SENATE BILL NO. 108 An Act relating to payment rates under the Medicaid program for health facilities and to budgeting, accounting, and reporting requirements for those facilities; abolishing the Medicaid Rate Advisory Commission; and providing for an effective date. Co-Chair Harris MOVED to adopt work draft #23-GS1125\I, Lauterbach, 4/23/03, as the version of the bill before the Committee. There being NO OBJECTION, it was adopted. JOEL GILBERTSON, COMMISSIONER, DEPARTMENT OF HEALTH & SOCIAL SERVICES, commented on the changes made to the committee substitute. He stated that the bill would eliminate the Medicaid Rate Advisory Commission and place the responsibility for calculating and setting Medicaid payment rates for health care facilities under the general authority of the Department of Health & Social Services. The bill would modify the Alaska Statutes to parallel federal statutory requirements for setting facility-based rates under Medicaid. Originally, the structure was modified in 1997 to remove the Medicaid facility payment standards and place them in the public process requirements of federal law. The Alaska Statutes have not changed to reflect that modification. Commissioner Gilbertson continued, the legislation would provide for the Alaska Statutes to mirror the federal statutory requirement for rate setting. He noted that the Department had worked with the Alaska State Hospital and Nursing Home Association (ASHNHA) to provide compromise language as adopted in the committee substitute. The language clarifies that the State will continue to have rates based on reasonable costs. The Administration agrees that there should not be "unreasonable" costs or rates. The Department does have an interest in grouping rates for facilities. The current structure allows for the Department to only adopt one rate setting structure and does not allow differentiating between a ten-bed facility and a two hundred-bed facility. The legislation is an effort to provide a unique methodology in grouping facilities. Commissioner Gilbertson pointed out that Section 5 references audits and are optional and would not be required. Those audits would not happen every year. The Department would retain their ability to have reasonable access to medical assistance for auditing records. Representative Croft referenced the committee substitute and asked if the section regarding the reasonable costs for the facility managers were listed on Page 2. Commissioner Gilbertson replied that was correct. Representative Croft asked if there had been any other changes between the committee substitute and the prior version of the legislation. Commissioner Gilbertson responded that there were a number of small changes to accommodate some concerns voiced by Legislative Legal Services. The substantive changes were the ones concerning the language on legal costs related to patient care. Representative Croft asked if Section 5 would be changed. Commissioner Gilbertson responded it would not. Representative Foster MOVED to report HCS CS SB 108 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CS SB 108 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal note #1 by the Department of Health and Social Services.