03/30/2015 01:30 PM Senate HEALTH & SOCIAL SERVICES

                    ALASKA STATE LEGISLATURE                                                                                  
      SENATE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                    
                         March 30, 2015                                                                                         
                           2:42 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Bert Stedman                                                                                                            
Senator Bill Stoltze                                                                                                            
Senator Johnny Ellis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Cathy Giessel                                                                                                           
Senator Pete Kelly                                                                                                              
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 78                                                                                                              
"An Act relating to medical  assistance reform measures; relating                                                               
to  eligibility  for  medical assistance  coverage;  relating  to                                                               
medical assistance  cost containment  measures by  the Department                                                               
of Health  and Social  Services; and  providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 78                                                                                                                   
SHORT TITLE: MEDICAL ASSISTANCE COVERAGE; REFORM                                                                                
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
03/18/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/18/15       (S)       HSS, FIN                                                                                               
03/30/15       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
VALERIE DAVIDSON, Commissioner                                                                                                  
Alaska Department of Health and Social Services (DHSS)                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Reviewed SB 78.                                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
2:42:16 PM                                                                                                                    
CHAIR BERT STEDMAN  called the Senate Health  and Social Services                                                             
Standing Committee meeting  to order at 2:42 p.m.  Present at the                                                               
call to order were Senators Stoltze, Ellis, and Chair Stedman.                                                                  
                                                                                                                                
           SB 78-MEDICAL ASSISTANCE COVERAGE; REFORM                                                                        
                                                                                                                                
CHAIR STEDMAN announced the consideration of SB 78.                                                                             
                                                                                                                                
2:43:16 PM                                                                                                                    
VALERIE DAVIDSON,  Commissioner, Alaska Department of  Health and                                                               
Social  Services  (DHSS),  reviewed   SB  78.  She  related  that                                                               
Governor  Walker released  the Healthy  Alaska Plan  earlier this                                                               
year, which can be found on  DHSS's website and on the Governor's                                                               
home page.  She said that  SB 78  does several things.  It's good                                                               
for Alaskans,  for the  health of Alaskans,  and for  the economy                                                               
and the state's general fund budget.  It is a catalyst for reform                                                               
and it reduces uncompensated care.                                                                                              
                                                                                                                                
She continued to  say that the bill extends  health care coverage                                                               
to  up to  42,000 low-income  Alaskans. The  coverage extends  to                                                               
adults without  dependent children  who are  between the  ages of                                                               
19-64 who  are not otherwise  eligible for Medicaid  or Medicare.                                                               
These adults  have incomes of  up to  138 percent of  the federal                                                               
poverty  level: a  single adult  who earns  $20,314 or  an hourly                                                               
salary of  about $9.78,  based on  a 40-hour  week; or  a married                                                               
couple without dependent  children who earn about  $27,500 a year                                                               
combined  or  $13.21 an  hour  combined.  The bill  also  extends                                                               
coverage to adults  in the newly-created donut  hole; adults with                                                               
incomes  less than  100  percent of  the  federal poverty  level.                                                               
These are single adults with  incomes of about $14,720 or married                                                               
couples who  earn incomes  up to $19,920.  These Alaskans  do not                                                               
qualify  for a  marketplace subsidy  and they  don't qualify  for                                                               
regular Medicaid.                                                                                                               
                                                                                                                                
COMMISSIONER DAVIDSON explained that  more Alaskans would receive                                                               
preventive and primary care,  including behavior health services.                                                               
In  Alaska, the  five most  common  causes of  death are  cancer,                                                               
heart disease, unintentional injuries,  stroke, and chronic lower                                                               
respiratory  diseases.   Of  these,   four  are   preventable  or                                                               
treatable if caught early.                                                                                                      
                                                                                                                                
She concluded  that we  all want  Alaskans to  be as  healthy and                                                               
productive as possible. People can't  work, hunt, or fish if they                                                               
are not healthy enough to do so.                                                                                                
                                                                                                                                
2:43:51 PM                                                                                                                    
COMMISSIONER  DAVIDSON explained  several  reasons why  SB 78  is                                                               
good for  Alaska's economy. The  bill provides for  the expansion                                                               
group a higher  federal match resulting in  an immediate economic                                                               
boost. In  2016 there will  be a  100 percent federal  match. The                                                               
match transitions over  the next three years from 95  to 94 to 93                                                               
percent federal match and then to  90 percent in 2020 and beyond.                                                               
By comparison, regular Medicaid is 50 percent federal match.                                                                    
                                                                                                                                
She  stated that  the  state  has indicated  to  the Centers  for                                                               
Medicaid  and Medicare  Services that  Alaska's participation  is                                                               
contingent  upon the  state's  match being  at  least 90  percent                                                               
federal match.  This is reflected  in Section  6 of the  bill. It                                                               
will bring  over $146 million in  new federal revenue in  FY 2016                                                               
and over  $1 billion by FY  2020, resulting in an  economic boost                                                               
to the  state's economy.  These new  federal dollars  multiply in                                                               
the  state's  economy  and  result   in  about  4,000  new  jobs,                                                               
according to a study by Northern Economics.                                                                                     
                                                                                                                                
2:47:23 PM                                                                                                                    
COMMISSIONER  DAVIDSON  pointed out  SB  78  is healthy  for  the                                                               
state's general fund budget because  currently the state pays for                                                               
certain  health  care  services with  100  percent  general  fund                                                               
dollars.  Transitioning  these  costs  to  Medicaid  saves  state                                                               
general fund dollars.  In the first year, $6.6  million is saved,                                                               
including  $4  million  in  The  Department  of  Corrections,  $1                                                               
million in Chronic and Acute  Medical Assistance (CAMA) programs,                                                               
and $1.5 million  in Behavioral Health Grants. In  the out years,                                                               
those offsets  increase to over  $24.5 million. The  general fund                                                               
offsets total over $107 million in the first six years.                                                                         
                                                                                                                                
She  emphasized  that  the  bill's   fiscal  notes  do  not  show                                                               
additional savings that would be  due to reductions in recidivism                                                               
rates.  She compared  Alaska  to Texas  before  they invested  in                                                               
behavior health  services for prisoners.  Between 2000  and 2007,                                                               
Texas saw a 22 percent  reduction in recidivism rates after doing                                                               
so. Alaska  has the opportunity  to build healthy Alaskans  or to                                                               
build  another  prison,  based upon  projections.  She  suggested                                                               
Medicaid expansion  is one  of the best  ways to  finance healthy                                                               
Alaskans  with at  least a  90 percent  federal match  to provide                                                               
behavior health services.                                                                                                       
                                                                                                                                
2:49:13 PM                                                                                                                    
COMMISSIONER  DAVIDSON stated  that SB  78  lays out  a path  for                                                               
Medicaid reform  that will also  save Alaska millions  of dollars                                                               
and  ensure that  Alaska's Medicaid  program is  sustainable over                                                               
the long  term. Given  the current  financial situation,  DHSS is                                                               
very  invested in  making the  Medicaid program  as efficient  as                                                               
possible.  She  said,  "We're  building   upon  the  reforms  the                                                               
department has already undertaken."  SB 78 directs the department                                                               
to look  at all options  available to improve Medicaid  and limit                                                               
costs. These reforms are found in  Section 10 and include an 1115                                                               
waiver  to maximize  100 percent  federal match  by working  with                                                               
Tribal   Health  providers   to  increase   the  number   of  IHS                                                               
beneficiaries  who  receive  services, and  1915(i)  and  1915(k)                                                               
options that  result in savings  for Alaskans. The (i)  option is                                                               
for  Alaskans who  don't meet  nursing  level of  care, but  meet                                                               
other  criteria. The  (k)  option improves  savings  on home  and                                                               
community-based services to Medicaid eligible individuals.                                                                      
                                                                                                                                
She  said  the bill  also  includes  broad demonstration  project                                                               
authority,  such as  payment reform,  care management,  workforce                                                               
development  and  innovation,  and  innovative  service  delivery                                                               
models.                                                                                                                         
                                                                                                                                
2:51:43 PM                                                                                                                    
COMMISSIONER   DAVIDSON   addressed  tele-health   delivery   and                                                               
uncompensated   care  options   in  the   bill.  She   said  that                                                               
uncompensated care  costs over  $90 million each  year and  SB 78                                                               
takes advantages  of federal  resources to  pay for  those costs.                                                               
She  used  Arizona  as  example.   They  received  a  30  percent                                                               
reduction  in uncompensated  care  rate in  their  first year  of                                                               
expansion.                                                                                                                      
                                                                                                                                
2:53:08 PM                                                                                                                    
CHAIR STEDMAN  turned to the  fiscal note summary page  and asked                                                               
if  Commissioner  Davidson  expects  to see  a  savings  of  $107                                                               
million over the next six years from SB 78.                                                                                     
                                                                                                                                
COMMISSIONER DAVIDSON answered  yes - in terms of  what the state                                                               
is paying  for with general  fund dollars for  Corrections, CAMA,                                                               
and Behavior Health Grants.                                                                                                     
                                                                                                                                
CHAIR  STEDMAN noted  that $7  million is  in Corrections,  which                                                               
still has to be refined, leaving a targeted $100 million.                                                                       
                                                                                                                                
COMMISSIONER  DAVIDSON answered  correct. Savings  in Corrections                                                               
do  not include  opportunities for  Contract Health  Purchases or                                                               
Behavioral Health Services.                                                                                                     
                                                                                                                                
2:54:24 PM                                                                                                                    
CHAIR STEDMAN  noted that  the fiscal  notes are  preliminary and                                                               
are being  revised by  various staff and  agencies. They  will be                                                               
shared with committee members and staff. He said he is surprised                                                                
at the dollar amount of savings in the bill.                                                                                    
                                                                                                                                
2:55:58 PM                                                                                                                    
SENATOR STOLTZE asked that the Department of Revenue be present                                                                 
in future committee meetings. He requested more information on                                                                  
the hold harmless provision in Section 2.                                                                                       
                                                                                                                                
CHAIR STEDMAN noted that the issues will be worked out. He asked                                                                
for final comments.                                                                                                             
                                                                                                                                
SB 78 was held in committee.                                                                                                    
                                                                                                                                
2:57:22 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Stedman adjourned the Senate Health & Social Services                                                                     
Standing Committee hearing at 2:57 p.m.