HB 376-EXTEND ALASKA HEALTH CARE COMMISSION  3:04:53 PM CHAIR HIGGINS announced that the first order of business would be HOUSE BILL NO. 376, "An Act extending the termination date of the Alaska Health Care Commission; and providing for an effective date." 3:05:22 PM THOMAS STUDLER, Staff, Representative Pete Higgins, Alaska State Legislature, paraphrased from the sponsor statement, which read: HB 376 extends the sunset of the Alaska Health Care Commission until June 30, 2017. The Legislative Auditor has concluded that the Alaska Health Care Commission is serving the public's interest and should continue its statutory obligation. The legislature established the Commission under AS 18.09.010 in 2010 to recommend policies to improve quality, affordability and access to health care, and to identify strategies for improving the health of all Alaskans. Seats representative of various health care stakeholders are designated in statute, and voting members are appointed by the Governor. Sen. Coghill and Rep. Keller currently represent the legislature as ex-officio members of the Commission. The Commission's approach has been to study current conditions of Alaska's health care market, and design market-based strategies and policy recommendations that enhance the consumer's role in health and health care. The Commission submits an annual report including policy recommendations to the Governor and the legislature on January 15 each year. A summary of the core strategies and policies recommended by the Commission to-date is attached. In its short tenure the Commission has developed a strategic framework including a time-specific vision with measurable objectives; conducted numerous studies to increase knowledge and understanding of current problems in the health care system, designed a comprehensive body of specific, relevant and measurable market-based policy recommendations for improving health care cost and quality; and created a template for and is facilitating development of an executive branch action plan for implementing Commission policy recommendations. The Commission has also coordinated with and provided consultation to private sector employer groups on health care system concerns. Excessive health care costs and medical inflation in Alaska threaten the sustainability of the health care system and create a burden on families and public and private employers. Continuation of the Commission would promote accountability and evaluation of public program implementation through finalization of a state agency plan to implement recommended policies, increase transparency in the health care system, and provide continuing consultation and coordination with private sector employers in support of their health care value improvement strategies. The Commission has consistently proven to be efficient and effective in its progress to develop a strategic framework for improving statewide health care and I ask for your support in the passage of this bill. 3:07:02 PM WARD HURLBURT, MD, Chief Medical Officer/Director, Division of Public Health, Central Office, Department of Health and Social Services, said that the Alaska Health Care Commission had been initially established by then Governor Sarah Palin by executive order, and later established in law by the Alaska State Legislature. The Commission was "charged with looking at health care delivery in Alaska related to accessibility, affordability, quality, prevention, and so on." He stated that the committee had reviewed the various aspects of the health care delivery system; however, the dominant focus was for the cost of health care, and what opportunities there were to mitigate the high cost. He reported that about 18 percent of gross domestic product was spent for health care in the United States, almost $3 trillion annually, whereas the rest of the industrialized world spends about half to two-thirds of this amount in terms of both gross domestic product and dollar equivalents. He pointed out that Norway and Switzerland were the next most expensive countries, spending about two thirds the amount of the U.S., even with longer life expectancies and lower infant mortality. In the past twenty years, comparable health care spending by the U.S. to Norway and Switzerland in percentage of gross domestic product would have saved the U.S. about $15 trillion, an amount equivalent to the current national debt. He reported that Alaska spends about 20 - 21 percent of its gross domestic product for health care. He relayed that the average salary of teachers in the Anchorage School District had increased about 1 percent annually, over inflation, in the last 30 years, whereas the cost of health care insurance had increased about 15 percent each year above inflation. This was a challenge for the Alaska State Legislature. He noted that the Milliman Company had compared the charges for medical services by various payers in Alaska with those charges in Washington, Oregon, Idaho, North Dakota, Wyoming, and Hawaii, and that Alaska was much higher than the other states. He said that an all payer claims data base had been studied by another contractor, which would provide information for health service charges and quality data for outcomes. He noted that 12 states had this process, with 18 others considering it. He pointed out that the Health Care Commission was working with other health care entities, both public and private sectors. He offered as an example that the Human Resources directors from the large for-profit companies had included the cost of health care during discussion of expansion plans. He noted that the Legislative Audit process had focused on DHSS developing a health plan, and the department had taken those policy recommendations to the Legislature and the governor for guidelines to the formation of a health plan to benefit Alaskans. He offered his belief that all the members of the Health Commission believed that its work benefited the state and its citizens. He requested a determination of value from the Alaska State Legislature. CHAIR HIGGINS asked if there had been implementation and savings for the state from the recommendations of the Alaska Health Care Commission. DR. HURLBURT offered his belief that there were results; however, if the Alaska State Legislature did not see those results, he would question his own assessment. He declared that this was a critical decision for the legislature, particularly in light of the necessity for fiscal conservation. He opined that, in terms of value, the response from larger employers was that the information had helped to contain health care costs. He said that anecdotal reports indicated that this information was helpful in negotiating rates to ensure a level playing field between payers and providers for fair levels of compensation to support a health care industry which was sensitive to the adverse effects of high costs. He compared these high costs to a tax. CHAIR HIGGINS questioned whether the work of the commission was saving the state money and providing the necessary services. 3:18:24 PM DEBORAH ERICKSON, Executive Director, Alaska Health Care Commission, Office of the Commissioner, Department of Health and Social Services, addressed the $500,000 fiscal note, [Included in members' packets] which had been proposed in the governor's budget, as it reflected the ongoing costs for the next few years. She explained that $335,000 was paid from the general fund and the remaining $165,000 from federal funds to the department. She reported that this budget supported two staff, travel for the 14 commission members, and the occasional facility cost to host a meeting with the private sector. She noted that some of the budget was for professional service contracts for special studies on which the commission did not have expertise or capacity. She offered an example of the actuarial study comparing pricing and reimbursement levels between payers in Alaska, to better understand cost shifting between private insurance and Medicaid, as well as a cost comparison between Alaska and other states in our region. She reported that currently there was a contract with the Institute for Social and Economic Research (ISER) and Department of Labor & Workforce Development to survey private sector health insurance, concerns, and employee wellness programs. She pointed out that there had been studies related to the impact of the Affordable Care and Patient Protection Act, including an employer survey to capture information regarding the actions of Alaska employers both before and after implementation of the individual mandate, for use as a baseline with future assessments. REPRESENTATIVE SEATON referred to the report on "Core Strategies for Health Care Transformation" [Included in members' packets] and asked how the commission reached its first goal of ensuring that the best available evidence was used for making decisions. MS. ERICKSON replied that a series of more specific policy recommendations related to that strategy was an appendix to the commission's 2013 report. She relayed that ensuring the best available evidence was used for making decisions was the most important, although it was more difficult to implement and had longer term implications. She offered an example of the learning sessions with the private medical community in order to critically appraise medical literature for identification of biases during reporting of studies. She said there were additional techniques for incorporating evidence into insurance designs, which were being discussed for employee and retiree health plans. She noted that the commission had also presented a specific recommendation to the Workers' Compensation Board. REPRESENTATIVE SEATON asked that the upcoming report show the strategy and what was being done to accomplish the strategy. MS. ERICKSON directed attention to the recommendations by Division of Legislative Audit, which stated that the commission was meeting its intent, although it was necessary for an actual plan for implementation of the strategies. She stated that there had been meetings with the directors from state agencies that had a lead role in health care services. She referred to an appendix in the 2013 report that detailed the plan for each agency to implement the recommendations by the commission. 3:26:44 PM KRISTIN CURTIS, Legislative Auditor, Division of Legislative Audit, Alaska State Legislature, explained that her division had conducted a sunset audit of the commission to decide whether the commission served the public interest and whether its termination date should be extended. She referred to the audit report [Included in members' packets]. She offered some background on the commission and the expectations from the legislature. The commission had been started by executive order in 2008, with the legislature intending for the commission to achieve health reforms through development of the statewide health plan; however, the original commission did not consider itself responsible for the development of a plan, and the new commission, established in statute in 2010, had agreed to continue the approach by the prior commission. The new commission collected information from various cost studies and developed high level policy recommendations, while establishing general priorities which evolved into a strategic framework. She directed attention to Appendix A of the audit report [Included in members' packets]. She declared that the audit had concluded that the commission was serving the interest of the public, but improvements in the development of a state health plan were necessary to justify its continued existence. She stated that the legislature had intended the commission to work in conjunction with Department of Health and Social Services (DHSS) to create a comprehensive health plan; however, as the commission had not collaborated with DHSS, Division of Legislative Audit recommended only a three year extension in order to develop a plan. The audit concluded that the commission was active, although there was concern by the division that the framework lacked any actionable components for effective implementation and did not identify specific actions to be taken, a timeframe for completion, the person responsible for taking action, a definition for a successful outcome, or a means to specifically monitor and measure progress. Without a statewide health plan, the actions of the commission may not effectively impact health care in Alaska. She recommended coordination with the DHSS commissioner to identify the role and responsibility of each agency and then pursue development of the health plan. The audit also recommended improvement for the public noticing of meetings and assurance that annual reports include all statutorily required elements. REPRESENTATIVE KELLER clarified that he was a member of the commission, although he did not perceive any conflict of interest and he had no economic connection. He acknowledged that he was biased and very positive in general terms for the commission. He declared that there was a challenge to keep the health care system in Alaska from entering a crisis, and that everyone on the commission had agreed on the necessity to cut the costs. He opined that it would get better, as the commission had identified significant issues, including a focus on preventive care. 3:31:56 PM REPRESENTATIVE SEATON referenced the plan mentioned in the audit report, and asked if the commission agreed with the findings by the Division of Legislative Audit to develop a specific actionable plan as a primary goal of the commission. REPRESENTATIVE KELLER replied that this had been the focus of the previous commission meeting. CHAIR HIGGINS offered his agreement that the commission had the potential to be really beneficial to Alaska, and he recommended that it be allowed more time. 3:33:07 PM REPRESENTATIVE KELLER moved to report HB 376, version 28- LS1604\A, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 376 was moved from the House Health and Social Services Standing Committee.