SENATE BILL NO. 109 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, explained 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given fiscal year, the Department is directed to eliminate optional Medicaid services based on a priority list that is out-of-date. He maintained that 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. Commissioner Gilbertson advised that the bill would repeal the options list and replaces it with a singular direction for the Department to engage in cost containment measures to achieve the same level savings to operate the Medicaid Program within the amount appropriated by the Legislature. The proposed bill would replace the obsolescent language with broad general authority for the Department to undertake cost containment based on three key principles: · The Department must pursue all other reasonable cost containment measures before eliminating any eligibility groups or services; · The Department should aggressively pursue strategies to maximize federal financial participation in the Medicaid program; and · Cost containment decisions should be made in a manner that best reflects the needs and interests of eligible Medicaid recipients. Commissioner Gilbertson noted that the current list in statute establishes a very rigid structure. The Administration believes that the Department can engage in similar cost containment measures within the Medicaid Program and conduct cost containment in a manner that is responsive to the Legislature's intent and responsive to the needs of the beneficiary population. He spoke to the fiscal note. Commissioner Gilbertson stated that next year there would be a savings. At this point, the Administration is not proposing any additional cost containment in the Medicaid Program that is not currently in the Governor's budget mission. Co-Chair Harris asked about a deferred drug list. Commissioner Gilbertson advised that included in the Governor's budget submission this year was a proposal for adopting a deferred drug list for the Alaska Medical Assistance Program. A preferred drug list is not a formulary. That drug list is a peered reviewed, professionally designed list that establishes preferred drugs within a drug class. These drugs would be purchased at a similar or lower cost. Some other states use these drug lists. He added that at this stage, the Department has not formulated their preferred drug list and are not in the process of developing one. Commissioner Gilbertson did not believe that the Department would develop their own list. There are a number of other lists adopted by other states that have withstood litigation. It is foreseeable that Alaska would take one from another state. That decision has not yet been made. He acknowledged that the preferred drug list is contentious. Co-Chair Harris inquired the success rate that other states have had in saving money using this system. Commissioner Gilbertson offered to provide that information to the Committee at a later date. He added that some states have shown large savings. There is disagreement regarding the net effect of Medicaid expenditures. Most of the Medicaid growth now is within the seniors and disabled individual population area. Seniors have a high drug utilization cost. The preferred drug list would not prevent access to pharmaceutical products that perform certain benefits. The Commission would decide which there might be two drugs that serve the same purpose, which one should be clinically approved for dispensing. Co-Chair Harris requested that Commissioner Gilbertson work with Representative Hawker and other interested parties who have concerns regarding this legislation. Co-Chair Williams recommended that Commissioner Gilbertson also work with Representative Croft, the maker of the proposed amendments. Co-Chair Williams noted that SB 109 would be HELD in Committee for further consideration.