HOUSE BILL NO. 190 "An Act relating to a medical assistance reform program; relating to the duties of the Department of Health and Social Services; establishing medical assistance demonstration projects; relating to civil penalties for medical assistance fraud; relating to studies by the Department of Health and Social Services; relating to cost-containment measures for medical assistance; and providing for an effective date."   1:36:20 PM    HEATHER SHADDUCK, STAFF, SENATOR PETE KELLY, read from a prepared statement: HB 190 begins the process of reform and cost containment needed to slow the growth of the Alaska Medicaid program. Medicaid has grown to $1.8 Billion of the annual operating budget, and has accounted for 22% of the total UGF increases over the last ten years. The current and former administrations have testified the Medicaid program, as it stands, is not sustainable. Low oil prices and billions of dollars in revenue shortfalls have forced us to change how we do business. In July 2013, the Medicaid Budget Group of the Department of Health and Social Services reported the total spending on Medicaid services will reach $6.3 billion in 2032, including $2.8 billion in state matching funds. If we don't act now to bend the growth curve of Medicaid, many of our most venerable Alaskans will be without critical health care services they need. Ms. Shadduck provided a sectional analysis (copy on file) of the bill. She read from the document: Section 1: Adds new sections establishing civil penalties for false claims for medical assistance and authorizing the Department of Health and Social Services (the department) to asses civil penalties against medical assistance providers. Ms. Shadduck noted that Section 1 was found on page 1, line 7 of the bill and commented that every dollar averted from fraud translated into more money available to serve the "most vulnerable" citizens. Ms. Shadduck turned to Section 2 that began on page 3, line 5 of the legislation: Section 2: Requires the Department of Health and Social Services (the department) to design, adopt, and implement a medical assistance (Medicaid) reform program. Requires the department to prepare and submit a report about reforms, savings, and costs related to the Medicaid program. Provides for a definition of "telemedicine." Ms. Shadduck explained that subsection (a) mandated that the reform program must include ten items. She read number one from the legislation: (1) referrals to community and social support services, including career and education training services available through the Department of Labor and Workforce Development under AS 23.15, the University of Alaska, or other sources; Ms. Shadduck related that the state had a multitude of job training available through its job centers, vocational rehabilitation offices, Workforce Investment Act programs, vocational training programs, and support from non-profits. Ms. Shadduck continued beginning with item two: (2) distribution of an explanation of medical assistance benefits to recipients for health care services received under the program; (3) expanding the use of telemedicine for primary care, behavioral health, and urgent care; (4) enhancing fraud prevention, detection, and enforcement; (5) reducing the cost of behavioral health, senior, and disabilities services provided to recipients of medical assistance under the state's home and community-based services waiver under AS 47.07.045; Ms. Shadduck detailed that number five related to a 1915 "K" or "I" option [federal regulation related to the Community Choice Act] which was a way to enhance the current federal match from 50 percent to 56 percent for option "K" and no federal match to a match of 50 percent for option "I". The options were eligible for telemedicine for individuals receiving home care. Ms. Shadduck continued to read: (6) pharmacy initiatives; (7) enhanced care management; Ms. Shadduck defined that enhanced care management were methods that taught individuals how to use the healthcare system. She noted that Medicaide recipients often needed guidance on how to approach healthcare. She added that enhanced care management did not detract from preventative care and included primary healthcare, vaccines, flu shots and all other appropriate care. Ms. Shadduck moved to the next item on line 22: (8) redesigning the payment process by implementing fee agreements based on performance measures that include premium payments for centers of excellence according to nationally acceptable criteria and penalties for hospital acquired infections, readmissions, and failures of outcomes; Ms. Shadduck related that the Department of Health and Social Services (DHSS) would study the use of bundled rates for physicians and diagnosis related groups for hospitals. She exemplified that the provision would foster a streamlined approach instead of the fee for service model resulting in one bundled rate for a procedure such as a knee replacement. Alaska was one of the only states not currently using the practice in its Medicaid program. Ms. Shadduck turned to the following items: (9) stakeholder involvement in setting annual targets for quality and cost-effectiveness; (10) to the extent consistent with federal law, reducing travel costs by requiring a recipient to obtain medical services in the recipient's home community, to the extent appropriate services are available in the recipient's home community. Ms. Shadduck stated that travel costs needed to be reduced where possible. She pointed to incidences of consolidating different needs within one family to make one trip to cover various appointments as one example. She addressed subsection (b) beginning on page 3, line 31 that related to the department's improvements in access to telemedicine. She related that the state's willingness to collaborate with the Alaska Native Tribal Health Consortium (ANTHC), which had an "extensive" network for telemedicine throughout the state to increase access. She moved to subsection c on page 7 of the bill. The subsection required that DHSS submit a report to the legislature on or before October 15 of each year that contained everything that legislators needed to monitor for continuing reform of the Medicaid system. She listed some of the required information: realized cost savings related to reform; realized cost savings undertaken by the department; a statement of whether DHSS had met annual targets for quality and cost-effectiveness; recommendations for legislative or budgetary changes: impacts from federal laws; and the results of demonstration projects. She noted that subsection (d) [page 5, line 10] provided a definition for telemedicine. Ms. Shadduck cited Section 3 located on page 5, line 15 and read: Section 3: Requires the department to design and implement a demonstration project to reduce nonurgent use of emergency departments by Medicaid recipients. Ms. Shadduck remarked that the provision enhanced what the department had already done with its "super-utilizer program" for individuals using the ER for primary care. The program directed individuals to the appropriate type of care or provider. She noted that subsection (5)on page 6, line 1 delineated a process for referring a frequent emergency room user (or super-utilizer) to a primary care provider within 96 hours after an emergency room (ER) visit directed at. The program included strict guidelines for prescribing narcotics and a prescription drug monitoring program. She continued with Section 4 on page 6, line 12 and read: Section 4: Requires the department and the attorney general to annually prepare a report regarding fraud prevention, abuse, prosecution, and vulnerabilities in the Medicaid program. Ms. Shadduck directed attention to Section 5 on page 7, line 6: Section 5: Requires the department to develop one or more managed care or case management demonstration projects through a contract with a third party. The managed care program would be for individuals enrolled in all Medicaid programs. Ms. Shadduck examined subsection (a) [page 7, line 9]. She shared that Alaska was one of seven states that did not utilize a "managed health plan" within Medicaid. Recipients would be managed by traditional insurance carriers, i.e. Aetna or Premera. Improved outcomes and more "one on one" care were cited as benefits of the managed health care model. The provision included comprehensive care management and care coordination. She exemplified a pregnant woman enrolled in the Denali Kidcare Program who would be assigned a primary care case manager and would check-in regularly with the manager, in order to build relationship and trust. The relationship enabled the manager to encourage healthy behavior for the most positive outcome. The program was focused on the whole person and also required individual and family support and referral to community and social support services, including career training. 1:49:23 PM Ms. Shadduck noted subsection (b) starting on page 7, line 29 that required the department to enter into contracts with one or more third-party administrators for the managed care program. Subsection (c), on page 8, line 5 outlined the requirements for services and fees between the department and the third party administrator. She added that Subsection (d) [on page 8 line 12] mandated the department to include additional cost-saving measures that included innovations through a demonstration project by reducing travel through the expanded use of telemedicine for primary care. The subsection also "simplified administrative procedures for providers, including streamlined audit, payment, and stakeholder engagement procedures." She turned to Section 6 on page 8, line 20: Section 6: Requires the department to conduct a study analyzing the feasibility of privatizing certain services. Ms. Shadduck reminded the committee that before any state service can be privatized a feasibility study must be performed. The provision was aimed at the Alaska Pioneers' Homes, the Alaska Psychiatric Institute, and select facilities of the Division of Juvenile Justice (DJJ). She expounded that the studies would be tailored for the specific service. She exemplified that the division had an underutilized facility in Nome where the Norton Sound Health Corporation also operated. The state's facility could be handed over to Norton Sound to run as a residential psychiatric treatment center, thus avoiding forcing juveniles to leave their community and receive "culturally relevant care" paid for with a 50 percent Medicaid funding match instead of the 100 percent general fund costs incurred at DJJ facilities. She remarked that the three entities listed employed 1,192 state employees. Ms. Shadduck continued with Sections 7, beginning on page 8 line 30: Section 7: Requires the department to amend the state Medicaid plan and apply for any waivers necessary to implement the projects and programs described in the bill. Requires the Commissioner of Health and Social Services to certify to the reviser of statutes federal approval of specified measures. Ms. Shadduck moved to Section 8 [page 9 line 10]: Section 8: Allows the department to adopt regulations necessary to implement the changes made by the Act. The regulations may not take effect before the dates the relevant provision of the Act takes effect. Ms. Shadduck cited Section 9 located on page 9, line 18: Section 9: Conditional effects. Ms. Shadduck explained that conditional effects protected the department from having to follow a law in the event that the federal government did not authorize a specific state plan or amendments or waiver needed for implementation. She identified Sections 10 through 14 [beginning on page 10, line 7] and read: Sections 10 - 14: Provides for effective dates for provisos that require waiver and state plan amendment approvals from the United States Department of Health and Human Services. Ms. Shadduck cited the final section [page 10, line 22]: Section 15: Provides an immediate effective date for sections 6, 7, and 8. HB 190 was HEARD and HELD in committee for further consideration.