HOUSE BILL NO. 263 "An Act making appropriations for the operating and loan program expenses of state government and for certain programs; capitalizing funds; amending appropriations; making supplemental appropriations; making appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date." HOUSE BILL NO. 265 "An Act making appropriations for the operating and capital expenses of the state's integrated comprehensive mental health program; and providing for an effective date." ^PRESENTATION: MEDICAID RATE REVIEW STUDY BY GUIDEHOUSE 1:36:48 PM EMILY RICCI, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH, reviewed the Medicaid program with prepared remarks: Alaska's Medicaid program is a joint state/federal program that provides health insurance to low income Alaskans. As of December 2025, it provided health insurance to over 210,000 Alaskans or one in four Alaskans. Medicaid provides critical services an essential revenue to healthcare providers. It is also a very large budget component as this committee is aware. So the budget must be carefully managed to ensure the value of the dollars being spent align with the outcomes that we want to see. Fundamentally, that's what we are trying to review through the rate methodology study. When I started in this role in 2022, we were emerging from the pandemic and we are moving back into business as usual mode. But the effects of the pandemic were very present in the healthcare sector as in other sectors. Inflation was impacting all sectors, workforce was and remains a critical issue that we hear frequently from both providers and others as a challenge, behavioral health needs were skyrocketing across the U.S. including Alaska (particularly among our youth), and chronic and acute conditions were beginning to emerge and accelerate in ways that we had not seen before. The legislature was responsive and provided increased rates for home and community based waiver services and supported the department as it implemented behavioral health rate increases, but we continue to hear from providers that these increases were not enough and that there were gaps in their ability to meet the needs and provide the services that their population was experiencing. So we needed to consider, is the issue that there's not enough funding or is it that how our funds are established and how they are paid out may not reflect the realities of the system that we want to see and the outcomes that we want to see. Is the methodology underlying our rate structures right? How can we be sure that further investment in the Medicaid program aligns with the gaps in our system that we want to close? Again, this is a question that underlies the foundation of our Medicaid rate methodology study. Like everything in Medicaid, our rate structure is very complicated. We have over a dozen different rate methodologies in our Medicaid system. To tackle this we broke the study into two phases and today Guidehouse will present on the first phase of that study. We prioritize the services where we are hearing the most concern from both our stakeholders and our providers. These include behavioral health services, long-term care services (home and community based waiver services), federally qualified health centers, and our transportation services. Other types of rates will be addressed in phase two, which we are building out over the next few months. Work on the first phase started last fall and final reports for behavioral health and long term care services were completed in this last fall or early winter - about a year later. The federally qualified health center reports were fully finalized at the end of last week and we are finalizing the transportation report; however, we've shared many of those findings already with stakeholders publicly and we will be speaking to those today. 1:40:22 PM Ms. Ricci continued to read from prepared remarks: These studies and recommendations are intended to provide policymakers and appropriators with options and structures to consider when you're evaluating future needs and requests for the Medicaid program. We have asked the contractor Guidehouse to provide fiscal estimates that reflect Fiscal Year 25. The intent was to offer a sense of magnitude of what some of these options would be. There is no expectation from the department that these recommendations be implemented all at once or potentially at all. This depends on discussions that will occur this year and the next several years by policymakers and appropriators. Many of the questions that the rate methodology examines are ones that we have heard from stakeholders. We're happy to put some context and numbers around those discussions so that they can inform some of the future decisions that we have to make. We know that this is especially important given our fiscal situation. As we work to balance the needs of the healthcare system and Alaskans along with our fiscal constraints, we hope that you find this useful information to consider as we move forward into the future. 1:41:40 PM COY JONES, PROJECT DIRECTOR, GUIDEHOUSE, introduced himself and relayed that he led the Guidehouse rate evaluation. He provided a PowerPoint presentation titled "Alaska Medicaid Rate Methodology Review," dated February 9, 2026 (copy on file). He highlighted definitions and common terms including acronyms on slide 2. He remarked that Ms. Ricci did a comprehensive job talking about the nature of the Guidehouse evaluation. He stated that what the State of Alaska was looking for in the evaluation impacted the scope and nature of the recommendations. Mr. Jones turned to slide 4 titled "What is a Rate Evaluation?" He called out four words on the slide including comprehensive, actual, standardized, and transparent. He stated that one of the things that distinguished the evaluation from those in other states was that the evaluation for Alaska involved an ambitious program to look at the many methodologies the state used across Medicaid. Like Alaska, many states used multiple methodologies and it could be cumbersome to look at them together; therefore, many states looked at different programs in different years, which had its virtues, but one of the things that was missed was an attempt to bring them all together to standardize the rate methodologies across the programs to make them transparent. He stated it was an opportunity to look at the methodologies together in a phase one and two approach and implement changes in a rational way when there was need for uniformity in areas like behavioral health services and other home and community based services. Mr. Jones clarified that the work done by Guidehouse reflected an evaluation rather than a rebase. He explained that Guidehouse was given a broad scope in terms of making recommendations on the methodology. He detailed that the evaluation did not just look at the existing services and recommend a rate. Guidehouse was invited to look at the methodologies to determine whether they were supporting the needed services and to make recommendations about establishing new needed services or improving service delivery. He stated that the Guidehouse recommendations reflected the broader point of view. 1:45:30 PM Mr. Jones turned to slide 5 titled "Who was Involved?" The evaluation involved Guidehouse, the Department of Health (DOH), Alaska providers (tribal and non-tribal), and Alaskans with lived experience, and broader input from a wide range of stakeholder groups. Mr. Jones moved to slide 6 titled "Engagement Scope and Phase 1 Services Categories." Guidehouse was at the point of completing phase 1, which focused on four major types of services including behavioral health, long term services and supports (LTSS), federally qualified health centers (FQHC), and medical transportation. The slide showed different programs that fell under each category. Behavioral health included community services - it did not include the state hospital - for mental health and substance use disorder services (SUD). He detailed that behavioral health included a range of high intensity services for people with a range of needs. The same was true for SUD that included a range from therapy services to major residential services. The second category was Long Term Services and Supports (LTSS), which included home and community based services for the elderly and physically disabled population as well as the developmental disabilities population. He detailed that the two key populations had different needs even though there was significant overlap in the types of services received. The services could range from a personal care attendant coming into a person's home to assisted living and major residential services. Mr. Jones moved to the third category on slide 6. Federally Qualified Health Centers (FQHCs) were a form of health clinic that provided medical and behavioral health care serving needy populations in locations when there was often no other provider. He noted there were FQHCs all throughout Alaska. The Guidehouse evaluation looked at the Prospective Payment System (PPS) and the Alternative Payment Methodology (APM), which were various ways to reimburse the facilities. The fourth category was medical transportation and included everything Medicaid paid for including emergency transportation such as air, water, and ground ambulance; and nonemergency transportation such as taxi, ride shares, and public transit to get people to their medical appointments. He remarked that because it could be a big undertaking in Alaska to get people where they need to go, medical transportation also included lodging and meals. Mr. Jones turned to "Stakeholder Engagement" on slide 7. The evaluation sought input from as many types of stakeholders as possible. He noted that providers were a key group, but Guidehouse also met with broader provider and industry associations, advocacy organizations, labor groups who delivered services, tribal health organizations, and self-advocates and families of those with lived experiences. Guidehouse used a number of venues to try to get and receive as much information as possible. 1:50:44 PM Representative Tomaszewski stated there had been a massive amount of news about fraud happening within the community health and transportation category in Minnesota. He asked if it had occurred in Alaska and who was checking on all of the people taking massive amounts of Medicaid and different healthcare funding. Mr. Jones answered that the main way the study intersected with emerging issues that was important for Alaska was to understand how services were delivered and the cost of the services. The evaluation had looked at the costs incurred by providers to give a sense of what costs were at present. He noted it was not a program integrity effort, which was not a part of the scope. Ms. Ricci elaborated that DOH had a Program Integrity Unit that worked with a Medicaid Fraud Unit under the Department of Law (DOL). She stated there had been increasing activity to publicize some of the current program integrity efforts. She relayed that "how we pay reflects how people provide services." There were some areas where the state needed to make adjustments into how rates were structured because there may be a rate that provided payments on a 15-minute basis, which incentivized people to bill in 15-minute increments. She stated it drove up the cost and people were not necessarily getting better services. She suggested the state could look at establishing a daily rate, which provided a limit and incentive for services to occur in a different way. She explained that those were some of the things DOH asked Guidehouse to look at to make sure what the state was paying for reflected services it wanted to see from providers. Representative Tomaszewski referenced organizations who were not even providing services but were turning in receipts fraudulently. He was thinking about outright fraudulent organizations on transportation. He asked how to ensure it was not happening in Alaska. Ms. Ricci responded that she would be happy to update the committee with an outline from the Program Integrity Unit showing how it looked at unusual behavior or billings in the Medicaid system combined with its routine random program integrity analysis and audits. 1:54:39 PM Co-Chair Josephson recalled that former colleague, Jay Fayette, one of the "toughest state prosecutors around" who led the homicide unit for years was selected to run the Medicaid Fraud Unit for the DOL Criminal Division. He stated his understanding that the state did prosecute individuals. Ms. Ricci responded, "Correct." Representative Galvin presumed the map [of Alaska] shown on slide 8 represented the Guidehouse focus areas. She observed that the North Slope was not represented on the map. She was curious about Port Heiden where there was not a choice for the hub community. She asked about the transportation piece of Medicaid. She had heard that the charge [to Medicaid] for the service was only when a patient was in the helicopter or ambulance. She asked about remote communities and considered the possibility that a patient may have to pay for the cost of the emergency service to reach their rural community, while only receiving reimbursement for one way. She thought it must skew Alaska's rates. 1:57:03 PM Mr. Jones commented first on the nature of strategy on stakeholder engagement in the evaluation. He relayed that Guidehouse wanted to talk to as many people as possible, which explained the reason for being in Anchorage, Juneau, and Fairbanks. Another important point was to visit all of the major regions in the state. He highlighted that Guidehouse included five or six regions [shown on the map on slide 8]. He noted that Kotzebue and Southeastern Alaska were isolated in very different ways with cultural, logistical, and demographic constraints and characteristics. He noted that Guidehouse wanted to be on the ground to see the differences. Another important motivator was to have a demographic cross section. Guidehouse was interested in urban communities and understanding how the hub and spoke model worked in Alaska. Mr. Jones elaborated that Guidehouse had visited rural hub communities as well including Kotzebue, Bethel, and Dillingham. He noted that Port Heiden was the single village represented. He sensed that "many folks did not go to the village level." Guidehouse learned how difficult it was get to the villages; it was extremely instructive merely getting transportation to a village. He explained that Port Heiden was the second option because the weather had been too poor to travel to the first option. He stressed that villages had a unique perspective that was not the same perspective as even the rural hub communities. Villages were served by providers based in rural hub communities, but their perception of their needs was often different than the vantage point in Anchorage and in the hub communities. He would have liked to visit more villages if Guidehouse had more time and resources. He would have liked to visit the North Slope more. He recognized that Kotzebue was not necessarily the only or best representative of a very expansive area in northern Alaska. Mr. Jones addressed the second part of Representative Galvin's question about things that went into transportation that were not covered in Medicaid policy. He understood why the policy existed. He noted it was not only a state policy; it was the way the Medicaid program and the state/federal partnership worked. He stated that Medicaid was a program that was created to cover medical costs and transportation in most states was fairly peripheral to the medical needs. The rules were built for providing medical services so payment did not cover anything that was not directly related or did not require the delivery of medical services. He stated it was a constraint on the transportation side; if people did not get to their location or someone was waiting and it was not time actual transportation, it was not added in or billed separately. He expounded that providers were still incurring costs for that; therefore, a rate was needed that would adequately account for the fact that there were a lot of "uncliented" minutes. For example, a plane may take off but may have to turn back. He noted it was still a cost, but it could not be billed. Part of the methodology used for the services accounted for unbillable time and the cost incurred. 2:02:33 PM Representative Hannan looked at the last bullet on slide 8 specifying that Guidehouse met with providers representing service provision across all four work streams. She asked if work streams were the same as service categories. Mr. Jones replied that the four work streams were equivalent to what was shown on the previous slide. He remarked that it was internal jargon. There were slightly different Guidehouse teams working on all four of the programs. Representative Hannan asked for the background behind the Guidehouse. She asked if the company had worked for DOH before and if it was work that was done for other states as well. Mr. Jones replied that Guidehouse was a national firm working in healthcare and other areas of state and federal government as well as the private sector. The company had a particular focus in healthcare and he worked on state and local government and state health in particular. He explained that Guidehouse did the work in many states. He had personally worked on several projects in Alaska in the past and Guidehouse had some experience with Alaska but not within the last five years. The company did rate evaluations across the U.S. In the case of Alaska, Guidehouse did not lean too heavily on its work in the Lower 48 because there were some unique issues and challenges that did not have "out of the box" solutions. In some context the national experience was helpful because Guidehouse could talk about the benchmarks and expectations in other states. He noted it would show up when talking about indirect costs or transportation costs. 2:04:56 PM Representative Hannan referenced Mr. Jones' earlier discussion about rate structures versus rate methodologies. She asked if a methodology produced a rate structure or if the terms were interchangeable. Mr. Jones explained that the methodology generally defined where a rate landed. There was also a rate structure that was not decided by the methodology, which was what services the state wanted to deliver. A rate structure would be fitted to those services in order to determine how to pay for the services. Mr. Jones looked at the approach to rate-building on slide 9. Guidehouse used an independent rate buildup model for most of the services. For services in phase 1 such as behavioral health and LTSS home and community based services there was typically no data unless a state required providers to give their costs. He explained that it had been necessary to make the data through cost surveys. He detailed that Guidehouse asked the providers for their costs, which worked great for Alaska because they did not want to piggyback off of other costs seen in the rest of the country. He elaborated that Guidehouse used the rates given by providers and built up a rate based on the costs. The delivery of the services required practitioner time, administrative overhead, travel components, different kinds of indirect costs, wages, staffing ratios, and employee benefits. Guidehouse compiled the information in rate models at a cost based rate what it would cost for a provider to deliver a quality service. 2:07:49 PM Mr. Jones moved to "Data Sources" on slide 10. He stated that actual costs were extremely important to understand in Alaska because the cost profile for delivering services was unlike any other state. The costs were captured in the survey through different cost reports for FQHCs and were benchmarked against other publicly available data, which drove the benchmarks around what Guidehouse thought services should cost. Mr. Jones moved to slide 12 titled "Behavioral Health Rate Evaluation Findings" and discussed three key findings. Guidehouse was recommending some overall rate increases for service reimbursement, but the biggest issue it found was that service reimbursement was misaligned. Many services currently had adequate reimbursement and many services probably paid more than benchmarks indicated was needed, but some actual costs were significantly lower than the service. Guidehouse was recommending that behavioral health in Alaska needed rate equity or rebalancing. He explained that it was not that an infusion of significantly more money was needed. He detailed that before the dollars went into the service there was a need to calibrate the service to pay appropriately, otherwise it provided incentives to over deliver a service and under deliver others. Mr. Jones second key point listed on slide 12 related to indirect costs, which represent the overhead costs of delivering services. He relayed that the indirect costs were disproportionately high for LTSS and behavioral health. He detailed that for every dollar spent on behavioral health about 40 cents went to indirect costs, which was more than in other locations nationwide. The third component was that a lack of historical standards in the rate reimbursement contributed to misalignment of the system and no way to drive efficiency. The state was paying for the cost of services and the costs increased annually. 2:10:39 PM Representative Stapp asked Mr. Jones to elaborate on the delivery of services being so high. He asked how the 40 cents on the dollar compared to other jurisdictions. He asked if it reflected administrative costs by providers. Mr. Jones replied that the indirect costs reflected two "cost buckets" including administrative costs and program support costs. An example of program support costs was another worker assisting and delivering services who could not bill for the services themselves. The cost was higher in Alaska than in other jurisdictions. He explained that 30 percent of the cost would be very high in most other jurisdictions, while Alaska was at 40 percent. The rate was usually between 20 and 30 percent including overhead and program support. He did not have a strong theory about the driver of the cost. He noted there were higher personnel costs in Alaska, but the higher costs were direct and indirect care costs. Guidehouse calculated the indirect costs as a percentage of the direct care costs. He elaborated that if there were high direct care costs, there could also be high indirect care costs without it being disproportionately high relative to the direct costs. Representative Stapp thought it was odd to be spending 40 cents on the dollar for administrative costs. He stated that on the health side the federal government required insurance companies to spend 15 percent. He asked if Guidehouse had been able to determine whether or not the additional nonbillable personnel utilized in the direct care process was more of a driver. Alternatively, he asked if it was the paperwork. 2:13:41 PM Mr. Jones responded that one of the ways Guidehouse conducted its cost survey in order to make it manageable for providers was to broadly capture the cost categories and indirect costs but it did not ask questions about who was in what administrative personnel role and what their salaries were. The information was captured at a high level. Guidehouse could identify broadly what was driving the indirect care costs such as administrative personnel, program support, transportation, or information technology; however, it could not tell if there was a particular driver (e.g., broadband being more expensive in certain parts of Alaska). Representative Moore looked at slide 10 and asked what percentage of the providers responded to the provider cost survey. Mr. Jones answered that it was different for each program, but generally Guidehouse was aiming at a response rate of about 30 percent. He deferred to his colleague. CLAIRE PAYNE, BEHAVIORAL HEALTH LEAD, GUIDEHOUSE, responded that the response rate varied depending on the service. She explained that for behavioral health specifically, Guidehouse looked at the number of providers as well as the total Medicaid dollars the providers delivered. For example, there could be 100 providers that may only do a little Medicaid and did not have the same labor force. On the behavioral health side, about 60 percent of the Medicaid dollars were responded to in the survey. She relayed that the company Qualtrics conducted a lot of the surveys in the U.S. and it identified a representative sample at about 35 percent. She noted the response rate in Alaska was almost double that figure. She believed the other providers were similar. She relayed that the FQHC response was quite different because it was a much smaller provider pool. 2:16:19 PM Representative Moore asked if the costs reported by providers were validated. Mr. Jones answered that Guidehouse made a distinction between a cost report, which was usually audited and certified, and a cost survey. For the sake of time and expediency to get real time data that was not years old, Guidehouse did not look at audited financials and backup the dollars. There was an understanding they were trading accuracy for expediency. He remarked that the survey had seen a low response rates from air ambulance companies, but Guidehouse did not find it concerning. He detailed that there were many air ambulance providers and some were much bigger than others. He estimated that the survey had received a response from around four air ambulance providers; however, among those providers the survey captured about 90 percent of the volume. Generally, Guidehouse was comfortable with the feedback it received through the survey. Representative Moore asked for verification that the [costs reported by providers] were not validated. Mr. Jones agreed. Representative Galvin referenced that indirect costs accounting for 30 percent of the total would be considered high and the number in Alaska was 40 percent. She heard from behavioral health providers that 40 percent of their time was spent doing paperwork in order to receive reimbursement. She noted there were several other states, possibly including Wyoming, that were using a federal form instead of whatever was used in Alaska. She wondered if the issue played a big role in the cost in Alaska. Mr. Jones clarified that total indirect cost of 40 percent was not all overhead. He noted that especially in the case of behavioral health, much of the cost was associated with program support (e.g., transportation). He explained that it was not administrative. He elaborated that it was necessary to spend the money to provide the service, but it was not billable. He explained there was a fee for service structure in Alaska, which would require a certain level of reporting and documentation. For all of the fraud considerations, the basic documentation was needed in order to make a claim and tie it back to the service delivered. In some cases it was possible to leverage federal processes, but for behavioral health, LTSS, and transportation, there was not a standardized federal system to streamline the process. There were potentially some administrative rules in Alaska that could be changed, but it was not a focal point of the study. He relayed that there were some reforms underway in behavioral health that would lead to clinically certified behavioral health centers. Part of that payment methodology, which Alaska was moving to, would address some of the administrative overhead because it was paid through an episode that cut down on much of the documentation. He added that it had its own challenges but it was a potential improvement. 2:21:19 PM Co-Chair Josephson referenced SB 45, current legislation pertaining to Medicaid parity in mental health and substance use disorder coverage in the state medical assistance program. He elaborated that mental health providers in Alaska came to the legislature to talk about the burden of paperwork they had that other types of physical healthcare providers did not. He thought it was the issue Representative Galvin was highlighting. He asked if Mr. Jones had heard the complaint around the country. He stated that the key word was parity. Mr. Jones replied that he was familiar with the parity issue, but Guidehouse did not see anything strictly related to it. Many of the services the study looked at had no equivalent to commercial healthcare where parity was an issue. He relayed that Guidehouse heard the complaint about high burdens of documentation everywhere. He did not aim to diminish the reality and truth of the situation, but Guidehouse heard about the issue from medical and behavioral health providers. Behavioral health providers were newer to the world of medical claiming in the Medicaid program, unlike hospitals and others that had been involved for decades. He stated there was a learning curve to making claiming more efficient and it was likely more difficult for behavioral health providers than established medical providers. Ms. Payne added that the Guidehouse methodology did not want to take the rate and move it forward based on inflation because that would perpetuate a system that was already out of sync. The study looked at many nuanced pieces within the methodology including a billable time adjuster or productivity adjuster. She detailed that it was traditionally much higher in the behavioral health space for record keeping. For example, therapists were supposed to have care plans and take notes on what was supposed to happen next. She noted that it was time consuming. She highlighted that the rate models developed by Guidehouse included the adjuster shown in the report appendix. She explained that it was substantially lower, which increased the reimbursement to account for the downtime. The study worked to address the issue very specifically and it was traditionally higher in behavioral health. 2:24:36 PM Representative Hannan discussed her understanding of parity for behavioral health services. She believed therapists under behavioral health could refer an individual to a medical provider to get a script and the doctor had the individual go back to see the therapist. Under the scenario, it was two or three sessions before there was something to bill for. She thought it was where the bulk of the extra time for behavioral health treatment occurred. While in comparison a medical provider could give a person a script and tell them to follow up in six weeks. She asked if it was accounted for in some of the indirect cost. Ms. Payne responded, "Not specifically." She provided a scenario the study was aiming to address. The scenario included a patient who received a bill for seeing her therapist for 30 minutes. She explained that the downtime included the therapist having to follow up with the client's insurance, record keeping, or contacting the client for follow up would be accounted for in the nonbillable time. The medical component with the parity rule was nuanced. She would have to follow up with specific detail. Representative Hannan looked at bullet 2 on slide 12 that specified Alaska was spending 40 cents on the dollar as opposed to 25 or 30 cents. She referenced the one element of medical transportation and so much of it being non- billable. She considered the vernacular in Alaska and provided an example about whether a person had been transported on a seat fare or if the plane had been chartered. She stated the examples were two big different costs and neither seemed to be reimbursable because they were not ambulance costs or paratransit. She stated her understanding that when Guidehouse concluded Alaska was spending 40 cents on the dollar it was not concluding the charges were invalid, but that the charges were higher. She asked for verification that it was not merely the cost of utilities, but that in some of the broad categories, Alaska's situation was bizarre compared to other locations such as Wyoming where the option was a 50 to 200-mile drive, but in Alaska the travel included things like chartered flights, seat fare flights, ferries, and private transport on snow machines. Mr. Jones responded affirmatively. Guidehouse noted that the costs were high; however, its benchmarking did not say that costs should not be so high. Guidehouse understood the costs were higher in Alaska and for the most part the rates reflected the high indirect costs. There was not any kind of prescription on what the indirect costs should be. Representative Bynum remarked that the current meeting would not cover the scope and depth of the work done running a $3.8 billion program in Alaska with $1 billion in unrestricted general funds (UGF). He stated that the presenters were talking about trying to find cost saving measures and increasing efficiency, which could equate to hundreds of millions of dollars. He noted that Alaska had Medicaid expansion, which included receiving a 90 percent cost share. He believed the cost sharing was about 50/50 under standard Medicare. He asked if the cost associated with different user groups was tracked. He highlighted behavioral health as an example. He asked who was using the services based on the user groups. 2:29:43 PM Mr. Jones answered that Guidehouse did know via claims for instance what populations were using each of the different services. For example, in the case of Alaska Native populations Guidehouse could tell whether the rate was paid for with high levels of Federal Medical Assistance Percentage (FMAP) or state share. Guidehouse could identify program by program how the state dollars were being spent versus additional federal dollars. Representative Bynum asked if Guidehouse was tailoring its research to target the best return for the higher cost expenses such as the 50/50 expenses. He noted those costs were responsible for driving up the state's actual spend. He was not indicating the state should not be frugal and wise with all of its fund sources including federal dollars. He assumed the state wanted to be able to target where it was getting the best value and return to either save the state money or provide better services to Alaskans. Mr. Jones agreed that Guidehouse noted the information in its report. He explained that significant state investment would get a larger return on investment (ROI), which was very important in terms of transportation where some of the most significant expenses were incurred in rural areas where the federal dollar went extremely far relative to the state spend. The fiscal impact in the report showed that even with a relatively small investment in state dollars, the state could get as much as $4 for every dollar spent. He noted it was not true for every program. The presentation would show in the fiscal impact of federal versus state that dollars went further with some programs than others. Representative Bynum asked what kind of coordination was occurring between DOH and the Alaska Mental Health Trust Authority (AMHTA) to ensure the state was leveraging all of its resources to achieve healthy Alaskans. Co-Chair Josephson remarked that "they're not a department as much as a vendor." 2:32:33 PM Ms. Ricci replied that DOH coordinated with AMHTA and worked together in development of different budget scenarios. The department presented to the AMHTA board regularly. One of the focuses was ensuring the state was leveraging dollars between both entities to go as far as possible. Some of the dollars the state could use to support behavioral health services had limitations and some of the dollars AMHTA had access to may have more flexibilities. The entities were trying to be strategic in determining how to weave the two together to meet existing needs. 2:33:25 PM Mr. Jones discussed results of the behavioral health rate evaluation on slide 13. One of the recommendations was that DOH adopt the methodologies that went into the Guidehouse independent rate build up to identify rates that were more appropriate and aligned more closely with the actual costs of delivering particular services. The implication of adopting the methodology transition was there would have to be some recalibration of rates. Some rates for services would go up significantly and some may decrease significantly as part of the rebalancing. The second recommendation under rates was "hold harmless." He explained that rebalancing increased volatility for providers. He elaborated that for a single provider some rates may go up, and some may go down; it all balanced out. He stated that was not always the case. He detailed that some providers focused on the rates that were going down rather than the rates that were going up. He stated it was possible to put someone out of business easily if it was not done wisely. Therefore, Guidehouse was recommending a risk corridor to leave rates alone until there was a natural point at which rate increases would happen. He shared that there was a UPL [upper payment limit] ceiling for certain services in Alaska that did not allow payment higher than what Medicaid paid. Guidehouse included some recommendations in its report on how to address the issue. Mr. Jones addressed other components of the reimbursement structure. He relayed that behavioral health rates were not adjusted geographically. Guidehouse was proposing a framework to have slightly different rates depending on where services were delivered. They believed that it was feasible because it already existed in the LTSS side in home and community based services. Guidehouse was recommending something similar for implementation with behavioral health. He referenced indirect costs and stated that it was unclear in the way things were currently described whether rates were designed to cover transportation and staff transportation. Guidehouse recommended the inclusion of a specific add-on in certain rates to address the issue more clearly. The report included specific recommendations for the state to review service definitions for some of the more complex services such as SUD for adolescents versus adults to confirm whether the state was paying for the type of service it wanted and to work with providers to review the service definitions. Guidehouse also recommended updates to crisis services. The state was in the process of redesigning its crisis service array and Guidehouse had recommended what rates would be appropriate for new services. Mr. Jones looked at state operations and how the rates were implemented and monitored over time. Guidehouse recommended that the state put together a cost reporting system, which would require annual reporting from providers. He explained that the reporting system would help to understand the indirect costs. He stated there was an argument to be made as to whether the costs should be lower, but the data was not currently available to track what went on with the cost. A cost reporting system would provide better information to understand the nature of the indirect costs and potentially establish additional reimbursement features that incentivize efficiencies. He stated it could ultimately be to the benefit of the payer, regulator, and provider. He noted that the clinic UPL issue was another component. He explained that if the state had cost reporting, it would not have to set the ceiling at the Medicare rate, but at the actual cost. He expounded that if Alaska ever wanted to pay more beyond the ceiling or rebalance the rates that fell under the clinic UPL, cost reporting would facilitate it. Guidehouse also recommended that the state could more easily update rates administratively on an annual basis by putting key inflation factors on things like wages and other indirect costs. 2:38:57 PM Co-Chair Josephson asked if the CMS prohibition on exceeding the UPL could be dispensed with if the state did cost reporting. Mr. Jones replied it would mean there would be a new measuring stick. He explained that the requirement would not go away but the nature of how the upper payment limit was decided would change. Instead of basing the ceiling on the equivalent Medicare rate it was based on the actual costs incurred by providers. If the costs were higher than Medicare would pay, it was possible to pay up to those costs, but it required having data on what it cost providers. 2:39:41 PM Mr. Jones turned to slide 14 titled "Annual Fiscal Impact for BH Recommendations." The slide showed line item estimates of what it would take to implement various recommendations. The first recommendation to adopt the new methodology and corresponding rates would cost an additional $4.1 million in state spending and a total investment of $13 million. He noted that given current behavioral health spending, the number was not a high amount. He explained that higher rates were being offset to some extent by rates that would decrease. The second recommendation was the hold harmless provision that meant rates would not be lowered for services that would otherwise go down. The hold harmless provision would cost the state $1.6 million. The geographic differentials would cost the state an additional $1.3 million to cover the cost for the more expensive regions of the state [recommendation three]. Recommendation four pertained to behavioral health cost reporting and would cost the state an additional $150,000 to $225,000 depending on how it was implemented. Recommendation five was rate rebalancing and the cost depended on how the state wanted to address it. Recommendation six was for crisis services and would cost the state $280,000+. Recommendation eight showed a small cost for additional resources to conduct the administrative rate review. He understood DOH was looking at a phased implementation of the recommendations. The overall cost was about $7.2 million to $7.5 million in state general funds with an overall investment including federal dollars of roughly $21 million for behavioral health. Co-Chair Josephson asked how long the hold harmless period should be. Mr. Jones answered that two years was usually a good timeframe. He explained that if it was much shorter or longer it did not help. He stated it was designed to be temporary to prepare providers for changes. He relayed that two to three years was optimal. Co-Chair Josephson asked how Guidehouse incorporated inflation into the recommendations. Ms. Payne replied that data got old quickly. The base recommendations included a small amount of inflation because the data set used was already a year behind. She stated that 7/1/25 was the implementation date. Guidehouse did not build in additional inflation knowing it was in the state's regulations that it should come into effect on July 1 of every year. She explained that the state would have to apply additional inflation based on its regulations. 2:43:34 PM Co-Chair Josephson asked if the Guidehouse work on behavioral health recommendations was complete. Mr. Jones answered affirmatively. Co-Chair Josephson directed a question to DOH. He referenced Ms. Ricci's statement that DOH viewed the Guidehouse findings as recommendations. He assumed the recommendations were important but that there may be other factors for DOH. He asked when the department anticipated implementing the changes. Ms. Ricci responded that DOH was working to implement the recommendations in two different phases. The department was currently promulgating regulations to begin implementing the rate rebalancing and the hold harmless combined. There was a $10 million temporary increment in the Medicaid component. She believed the supplemental that was recently released would extend the funding into FY 27 giving the department time to promulgate the regulations to begin implementing the items. The department would also look at building out the geographic differences and crisis services at the same time. The department was thinking about the best way to approach establishing a system for cost reporting. Ultimately it would be important as Medicare continued to put pressure on entire system in Alaska. She believed the committee would hear more about the issue in future years. The requirement for annual cost reporting was significant to the provider and state. The department heard the concerns about behavioral health providers related to administrative requirements and burden. The department did not want to add to that, but it could not get around the Medicare cost limit until it found a way to collect the data. The department was not certain what that looked like yet. 2:46:00 PM Mr. Jones moved to slide 16 titled "LTSS Rate Evaluation Findings." He stated that the grooves had been established for behavioral health and there were somewhat similar findings for LTSS. He relayed that Guidehouse did not see the same need for rebalancing for LTSS services that it saw for behavioral health. He elaborated that the state kept up pretty well with costs with one important exception in personal care services. He explained that Guidehouse saw a need for a rate increase of about 32 percent. He stated it was a significant part of the service array. Given the expenditures on LTSS generally, the increase would lead to some significant dollars even though they were not a high proportion of current spending. The geographic rate differentials were in place for the services, but they depended on a framework that was over 20 years old; therefore, Guidehouse recommended a new way to do the differentials. He stated that Guidehouse found that about 40 cents to every dollar for LTSS services was going to indirect costs. Co-Chair Josephson referenced personal care services and noted there were various acronyms such as PCA. Mr. Jones replied that PCA was a personal care aid who came into a person's home to help with tasks. Co-Chair Josephson asked for verification that Guidehouse found that the cohort in Alaska was paid 32 percent less than it would recommend. Mr. Jones answered that rates would need to be roughly 32 percent higher for those services to cover the costs. Co-Chair Josephson remarked that the rates - the total package - may reflect some other number as a wage increase, but there was some connection between the rate and the wage. He asked if it was a fair statement. Mr. Jones replied affirmatively. He stated that wages were the driver of costs. 2:48:46 PM Mr. Jones moved to slide 17 titled "LTSS Rate Evaluation Recommendations." Guidehouse was recommending the same methodology, rate recalibration, and hold harmless as it did for behavioral health. There were a small number of services that would otherwise go down with the adoption of the recommendations. Guidehouse was recommending updates to the geographic adjustment and tiered service for better capturing of acuity differences between individuals and around administrative fees for certain services known as the organized healthcare delivery system. Guidehouse was recommending a new cost reporting system to track indirect costs. Also, there were new rules coming from CMS called the access rule, which mandated a ceiling on indirect costs for things like personal care and the state would have to demonstrate that its providers were not paying more. He added that if the state did not collect the cost data it could not be compliant with the federal regulations. Guidehouse was also recommending additional administrative rate updates as with behavioral health. He referenced opportunities for drawing higher federal share and explained that LTSS was one of the areas where the federal share was 50/50. Guidehouse recommended looking to tribal providers and gauging willingness to invest more in providing the services. Co-Chair Josephson surmised that there was not a 100 percent opportunity to reclaim for LTSS. Mr. Jones answered it was largely non-tribal providers delivering the services and drawing the 50/50 match. 2:50:42 PM Mr. Jones turned to the annual fiscal impact for LTSS recommendations on slide 18. He stated there was a fairly hefty price tag given the size of the program and funding personal care to the benchmark rate along with several other rates. He noted that it was not a massive proportion of the overall spending currently. He noted that the general fund and total spending were in the wrong columns at the bottom of the slide. The slide broke out the hold harmless, geographic differentials, rate tiering recommendations, and more. The total cost for the state was between $24.5 million to $30 million. He noted that DOH was looking at a phased approach of the LTSS recommendations. 2:51:45 PM Mr. Jones moved to slide 20 and discussed FQHC (Federally Qualified Health Center) findings. He stated it was a narrower scope for FQHCs and came down to the small number of FQHCs that had not moved to the alternative payment method (APM) rate. There were currently four that were still on the prospective payment system (PPS) rate. The goal of the recommendations was to establish a pathway for FQHCs still on the PPS rate to do a one-time catch-up change in scope to look at current rate costs and establish a pathway and recommendation for future changes in scope. Mr. Jones turned to slide 21 titled "FQHC Rate Evaluation Recommendations." He began with the catch-up change in scope. He detailed that Guidehouse did an analysis of what it would cost in order for providers and the state would understand the potential fiscal implications, even though it expected only one or two providers would want to continue with PPS rates rather than move to an APM rate. Guidehouse recommended technical assistance to help providers needing support to update their rate methodology. Guidehouse also recommended the creation of a policy and process moving forward that would allow providers to update their PPS rates. 2:53:16 PM Mr. Jones turned to slide 22 titled "Annual Fiscal Impact for FQHC Recommendations." The general fund cost would range between $800,000 and $1.5 million depending on the number of providers who moved to the PPS rate. The general matching rate was about 75 percent with the total cost reaching up to $5.3 million including federal funds. Mr. Jones addressed slide 24 titled "Medical Transportation Rate Evaluation Findings." He relayed that the report had not been fully released and he provided preliminary findings. He highlighted that ambulance and lodging rates had not been increased in many years. Guidehouse recommended that the rates be brought up in aggregate to the equivalent of 125 percent of Medicare. He elaborated that because rates were currently lower, getting ambulance staffing in place was becoming a more significant issue. There were administrative issues that prevented people from getting needed lodging. Guidehouse made recommendations especially around out of state lodging, transportation, and meals (e.g., travel to Seattle) to improve the policies. Representative Stapp asked if the air ambulance rate reimbursement was still subject to UPL. Mr. Jones responded affirmatively. He stated that the UPL was different for transportation than clinic and it was up to average commercial rates. He explained that it had not hit a ceiling in Alaska because the ceiling was much higher. 2:55:23 PM Representative Stapp asked how far off the rate was from the upper payment limit. Mr. Jones answered that they did not know because it would require proprietary data between commercial insurers and providers. Representative Stapp remarked that air ambulances were obviously a big deal in Alaska. He stated that the primary air ambulance company Guardian Flight had been bought and sold many times in the past few years. He wondered if some of the challenges the company had as opposed to other carriers like Life Med had been reflected in the Guidehouse findings. Mr. Jones answered that the findings applied to most providers and were not unique to Guardian Flight. Generally, Medicare and Medicaid paid significantly lower than commercial rates. The Guidehouse recommendations reflected the public insurance programs paying more of their share. Co-Chair Josephson was hearing from service providers including pilots and Guardian Flight that they were not reimbursed when flights were in route without a patient. He was told that 160 flights were cancelled not due to weather in the span of one year. He found it disconcerting. He wondered if Guidehouse had similar conversations with providers. Mr. Jones answered that Guidehouse heard similar feedback from providers. He stated it was a constraint in the nature of the Medicaid program that "you could not pay directly for those things." However, it was possible to build into rates the understanding there was nonbillable time and resources that had to be covered. 2:58:07 PM Mr. Jones turned to slide 26 titled "Annual Fiscal Impact for Transportation Recommendations." He highlighted the big issue was increasing rates for ambulance providers. There were a few policy recommendations included on the slide as well. He noted a recommendation for statewide brokerage partnerships, which could have substantial positive effects for non-emergency medical transportation. He noted the issues around drawing higher federal share and highlighted that ambulance rate increases would result in additional state expenditures of $2.3 million to $2.4 million, which would draw an additional $16 million total. He stated it meant that for every dollar the state invested into the rate increases it resulted in $4 from the federal government. He explained that it targeted areas of particular need in the state because it was disproportionately positively impacted rural travel heavily on the air and ground ambulance side. He remarked that rate increases for lodging was a similar picture. The need for lodging was higher for individuals coming into Anchorage from rural areas. Guidehouse made some estimates around potential savings for a public transportation partnership or the use of a brokerage. He noted it depended on implementation whether there would be an increase or yield potential savings. Co-Chair Josephson thought the industry term was "loaded" versus "unloaded" planes. Mr. Jones replied affirmatively. 3:00:16 PM Representative Stapp looked at the term "prior authorization fee increase" on slide 26. He asked what was meant by fee increase. Mr. Jones replied that TMOs [tribal management office] served as a kind of broker arranging transportation. In order to go through the prior authorization process TMOs charged a fee. The fee was set many years back. He explained that because transportation needs changed fairly regularly sometimes it could be administratively complex; therefore, Guidehouse recommended increasing the fee for working the prior authorization system. Representative Stapp asked what was meant by brokerage and government-to-government partnerships [slide 26]. Mr. Jones responded that they were called government-to- government partnerships because some of the elements of the brokerage happened through TMOs. He explained that it was not technically a brokerage, but a government-to-government agreement. He detailed that it would not cover all of the travel needs and Guidehouse was looking at a statewide broker that did not involve tribal travel. 3:02:06 PM Representative Stapp asked for further clarification on the statewide broker. He did not know of any third party vendors that would do that. He asked if Guidehouse was suggesting the state would take the responsibility on instead of how tribal entities already did the work themselves. Mr. Jones responded that for non-tribal Medicaid members it would involve bringing in a transportation broker to arrange the travel needs for the non-tribal population. There were TMOs for the tribal populations but there was currently no broker. He remarked that it could be a helpful thing for Alaska. He clarified that the state would not be doing the arranging. Representative Hannan asked if the broker was akin to a travel agency. Mr. Jones answered affirmatively. Representative Hannan referenced seasonal lodging rates. She stated her understanding that currently there was no variation in the rate. For example, if the lodging rate was $100, it did not change if it was peak travel season in Juneau where hotel rates doubled overnight in the summer or in the middle of winter. Mr. Jones agreed. Guidehouse was recommending seasonal rate differences and increases generally. He stated that even if the state did not opt to do a seasonal increase, a general increase in the current rate was needed. Representative Bynum was excited to see the last slide with two line items showing financial savings. He looked at the overall $43 million of additional recommendations and $110 million in federal match. He understood that increasing the rates would help the service providers. He thought it was good overall that providers would get the reimbursement rates necessary to provide the services. He relayed that he had people come to his office highlighting there were many areas where it was possible to move the continuum care to the left to provide better care sooner while saving money in the long-term. He was trying to get a better understanding how the recommendations would accomplish that goal. He stated that nothing in the evaluation about the rates gave a recommendation or reflection showing that the state could save money by moving the continuum of care to the left. He only saw an additional $43 million in spending to provide care. He asked for comments. Ms. Ricci answered that the study was focused on the underlying rate methodology and buildups and whether it produced the desired outcomes. She noted it was focused on specific workstreams. She reiterated her earlier statement that there was no expectation from the department that the recommendations would be implemented all at once or ever depending on the policy considerations and the fiscal situation facing the state. The department had been asked many of the questions by providers and constituents since it started in 2022. The Guidehouse review started to give a little shape to what the answers to some of those questions may mean and the magnitude. She agreed any consideration had to align with what the state wanted to see in the outcome of the system, which she believed was more of an emphasis on prevention and on better aligning services to meet the risks and acuity of the population being served. She did not believe the healthcare system or insurers did a great job of doing that currently. She explained that it would be a focus area for the department in the next several years. The department had some ideas on where to start and what to look at. She noted those things were not included in the Guidehouse studies. 3:07:33 PM Representative Bynum stated that one of Alaska's senators talked extensively FMAP)and the fight they underwent to change the 50/50 [state/federal] split to 30/70. He asked if there had been any consideration given to what the impact would be for Alaska if the congressional delegation had success in changing the FMAP percentage. Ms. Ricci answered that it was not part of the request to Guidehouse as part of the rate methodology study. The department had been closely watching the issue, particularly the implications for Alaska as debate on Medicaid funding at the national level had played out over the past 13 months. She shared that the state's FMAP was over 50 percent - it had previously hovered at about 50 percent - and the state was seeing a decrease of just over 1 percent beginning in October of the next federal fiscal year. She relayed that it translated into an additional $10.8 million the state would have to provide in general funds beginning in federal FY 27. She explained that the information gave a sense of what a 1 percent change in FMAP means in relation to the general fund match in any given year for the Medicaid program. The state tried to leverage opportunities to draw down federal match as much as possible. She noted that the department would talk about its operating budget with the committee on Wednesday and it would discuss that it was finding ways where it could claim additional federal dollars for IT enhancements or associated positions. She relayed that other states had been doing those things and the department was making sure to do the work on its end. 3:09:49 PM Representative Hannan stated that her question was spurred by Representative Bynum's question about continuum of care because she had come to a different conclusion. She looked at slide 16 and referenced Mr. Jones's statement that personal care services remained low and rates needed to increase by up to 32 percent to reflect actual cost. She stated her understanding that the whole nature of that was keeping someone with care in their home was at the far left of continuum of care and saved the state money. She remarked that even if it was a substantial rate increase of 32 percent, it would save the state money by not putting someone into a hospital or nursing home with more intensive care and cost. She asked if her conclusion was incorrect. Ms. Ricci replied that she did not believe Representative Hannan was incorrect. The challenge was how to make sure the cost resulted in lower overall cost of care for the individual compared to what they may have received versus additional cost that would not have otherwise been incurred. She thought it was sometimes where they struggled to see some of the investment returns. If there was a desire to move forward with some of the rate recommendations regarding personal care services, DOH knew it was an area that required careful monitoring and crafting to ensure services were appropriate and being used as directed. There had been problems with the issue in the past in Alaska and other states were experiencing it as well. The state needed to be very thoughtful before moving forward and take into consideration items that were not necessarily considered in the study but that the state would want to make sure were in place from the Medicaid side. The same was true for autism services. She heard concerns consistently from parents whose children needed autism services that were not available in the state. The study also found there were insufficient autism services. She highlighted a large rate recommendation increase for autism services. She relayed that it was an area that could be prone to misuse. She stated it was necessary for DOH to be thinking about how to address the need while building in the correct barriers to care for it from the beginning. 3:12:44 PM Co-Chair Josephson asked if there were any connections between any of the Guidehouse recommendations such that "thing A must happen before things B and C happen" in terms of reform of the methodology and payment structure. Mr. Jones answered that the main dependency was around the rate increases in the four different areas. Many of the latter policy recommendations could be implemented independently. For the recommendations that had a strong financial impact there was a basic adoption of the methodology and recalibration. The hold harmless and other pieces depended on moving forward. Co-Chair Josephson asked if CMS would have concerns with the Guidehouse recommendations that would result in denial of a state plan adjustment. Mr. Jones replied that he did not see it would be a significant issue. He stated the recommendations were accepted methodologies from CMS and in many cases they were preferred. 3:14:06 PM Co-Chair Josephson referenced a statement by Ms. Ricci about whether changes would ever be made depending on the state's fiscal situation. He was having a hard time discerning who would make the ultimate decision. He recognized that DOH was central to the decision making. He wondered if the reimbursement rate was inadequate if the state allowed to let it erode or if the state would be required at some point to "play ball" with some recommendations. Ms. Ricci answered that DOH worked with its allocated budget including the Medicaid program. Any sort of changes to the rate or rate methodologies went through the appropriations process. She explained that it was complicated because there were annual inflationary increases that were outlined in regulation and rebasing that occurred every four to five years. She detailed that the state did not want to end up in a position where the funding available for the Medicaid component conflicted with the required regulatory adjustments. Ultimately, the Medicaid program functioned within the budget allocated by the legislature. She stated it would be presumptuous of anyone in the department to put forward substantial rate increases that were not supported through appropriations. Co-Chair Josephson asked if the department could give providers who may be listening a sense of how the department would be engaging with the recommendations over the next couple of years. Ms. Ricci responded that DOH had a clear vision for behavioral health services. She stated it was an area with very strong interest and focus by the department, the legislature, and federal entities. She remarked that it was a critical piece that needed to be done right. The plan included promulgating regulations and leveraging the $10 million increment proposed in the supplemental to extend into FY 27. She believed more discussions were needed on the other rate methodologies accounting for the state's fiscal situation and the realities of the existing needs that frequently exceeded the state's means and how to prioritize what the state was able to invest in. She noted that she did not currently have the answer to that question. 3:17:25 PM Co-Chair Josephson asked what the regulations required as a timeline on the other three elements of the plan. He asked if the DOH regulations were in Title 7 of the Alaska Administrative Code. He asked if there was a deadline of January 1, 2028. Ms. Ricci replied that she did not know that anything in the study changed what was in existing regulations. Co-Chair Josephson used the medevac company Guardian Flight as an example and asked when he could tell the company to expect the department would take action. Ms. Ricci answered that the department was considering all of the recommendations and it needed to evaluate how to implement them within the context of the [state's] fiscal situation. The department had identified a path forward with behavioral health rights, but she did not know that there was the same clarity on the other rights. Representative Bynum considered the premise for the evaluations and observed there were estimated expenditures. He remarked that the recommendation was for a change in rates that resulted in additional cost. The rates were to reimburse providers for services they were providing. He asked if there was consideration given to how increasing the rates translated into better care. He asked if increasing the rates would lead to additional costs that were not reflected in the presentation. For example, he asked if certain services would be utilized more frequently because there may be an increase in providers as a result of more money being provided for the service. Ms. Payne replied that if people had proper access to services it could result in an increase in service utilization. She highlighted transportation in particular. She noted that it got into the cost avoidance question Representative Bynum had mentioned. She explained that if a person went to their standard office visit or therapies, perhaps they would not end up in the hospital. She stated that it was a chain reaction that was hard to quantify the overall impact five to ten years in the future. She elaborated that it was desirable to get people access to services for better care for the desired outcomes. Representative Bynum asked if the estimates in the presentation reflected only current services that would be provided under the new rate model and did not take into account potential higher uses of services. Ms. Payne responded affirmatively. The information was based on historical utilization with updated rates applied to the cost. 3:20:43 PM Ms. Ricci shared that one area the department was focusing on, especially with behavioral health, was access to care. She highlighted situations where individuals showed up at an emergency room in need of immediate care and were unable to get follow up care in the community as fast as they needed. Additionally, there were individuals who ended up seeking higher levels of care than they otherwise would because they did not have community access to care. She noted it was one of the reasons DOH focused on the behavioral health rates to start with. She elaborated that there may be an increase in utilization of community providers but ideally over time there would be a decrease in individuals needing acute care. Representative Galvin stated her understanding that DOH determined it would start with behavioral health. She thought it was a great presentation helping committee members understand that transportation equaled access to care, which was another cost. She referenced long-term care, specifically the 32 percent for care providers. She believed it seemed very important for access to care. She asked if all of the recommendations should be considered if the legislature identified funding. She wondered if the governor would consider it. She asked if there was only one piece they were ready to put forward. Ms. Ricci answered that the department had been focused on the behavioral health rates. She relayed that the recommendations reflected a series of different considerations the legislature could make. She elaborated that if a specific area had gaps and people were unable to get services (e.g., personal care assistants), it may be a conversation to have in the future where changes could be made to improve gaps. There was a series of different options that the legislature could combine or take depending on the available funding and need. She asked Guidehouse specifically if it had seen any state that had implemented recommendations all at once or in their entirety. The answer was no because it was complex and every state had different budgetary needs at a different time. She had been hearing about concerns in some of the areas [included in the recommendations] for a long time and the recommendations could help provide numbers and sense of magnitude for policymakers and appropriators. 3:24:08 PM Representative Galvin asked the committee to remember the multitude of personal care providers it had heard from in the past couple of years. The committee heard repeatedly from personal care attendants who loved their jobs but could not continue doing what they were doing because they could not earn a living wage. She appreciated it was an area impacting the health and wellness of all of Alaska. Co-Chair Josephson referenced the situation that took place with the caregivers a couple of years back [referred to by Representative Galvin]. He asked if it would give the department the confidence that the legislature was serious about making the broader policy part of its budget and would move to adjust the rates. He would have to think about whether those increases, if appropriated, would be part of the base budget. He asked if the rates would be important to the legislature at that point. He thought the questions may be more appropriate for the Legislative Finance Division. Ms. Ricci responded that the department had spent significant time considering the implementation of the behavioral health recommendations. The department had not spent as much time thinking through the implications of some of the other reports. Given the history of the state, especially related to personal care assistant services and the magnitude of the dollar impact, the department would want to spend considerable time thinking through what would be appropriate. The department was not currently at that point. Co-Chair Josephson thanked the presenters. HB 263 was HEARD and HELD in committee for further consideration. HB 265 was HEARD and HELD in committee for further consideration. Co-Chair Josephson reviewed the schedule for the following day.