SENATE BILL NO. 109 "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." Co-Chair Harris MOVED to ADOPT the Committee Substitute, Work Draft 23-GS1124\H. There being NO OBJECTION, it was so ordered. JOEL GILBERTSON, COMMISSIONER, DEPARTMENT OF HEALTH & SOCIAL SERVICES, spoke in support of the legislation. He stressed that the legislation is needed for the Department to move forward in the prudent adoption of cost containment measures, which would allow it to meet the legislative mandate for fiscal accountability while minimizing the impact on Medicaid beneficiaries. Intent language was modified and is consistent with the Department's intent to develop a preferred drug list that is responsive to clinical evidence. It would also develop an authorization system, which would allow providers to prescribe drugs outside of the preferred drugs in each drug class. He observed that the Committee had held hearings on the House version of the bill. Co-Chair Harris asked if the bill had been discussed with pharmaceutical companies. The Commissioner did not perform that duty. Vice-Chair Meyer referred to line 2 of the intent language and asked if "all" was appropriate. Commissioner Gilbertson explained that the section clarifies that the drugs are Medicaid approved medications. This is a smaller subset than "all pharmaceutical products available for sale in the United States". The Medicaid program or Alaska's medical systems program does not necessarily cover a product simply because it is an approved pharmaceutical product. It would also need to be on the national negotiated fee rate system. Each drug company negotiates with the federal government to establish a nation drug rebate schedule for states that participate in the Medicaid Program. The Medicaid program at a state level does not cover a drug unless it has been approved at the federal level. He noted that drugs, which are specifically excluded from the Medicaid program, such as abortion drugs, which are not under the federally approved program, cannot be prescribed. Representative Kerttula MOVED Amendments #1: 23-GS1124\A.2. Co-Chair Williams OBJECTED. Representative Kerttula explained that Amendment 1 would address the delegation of authority issue. The amendment would force the Department to bring the list to the Governor so that budgetary decisions could be made. The Department would not be able to eliminate a group until all optional services were eliminated. The Legislative Affairs Agency's attorneys indicated that the bill might over delegate legislative. Commissioner Gilbert stated that the Administration did not support the amendment. The amendment allows a new priority list to be set in statute a year in advance. He stressed that it would be more responsive to make the decision when the budget deficit in the Medicaid program is determined. He maintained that the list should be more ongoing to be more responsive. He indicated that the list would be created in response to current deficits, in order to achieve savings and minimize impacts. He observed that the amendment would require that all optional services be eliminated before an optional eligible group could be eliminated. He acknowledged that eligible individuals should be protected, but pointed out that the amendment would require that wheel chairs and prosthetics be eliminated before eligibility guidelines for higher earning individuals could be affected. He maintained that this was not feasible and harmful to recipients and stressed that the system is flawed. Representative Kerttula noted that the amendment is geared toward providing the information with enough time to scrutinize decisions and address the delegation of authority. STACY KRALY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW testified via teleconference. She stated that the Department of Law did not feel that the bill would create an indefensible delegation of authority. She noted that the central issue was whether the legislation would pass legislative authority on to an agency without any limitations on the implementation of the authority. She noted that there were a variety of state and federal limitations, which govern the Medicaid program. She concluded that the issues related to the Medicaid program prevented prioritizing to address budget shortfalls without addressing statutory and regulatory limitations. The legislation limits the discretion of the Department in regards to the implementation of cost containment measures. She asserted that the legislation is an appropriate delegation, providing an agency with a vary specific area of expertise the authority to administer a program. Representative Kerttula asked if there is any law that would define the order in which cuts would occur. Ms. Kraly acknowledged that there is no companion list, but pointed out that there are limitations regarding the coverage of optional services. Individual determinations would occur, rather than a category of services. She stated that there was no list in federal or state law, but that there were limitations pertaining to individuals. A roll call vote was taken on the motion. IN FAVOR: Berkowitz, Kerttula, Moses OPPOSED: Chenault, Hawker, Meyer, Harris, Williams Representatives Foster, Stoltze and Whitaker were absent from the vote. The MOTION FAILED (3-5). Representative Kerttula MOVED Amendment #2. Co-Chair Williams OBJECTED. Representative Kerttula stated that the amendment contains a notice provision, which would require the Department to notify individuals that are impacted at least 60 days before coverage would be denied by written notice. Commissioner Gilbertson agreed that there should be notice provisions, but pointed out that there are already a host of notice requirements under the Medicaid program. There is a minimum 30 days public notice period and a minimum 30-day waiting period before the regulation change can occur. He estimated that it already takes 90 to 120 days for a change [in regulations] to occur. He stated that under federal law, participants have to receive a 10 ten day notice on adverse actions if service is denied, terminated, reduced or required. He concluded that federal law and state regulations addressed notice for changes in service. Representative Berkowitz clarified that a 10-day notice is required [for the denial of service] and asked if there was a reason not to give more notice. BOB LABBE, DEPUTY DIRECTOR, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, pointed out that the participants would probably receive two notices. Individual case actions typically required a ten-day notice, but broad category changes generally received a longer notice. He reiterated the ten- day minimum under federal law. Representative Berkowitz asserted that, in a rural state, ten days was not adequate. He stressed that people might not be contacted in time to make alternative arrangements. He proposed that the state of Alaska be more courteous than the requirements under federal law Commissioner Gilbertson responded that there are ample notice requirements under federal law and state regulations. The regulation process would take longer than sixty days. He pointed out that larger changes would require longer notice. Representative Berkowitz asked the time frame for notifying impacted individuals. Mr. Labbe stated that individual cases were given a 10-day notice. General changes would have a minimum thirty-day notice. He added that regulation changes would be necessary. He speculated that a longer process might require [the Department to institute] larger reductions due to delay [in savings] and a lack of efficiency. Representative Kerttula pointed out that a regulation notice was very different than a notice to the participant that they are losing a benefit. She observed that there was little information about the nature of notice received by individuals. She suggested that a written notice was easy enough, and maintained that a written notice would not be onerous. A roll call vote was taken on the motion. IN FAVOR: Berkowitz, Kerttula, Moses OPPOSED: Foster, Stoltze, Hawker, Meyer, Harris, Williams Representatives Chenault and Whitaker were absent from the vote. The MOTION FAILED (3-6). Co-Chair Harris MOVED to report CSSB 109 (FIN) out of Committee with the accompanying fiscal note. Representative Kerttula OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Berkowitz, Kerttula, Moses OPPOSED: Foster, Stoltze, Hawker, Meyer, Harris, Williams Representatives Chenault and Whitaker were absent from the vote. CSSB 109 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with previously published fiscal note: #1 HSS.