HOUSE BILL NO. 153 An Act repealing the statute that sets priorities for the Department of Health and Social Services to apply to administration of the medical assistance program when there are insufficient funds allocated in the state budget for that program; authorizing the department to make cost containment decisions that may include decisions about eligibility of persons and availability of services under the medical assistance program; and providing for an effective date. JOEL GILBERTSON, COMMISSIONER, DEPARTMENT OF HEALTH & SOCIAL SERVICES, stated that under current law, if funds appropriated to the Medicaid program are insufficient for a given fiscal year, the Department is directed to eliminate optional Medicaid services based on a priority list that is out-of-date. The existing list is not an effective management tool and if used, would result in the denial of necessary and cost-effective services to Alaskans in need of health care. He continued that the proposed bill would replace that obsolescent language with authority for the Department to undertake cost containment based on three key principles. · First, the Department must pursue all other reasonable cost containment measures before eliminating any eligibility groups or services; · Second, the Department should aggressively pursue strategies to maximize federal financial participation in the Medicaid program; · Third, cost containment decisions should be made in a manner that best reflects the needs and interests of eligible Medicaid recipients. Commissioner Gilbertson noted that it is imperative to slow the growth of State funding for Medicaid while at the same time maintaining health care coverage for needy Alaskans, which is an issue that can no longer be avoided. Passage of the legislation will give the Department additional tools to meet these challenges. Representative Stoltze asked if the Department would see benefit in being able to prorate the amount of payment to eligible persons. BOB LABBE, DEPUTY DIRECTOR, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, stated that the payments made in the Medical Assistance Program are to health care providers rather than to individual beneficiaries. It is difficult to prorate once they have provided the service. Representative Croft pointed out that the Department could determine to eliminate item #11, mammography screening, if the bill was passed. Commissioner Gilbertson acknowledged that under the current options list, item #11 could go. The Department would maintain the discretion to help achieve cost containment. Representative Croft commented that the Department could get rid on any item on the list and that they would not be required to move in the order already established. Commissioner Gilbertson acknowledged that was correct. Representative Croft asked if there was any intent language, which would require the Department to come back to the Legislature before eliminating any one provision. Commissioner Gilbertson replied that there is not a provision in the bill that would require that, however, the Department would be working with the coordination of the Legislature, to find ways to insure that the funding was available for services that are needed. There is direction from the Legislature to the agency to provide for cost containment of the Department to manage the Medicaid budget within the amount that the Legislature appropriates. The Department needs the flexibility, which the bill provides to, accomplish that mission. Representative Hawker commented on the latitude the Department needs in order to provide for cost containment. He inquired if situations might occur when the Legislature is not in session. Mr. Labbe responded that in the past, the Department has projected the expenditures for the Medicaid program while in session. If the Department realizes that they have a significant reduction, they would bring the choices to the Legislature at that time. However, with only the option list available, there have been unintended consequences resulting from the high federal matching rate to achieve any savings. Mr. Labbe anticipated that if there were significant budget actions taken, the Department would then indicate a plan on how to meet that, such as: · Eligibility levels · Eliminating services and/or · Providing enhancements Mr. Labbe added that there would be a package deal in order to achieve the program outlined. The intent is to preserve the benefit and the eligibility levels. He pointed out that taking the proposed actions requires regulation change, which does not move very quickly. Based on the proposed budget, the Department will not be able to make it through this next year without taking some additional measures. Commissioner Gilbertson pointed out that the fiscal note indicates zero expenditures. The Department believes that if the Governor's budget passes as submitted, that budget contains all the cost containment intended. Representative Hawker understood that the bill would give the Department latitude and/or flexibility to choose amongst alternate means to meet the budget shortfall. Commissioner Gilbertson agreed that was correct. The current structure limits the Department's flexibility and disproportionately places the burden on a number of services that may not be efficient, such as the elimination of prescription drug coverage. The Department would have to go after some needed services before affecting the eligibility standards. The additional flexibility would allow the Department to manage the program to the same level of responsiveness to maintain costs. It would also reduce the impact on the consumers. Co-Chair Williams noted that HB 153 would be HELD for further consideration. HOUSE BILL NO. 153 An Act repealing the statute that sets priorities for the Department of Health and Social Services to apply to administration of the medical assistance program when there are insufficient funds allocated in the state budget for that program; authorizing the department to make cost containment decisions that may include decisions about eligibility of persons and availability of services under the medical assistance program; and providing for an effective date. Representative Hawker MOVED to report HB 153 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 153 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note #1 by the Department of Health and Social Services.