Legislature(2003 - 2004)
05/07/2003 01:44 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
May 7, 2003
1:44 p.m.
TAPE(S) 03-27
MEMBERS PRESENT
Senator Fred Dyson, Chair
Senator Lyda Green, Vice Chair
Senator Bettye Davis
Senator Gretchen Guess
MEMBERS ABSENT
Senator Gary Wilken
COMMITTEE CALENDAR
^BRIEFING: MEDICAID FUNDING AND PROGRAM ISSUES
Federal Center for Medicare and Medicaid Services:
Mr. Richard Strauss, Federal Center for Medicare and Medicaid
Central Office
Ms. Elizabeth Trias, Division of Medicaid and Children's Health,
Federal Center for Medicare and Medicaid Services - Seattle
Mr. John Gaisford, Director, Division of Medicaid, Department of
Health and Social Services
Mr. Ross Soboleff, Public Information Officer, Department of
Health and Social Services
^CONFIRMATION HEARINGS:
^BOARD OF CERTIFIED DIRECT ENTRY MIDWIVES
Ms. Mila Cosgrove
^BOARD OF PHARMACY
Mr. Michael Pauley
^UA BOARD OF REGENTS
Mr. William Altland - David Parks - UAA Board of Regents
^MENTAL HEALTH TRUST AUTHORITY
Mr. Nelson Page - Mental Health Trust Authority
Mr. John Malone - Mental Health Trust Authority
^BOARD OF OCCUPATIONAL AND PHYSICAL THERAPY
Ms. Mary Ann Paul
^BOARD OF OPTOMETRY
Mr. John Cobbett
Mr. Thomas Carter
^STATE MEDICAL BOARD
Mr. John Troxel
Mr. Robert Breffeilh
Ms. Debbie Joslin
Mr. G. Bert Flaming
^BOARD OF DISPENSING OPTICIANS
Ms. Roberta Rawcliffe
BOARD OF DENTAL EXAMINERS
Mr. Kevin Gottlieb
Mr. Robert Warren
Mr. David Eichler
^BOARD OF NURSING
Ms. Mary Weymiller
^PROFESSIONAL TEACHING PRACTICES COMMISSION
Ms. Cynthia Curran
^BOARD OF PSYCHOLOGISTS & PSYCHOLOGICAL ASSOCIATES
Mr. Lorin Bradbury
Mr. John Miller
CONFIRMATIONS ADVANCED
ACTION NARRATIVE
TAPE 03-27, SIDE A
CHAIR FRED DYSON called the Senate Health, Education and Social
Services Standing Committee meeting to order at 1:44 p.m.
SENATOR DAVIS was present. He said the committee would first
take up the briefing by the Federal Center for Medicare and
Medicaid Services.
MR. RICHARD STRAUSS, Federal Center for Medicare and Medicaid
Services, said he would focus on state operations for the
Medicaid program.
MS. ELIZABETH TRIAS, Federal Center for Medicare and Medicaid
Services, said she is in the Seattle regional office with the
Division of Medicaid and Children's Health. She is the regional
office national account representative and Mr. Straus is the
central office counterpart.
MR. JOHN GAISFORD said he is Director of Medicaid at the
Department of Health and Social Services.
CHAIR DYSON asked if anyone wanted to make a statement.
MR. STRAUSS said that one of their major functions is working
with the state on Medicaid and Medicare issues in their capacity
as the national account representatives. They wanted to
introduce themselves to the legislative branch of government,
because a lot of the issues they deal with relate to this
committee.
MS. TRIAS said she couldn't add much more, but said this is
their second visit with the Alaska legislature and they hope to
gather some information on issues of concern to them.
MR. GAISFORD stated that on a semi-annual basis the central and
regional offices visit each state. This time, because of the
state's financial problems, they are making a point of talking
with representatives of the states. He said that this is a
friendly and regular visit.
CHAIR DYSON said he hears that we can't get physicians to treat
federally reimbursed programs. The physicians represent that
they can't afford it and lose money on most of them through a
combination of their insurance and overhead. He asked if that is
true and what are they and the legislature going to do about it.
MS. TRIAS replied that last year [access to Medicaid and
Medicare services] seemed to be the real issue. She believed
this was being addressed with some part of a study by the Center
for Medicaid Services (CMS) in Baltimore.
CHAIR DYSON commented that access meant inadequate supply of
services due to government price fixing that isn't reflective of
what the real market is.
MS. TRIAS agreed, in part, with his statement.
SENATORS GUESS AND GREEN arrived at 1:50 p.m.
SENATOR DAVIS said she knows that all states are having problems
with these issues and asked what kind of assistance the federal
government is providing to them.
MR. STRAUSS responded that he mostly deals with the Medicaid and
the state children's health insurance programs. Those programs
are funded as a state/federal partnership according to a
formula. He explained there is a certain amount of flexibility
in terms of structuring programs they might want to establish in
Alaska, like the Alaska Natives doing outreach and claiming
those costs in the Medicaid program. The idea is to try and work
with the Medicaid agency here to see what can be done in that
capacity. "Assuming that these activities are allowable, then
there would be money available from the federal perspective to
jointly share with you to do those functions..."
He said their focus as national account representative is to try
to be more of an advocate within the framework of what they can
do for Alaska.
SENATOR DAVIS said she was interested in things they might be
able to assist states with, like waivers that could be granted
by the federal government, things that other states are doing
that might work here and comparisons.
MR. GAISFORD said they had been talking this morning about how
to improve the way the state gets a federal match with Indian
Health Service claims. The state is working to try to expand all
the areas they can match. They did not look at or address what
other states may be doing.
CHAIR DYSON asked if there were any limits on co-payments.
MR. STRAUSS answered there are federal limits on what states can
charge for co-pays.
CHAIR DYSON asked if there was anything the state could not have
co-payment on.
MR. STRAUSS replied there are certain mandatory groups that
aren't supposed to have any co-pays and there is certain
flexibility with some other options, both with services and
eligibility. Some groups would have nominal co-pays.
CHAIR DYSON asked, "Why nominal?"
MR. STRAUSS replied from a historical basis he thought the idea
was to give the client the idea that they are responsible for
paying something, but not to be overly burdensome.
CHAIR DYSON countered that federal requirements let the federal
government define what is overly burdensome.
MR. STRAUSS indicated the answer was yes.
CHAIR DYSON said he talked with major hospitals in our state and
found that when they bill for services, those who are reimbursed
by Medicaid give between a 40% and a 60% discount. Someone said
that was for physician services.
CHAIR DYSON continued that those who have a third party payer,
like an insurance company, get a similar discount, "and the poor
sap that pays his own bills gets to pay 100%."
It seemed to him that the current administration should be very
uncomfortable penalizing people who pay their own bills. He
asked if there was any move afoot in D.C. to rectify the old
American tradition of taking responsibility for yourself and
paying your own bills.
MR. STRAUSS said that was a complex question involving private
sector people paying for themselves and Medicaid people somehow
paying less. From his perspective, statutes, regulations and
policies lay out what he can do. An easier question for him to
answer would be what can he do to try to tailor the program to
some of the state's specific concerns, like the issue of
equitability.
CHAIR DYSON responded:
The net result of government price fixing is that the
costs get shifted to the other folks and they end up
subsidizing the clientele that Medicaid underpays for
and so then you're driving people out of the category
of paying their own bills and taking responsibility
and making them, at least in our state, an endangered
species, if not extinct.
He said it apparently is a result of not letting the marketplace
dictate the cost of services and the net result is that we're
getting more of what we don't want and less of what we do want.
MR. STRAUSS reinforced some of his concerns about having better
controls in place on how people utilize the services and co-pay
is one way of doing that.
CHAIR DYSON said one of the mandatory services is family
planning and there is a court decision saying if the state
provides any pregnancy related services, it has to provide all
of them including terminating an unborn child. He asked if the
federal government considered termination of an unborn child as
part of family planning.
MS. TRIAS replied that abortions are not considered family
planning services and they are allowed under Medicaid
regulations if they meet certain criteria, like being due to
rape or incest or to save the life of the mother.
CHAIR DYSON said he heard that some family planning clinics are
not reporting statutory rape and asked if that were proven to be
true, could they be disqualified from receiving federal funds.
MR. STRAUSS responded that their relationship is with the state
and not clinics.
MR. GAISFORD added that they have to enroll providers who have
to be licensed according to state law. If they were prosecuted
and found guilty and their license was taken away, they would
not be able to be enrolled. The federal government would
intervene if they paid an unenrolled provider.
CHAIR DYSON wanted to know what other jurisdictions were doing
to crack down on Medicaid fraud.
MS. TRIAS responded that she is also the fraud and abuse
coordinator for region 10 in Seattle. They have a national
program called Medicaid Alliance for Program Safeguards that has
an individual in each of the regions, a national group of
central office people, and a southern consortium in Atlanta.
They have been trying to address this by doing program integrity
reviews in different states. From that review, they are trying
to assess how well the state is carrying out their activities on
fraud and abuse in terms of what methods are in place to address
the issues. They talked to the Medicaid Fraud Control Unit
(MFCU) to see what kind of relationship they have with state
people in terms of their referrals and try to work with them in
developing detection systems and decision support systems to
enhance ability to detect potentially fraudulent providers. Once
they have a picture of what a state is doing, they try to work
with the current Health Care Services Division (formerly the
Division of Medical Assistance).
MR. GAISFORD told them that national estimates indicate a 10%
fraud figure, but Ms. Trias added that they don't know where
that figure came from. Fraud is difficult to measure and the
term "inappropriate payments" is used.
MR. GAISFORD said that intent is often hard to establish. In
many cases the provider doesn't intend to be fraudulent, but
there are bad billing practices. Historically, state systems
have not been that good. They are hoping to implement a new
system and have put out an RFP, but are now in litigation with
one of the respondents over the Alaska preferences. There has
been an initial finding in their favor, however, and attorneys
are assessing whether or not the ruling is firm enough to go
forward on. The federal government also must review the
contract. They hope to increase the amount of work they can do
in this area. He noted that SB 41 on the minimum number of
audits that can be ongoing in a state in a year is of interest
to them, also.
CHAIR DYSON said he hoped that most of Medicaid billing frauds
were inadvertent.
MS. TRIAS noted that technology is great way to key in on poor
billing practices and Alaska needs to settle on a decision
support system.
SENATOR GREEN said a couple of years ago an announcement was
made that all Medicaid payments would be paid within 11 days and
therefore any review of the billing was many months later and
had to have several red flags and anomalies for either the
provider or the recipient. She asked if we are still doing the
11 day payment or is there is system in place that checks the
billing immediately so that it doesn't get paid unless it passes
muster.
MR. STRAUSS replied that the answer to that question would be
more in how the state sets up its system to make the payments
within the framework. On the federal side, there are
requirements, which is a different concern and that is provider
participation. There are requirements in statute for timely
payment of claims; almost all of them must be paid within a year
and a percent within 30 days, etc. The concern is that the
providers get the money as fast as they can along with the idea
that you don't pay for something that shouldn't be paid for.
MR. GAISFORD agreed that the rule is 90% within 30 days and the
trick to that is clean claims or claims with enough information
to be correct. He said there are hundreds of thousands of edits
and audits that are checked against each claim. The ones Senator
Green was referring to are three basic kinds. Header checks
happen when the claim first comes in which makes sure the person
is the right person to receive the services; the second is
medical checks or is it the right kind of service and provider;
and historic audits. All claims go through these audits before
payment. He elaborated that historic audits check things like
seeing if the recipient is female if a female procedure was done
and if an appendix has been taken out more than one time.
SENATOR GREEN said it has to be more difficult for someone who
is getting prescriptions filled for street use.
MR. GAISFORD said that is what the audits are intended to
identify. One of their cost containment features is to expand
the number of people they have targeted as potential misusers of
that and have them tied to a particular provider and pharmacy.
This is a very difficult thing to do.
SENATOR GREEN said she meant the Medicaid audit where they talk
about waste, which is directed more inward toward the system.
She asked if 7% waste was a valid figure.
MS. GAISFORD said they didn't know for sure.
SENATOR GREEN said if you add the estimated 7% waste and the 10%
erroneous billing, that is a lot of wasted federal and state
dollars in a state like Alaska with a very meager population.
MR. STRAUSS agreed that it is a lot, but he emphasized that he
identified the waste as inefficiency in the system.
MS. TRIAS addressed Senator Green's concern with edits and
audits saying the state has the option of using prepay review,
which looks at providers billings.
SENATOR GREEN asked if Alaska does that.
MR. GAISFORD added that we do prior authorizations.
MS. TRIAS said on the recipient side that they could lock
someone into using one pharmacy and that wouldn't be viewed as
punitive.
CHAIR DYSON asked if they require states to have fraud control
and investigation and had they ever disqualified a state because
of not meeting standards.
MS. TRIAS said they hadn't done that.
MR. STRAUSS said that they don't disqualify states, but they do
recoup money from states.
MS. TRIAS responded to a question Senator Green had about
Medicaid fraud saying that they have discovered in a lot of
instances there is an error in the billing done by the billing
clerk who didn't realize, for instance, some change in code.
TAPE 03-27, SIDE B
CHAIR DYSON said he thought they were being far too naïve. He
thought they should be running stings in every state and holding
their feet to the fire.
MR. STRAUSS commented that they had participated in a pharmacy
sting in California and are not totally naïve. Both the state
and the federal government benefit from preventing and
identifying fraud. They share in funding of the programs and
recognize that the state administers their program. If the
federal government held the state's feet to the fire, there
would be some push back because they would not be doing it in
the right way.
CHAIR DYSON said their point is that the ones who ultimately pay
are the other needy people who don't have the funds.
MR. STRAUSS said that he was sure they would participate in
funding anything the state was going to do on fraud.
CHAIR DYSON said he really appreciated all the work they are
doing and that they have a huge job ahead of them. The
legislators are eager to help.
MR. STRAUSS said that he heard them say today that they are
interested in provider participation, inequitable co-pay
treatment, family planning, fraud and abuse, waste, and quality
issues.
CHAIR DYSON indicated agreement and commented that Ms. Trias
said that there were discussions going on about what government
price fixing in medical services is doing in, what she calls,
access.
MS. TRIAS said she would get that information to Mr. Strauss who
would get that to him.
2:37 - 2:38 p.m. - at ease
CHAIR DYSON announced that they would begin the confirmation
hearings.
MS. MILA COSGROVE, public member nominee for the Board of
Certified Direct Entry Midwifes, said she is interested in
seeing direct entry midwifery care being an option for women who
are having children. She thought it important that direct entry
midwives be regulated so there are standards of care and safety
and a medical review process.
SENATOR GREEN said that she had reviewed the names before the
committee today and she is satisfied with their nominations. She
would not be able to stay to forward the names on to the joint
bodies.
CHAIR DYSON said there was no objection to that.
2:43 - 2:44 p.m. - at ease
CHAIR DYSON called the meeting back to order and asked Mr.
Pauley to tell the committee why he was interested in serving on
the Board of Pharmacy.
MR. MICHAEL PAULEY, nominee for the Board of Pharmacy, said the
governor appointed him to fill out the remainder of the term for
the public seat on the board. He has worked as a legislative aid
in Juneau and in Washington D.C. and had an opportunity to work
with legislation that dealt with controlled substance issues,
which is one of their big priorities.
MS. DEBBIE JOSLIN, nominee for the Medical Board, said she has
been appointed by the governor as the public member of the board
and said that there is only one other woman on the board and
that it would be good to have another one.
CHAIR DYSON thanked the nominees for their comments and said
they would forward all the names to the joint session. There
were no objections and he adjourned the meeting at 2:47 p.m.
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