Legislature(2003 - 2004)
03/26/2003 01:32 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ 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
emergency."
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
continues.
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
qualifies.
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
intention.
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
follows:
· 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
setting.
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
facilities.
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
protected."
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
anticipated.
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
needs.
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
eligible.
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
authority...."
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
something....
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
again.
MR. BOB LABBE, Deputy Commissioner, Department of Health and
Social Services (DHSS), provided a chart, which he explained
briefly.
CHAIR DYSON commented that it didn't look like what he was
aiming at and said the committee would continue to work on the
bill.
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
change.
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
next.
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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