SENATORS                                                               
GREEN, WILKEN and  DYSON voting yea and SENATORS  GUESS AND DAVIS                                                               
voting nay.                                                                                                                     
        SB 105-MEDICAID:CHILDREN/PREGNANT WOMEN/FACILITY                                                                    
CHAIR  FRED DYSON  announced SB  105 to  be up  for consideration                                                               
MR.  BOB LABBE,  Deputy  Commissioner, Department  of Health  and                                                               
Social  Services (DHSS),  provided  a chart,  which he  explained                                                               
CHAIR  DYSON commented  that  it  didn't look  like  what he  was                                                               
aiming at  and said the committee  would continue to work  on the                                                               
         SB  30-ABORTION: INFORMED CONSENT; INFORMATION                                                                     
CHAIR FRED  DYSON announced SB 30  to be up before  the committee                                                               
and presented the  version I, which does two  things. It includes                                                               
a waiting  period and provides  doctors' offices with  the option                                                               
of  creating  an informed  consent  publication  for patients  or                                                               
providing them with the prepared pamphlet.                                                                                      
SENATOR GRETCHEN GUESS  pointed out that the bill  only makes one                                                               
CHAIR  DYSON apologized  and said  it  just puts  in the  24-hour                                                               
waiting  period and  added that  there would  be another  version                                                               
that would  insert legislative  findings that  explain compelling                                                               
state  interest  in  informed  consent.  The  Department  of  Law                                                               
believes  that  elucidation  will  help   make  a  case  if  it's                                                               
challenged in court.                                                                                                            
SENATOR GUESS  asked if  they would  be looking  for a  J version                                                               
CHAIR DYSON  replied yes and announced  that he would hold  SB 30                                                               
in committee.                                                                                                                   
CHAIR DYSON adjourned the meeting at 3:31 p.m.                                                                                  

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