SENATE BILL NO. 88 "An Act authorizing the state bond committee to issue certificates of participation to finance the construction and equipping of residential housing to serve the Anchorage campus of the Alaska Native Medical Center; and authorizing the Department of Administration to enter into a lease-purchase agreement for the benefit of the Alaska Native Tribal Health Consortium." 2:22:22 PM SENATOR PETE KELLY, SPONSOR, addressed the bill. He spoke to increased costs in Medicaid. He pointed to the Medicaid task force who made some recommendations and initiated the conversation about containing Medicaid costs. One recommendation was to move people who were utilizing Medicaid services while eligible for Tribal Health into hospitals eligible for Tribal Health grants that reimbursed at 100 percent. With Medicaid, the state paid 50 percent and Medicaid paid 50 percent. The bill incentivized care for hospitals that pay 100 percent. The department estimated an $8.8 million saving per year with implementation of the legislation. Co-Chair Stoltze asked about a direct appropriation or a bond. Senator Kelly replied that the net savings would be $8.8 million per year. He furthered that the bill would bond for the Alaska Native Medical Center (ANMC) in Anchorage for housing of patients that would then receive 100 percent grant funding from Medicaid. He anticipated even greater savings with time. 2:25:41 PM Co-Chair Stoltze pointed to construction opportunities for the capital side of the issue and savings on the operating side. Senator Kelly affirmed. HEATHER SHATTUCK, STAFF, SENATOR PETE KELLY, explained that the state was responsible for multiple pieces when paying Medicaid. The populations with high-risk pregnancies in rural areas benefitted greatly. She believed that the cultural aspect would incentivize Alaska natives who were Medicaid eligible to utilize the facility. The facility's lease was 15 years long and required a memorandum of the state. The legislation would increase access to tribal facilities, which was in part contingent on expanding housing abilities. Co-Chair Stoltze requested department testimony. 2:30:28 PM WILLIAM STREUR, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, discussed his involvement in the bill. He stated that approximately 40 percent of state services were delivered within the tribal system. The consequence was a 50 percent reimbursement for 60 percent of services. The discussion evolved cooperatively with Tribal Health who determined the greatest needs of tribal members. Maternal and child health was deemed the greatest need. Commissioner Streur pointed out that the state spent approximately $1 million per year for each of the first three years for a challenged birth. He mentioned an immunodeficient baby whose prescriptions alone cost $36 thousand per month. One proposal was to bring rural mothers into urban areas for prenatal services. He projected $1.9 million for increased deliveries per year within the native system. He added that operating room expansion was projected to cost $595 thousand. Commissioner Streur commented on the abundance of ear, nose and throat problems occurring in rural areas, which if left untreated could lead to permanent damage to children and their ability to be fully productive citizens. The proposal was for increased medical capabilities for those issues. He added that prenatal outpatient capacity would save $1 million per year and the increased day capacity would save $600 thousand per year. The total estimate was for $3.8 million in Medicaid savings per year as an offset to the Tribal Health facility. 2:34:26 PM Commissioner Streur discussed telemedicine capabilities. He noted that the telemedicine program at Alaska Native Tribal Health Consortium (ANTHC) provided a national model. He believed that the performance measures would be included in the memorandum of agreement. 2:35:45 PM Vice-Chair Neuman asked if the facility would be located in Anchorage. Commissioner Streur replied yes, the facility would be located on the ANTHC campus and connected by sky bridge to the Native Medical Center. Vice-Chair Neuman noted that 60 percent of Alaska natives did not attend visits with a primary care provider, but instead chose emergency services. He asked how the Alaska natives could be convinced to choose the facility over emergency hospital care. He wondered how the percentage could be lowered. 2:37:32 PM Commissioner Streur responded that most native citizens would arrive at the facility from Anchorage. He noted that people coming into Anchorage may or may not end up at a tribal facility. The intent of the legislation was early outreach and additional services. The prenatal services would bring young mothers into the facility for care earlier in their pregnancies. The prenatal service would encourage deliveries within the Tribal Health system. 2:39:25 PM Vice-Chair Neuman asked about an opportunity for veteran services. Commissioner Streur responded that an effort to increase veteran care was active in Bethel, Nome and Barrow. He mentioned outreach in other rural areas. The outreach led to over 100 veterans in the Cordova area. Co- Chair Stoltze clarified the city of Cordova. Vice-Chair Neuman hoped to get additional help for veterans in his area. 2:41:11 PM Vice-Chair Neuman asked if there was a Neonatal Intensive Care Unit (NICU) in the facility. Commissioner Streur replied that the facility did have a NICU with eight beds as part of the Alaska pediatric partnership. When the eight beds were full, transfers to Providence were made. Co-Chair Stoltze assumed that the prenatal care minimized the need for the NICU. Commissioner Streur agreed. Representative Kawasaki pointed to a centrally located hospital in Fairbanks. He understood that the Fairbanks Native Association had a facility to house people receiving care at the new facility. He wondered if the same bonding mechanism could be used for other facilities across the state. 2:43:23 PM Commissioner Streur replied that the efforts to expand Medicaid type services had been proposed in a variety of mechanisms since 2006. He advocated for continued development of the services. Co-Chair Stoltze mentioned the Mat-Su Valley Tribal Health facility. He wondered if benefits from that new facility were observed. Commissioner Streur responded that the facility was not yet open. He believed that the dental clinic was the only open portion. Co-Chair Stoltze believed that the Mat-Su valley had 10 or 11 percent Alaska native population. 2:46:07 PM ANGELA RODELL, DEPUTY COMMISSIONER, TREASURY DIVISION, DEPARTMENT OF REVENUE, addressed SB 88, which authorized the issuance of certificates of participation in the amount of $35 million. The funding would be used to finance the construction of a 179 bed facility at the Alaska Native Medical Center to serve patients and families. The certificates of participation would be used to finance five of the six floors in the facility with ANTHC financing the sixth floor. The costs were capped at $35 million with any cost overruns born by ANTHC. The ultimate project goal was to realize annual general fund savings. The total cost to the state was estimated at $42 million, which included principal and interest to repay the certificates over a period of 15 years. The payments were subject to annual appropriation. The annually required debt service cost approximately $3 million per year. An assumption was built in for increased rates. She noted that Department of Administration (DOA) would enter into a lease agreement with ANTHC who would be responsible for the design and building of the facility. Construction invoices would be submitted to the department with the assistance of Department of Health and Social Services (DHSS). The state would maintain the tax exemption on the certificates of participation. Representative Wilson asked if the money would be reimbursed to the state. Ms. Rodell replied that the state would fund the facility. Medicaid savings would provide the funding. The facility was a crucial aspect of the savings. Representative Holmes pointed to page 2, lines 24 through 27. She stated that the bill did not mention participation by ANTHC. Ms. Rodell clarified that the bill was related to the $35 million only. The entire project cost exceeded that amount. The partnership agreement was that ANTHC would contribute to the construction of the total project. Representative Holmes noted that subsection (a) referred to the project as a residential housing facility with all remaining funding connected to the investment income earned on the proceeds. She believed the language did not adequately detail the private partner's participation. 2:52:22 PM Ms. Rodell answered that she was unsure about acknowledging the private partner's participation in the legislation because ANTHC would be contributing equity. Representative Holmes was supportive of the project and would speak further with Ms. Rodell about the issue. Co-Chair Austerman asked if the Department of Revenue (DOR) would sell the bond. Ms. Rodell replied in the affirmative. Co-Chair Austerman asked about the federal government's participation in the project. Ms. Rodell answered that once the state went forward with the project, the department would come to the legislature for an annual debt service request regardless of federal government participation regarding Medicaid. Co-Chair Austerman asked for verification that the project was dependent on the federal government. Ms. Rodell replied in the affirmative. Representative Munoz asked if the state would derive benefit once the facility had been paid off and was constructed. Ms. Rodell replied that the state would continue to derive benefit due to the savings. Representative Munoz clarified that the state shared the cost of Medicaid with the federal government. She wondered if the state would derive the financial benefit for the savings allowed by the presence of the facility. She asked if the state's contribution to Medicaid would lessen. Ms. Rodell deferred the question to Commissioner Streur. Co-Chair Stoltze noted that the legislation would allow for medical services for additional Alaskans and provide a permanent accrual of benefit. 2:57:16 PM Co-Chair Austerman pointed to the fiscal note listing $2.8 million per year paid by the state. Ms. Rodell concurred. Representative Wilson asked what would happen if the state did not fund the $3 million annual payment. Ms. Rodell replied that the state would be in default. Representative Wilson asked if the state was competing with the private sector. Ms. Rodell deferred the question. 2:58:41 PM VALERIE DAVIDSON, SENIOR DIRECTOR, LEGAL AND INTERGOVERNMENTAL AFFAIRS, ALASKA NATIVE TRIBAL HEALTH CONSORTIUM (ANTHC), spoke in support of the legislation. She stated that expanding patient housing would allow an expansion of services at ANTHC. She provided examples of patients that would benefit from the facility. The first story pertained to a pregnant woman from a small village who experienced complications and needed to be in a hospital but was unfamiliar with the use of Medicaid vouchers. She mentioned her own personal experience. She elaborated on the story. She stated that patients had to learn navigation of a whole new world in Anchorage when they were from a village. She provided information on the proposed facility. She explained how a patient would be treated in the new facility. She discussed the services provided at the facility including the cafeteria, shared kitchen and housing. 3:04:33 PM Ms. Davidson continued to discuss how the facility would help various patients of all ages. She furthered that ANTHC was the highest level trauma center in the state. The project allowed the state to realize an annual savings of $8.8 million. The state's required contribution would be $2.8 to $2.9 million annually. She spoke to the necessary housing component. She thanked the committee for its time. Representative Holmes asked if the facility would enhance the ability for telemedicine services. Ms. Davidson answered that ANTHC had a program for telemedicine service which allowed savings in ear, nose and throat services. Her organization had documented the travel savings because of the telemedicine services. She stated that the organization explored expansion of telecardiology services. Representative Holmes discussed support for the benefits of telemedicine services. Co-Chair Stoltze asked ANTHC was under the management of the Southcentral umbrella. Ms. Davidson replied that the Southcentral foundation and ANTHC joint-managed the Alaska Native Medical center. Co-Chair Stoltze remarked about the partnership. Ms. Davidson commented on the many benefits of the partnership. Co-Chair Stoltze asked about the facility in Wasilla known as Benteh Nuutah. He wondered about its progress. Ms. Davidson replied that once a facility was able to bill services that were available by a tribal health facility, the state immediately saw savings. 3:10:57 PM Co-Chair Stoltze hoped that there was a decreasing number of Alaskans that would require Medicaid because of a thriving economy. Representative Edgmon asked about the safety aspect of bringing patients in from villages. Ms. Davidson replied that the consortium had heard stories about people being taken advantage of in cab rides to the ANMC. She provided other stories about patients who did not speak English well. The housing facility goal was to provide a home away from home. She shared a personal story related to her childhood. She furthered that Alaska Native families wanted what all families wanted. She stated that when there were opportunities to help the lives of many people it was important to seize them. Co-Chair Stoltze inferred that the bill financed a facility with great opportunities for savings, which included facilitated transportation for rural patients. Ms. Davidson replied in the affirmative. The transportation from the housing to the airport would be provided. 3:16:40 PM Representative Wilson asked if Medicaid eligibility was a patient requirement. Ms. Davidson replied that the housing facility would be available to all eligible individuals. Co-Chair Stoltze expounded that Medicaid patients utilizing the facility would benefit state savings. Ms. Davidson concurred. Co-Chair Stoltze CLOSED public testimony. SB 88 was HEARD and HELD in committee for further consideration. 3:19:14 PM RECESSED 7:36:27 PM RECONVENED