CS FOR SENATE BILL NO. 73(HES) "An Act relating to assisted living homes; and providing for an effective date." SENATOR MIKE MILLER, sponsor of the bill, testified. He told the committee the main purpose of the bill was to increase the daily rate paid to the "mom and pop" facilities around the state that provided a place for adults that could not provide for their own safety, medical or emotional and personal care needs. Currently in the Anchorage area, the state paid the facilities $30 per day to take care of these adults. He told of how he became aware of the services the facilities provided. He spoke of his father's experience with Alzheimer's disease. His family was able to place him in a home in the family hometown of North Pole rather then sending him to the Fairbanks Pioneers Home. While his family paid privately for the care, he saw first-hand the services that were provided. The care was good and provided inexpensively in comparison to other types of care provided by the Denali Center or a pioneer's home. However, he felt the state reimbursement rate of $30 per day was inadequate. Like it or not, Alaska's population was growing older and there would be more people in these types of situations. In his opinion, the assisted living homes were a very cost-effective way to deal with some of the problems that the state would be faced with in the future. He would recommend this type of care to others in his situation. He was sensitive to the fiscal situation in the state. He noted a rate structure report, released this year, which stated that assisted living facilities should receive $70- 75 per day. He structured the bill in a three-step phase that graduated the rate over three years. The rate would raise to $50 the first year, $75 the second year and $100 the third year. He believed the facilities provided a good service and if the state did not raise the rates, many of the facilities would leave the market. It would then have a negative impact to the budget because the patients would have to go to the nursing homes and hospitals at a much higher rate than what was proposed here. The committee needed to make a decision whether the facilities should be kept in operation. He had the departments break down the fiscal notes in two different ways. One included a geographic differential and the other did not. He recommended maintaining the program with the geographic differences in the rate system. Homes in Barrow and Kotzebue, for example, would receive higher compensation than those located in Anchorage. He felt that was fair. The other fiscal notes were submitted for the committee's consideration, should it choose to forgo the differential. Senator Randy Phillips asked if this would only apply to licensed assisted living facilities. Senator Mike Miller was not sure but thought it was because it would only apply to those facilities that received state-assisted patients. Senator Loren Leman wanted to know about the geographical differential and didn't see the numbers listed in the bill although he did see those reflected in the fiscal note. Senator Mike Miller deferred to the department. Senator Loren Leman noticed that the rate for Fairbanks was 15 percent higher. Senator Mike Miller agreed that was correct and noted the other areas with higher rates. He did not establish that structure and again deferred to the department. Senator Loren Leman then asked about doing only two steps going up to $75 and then reaching $100 in future legislation. Senator Mike Miller responded that was a policy call for the committee. However, he stressed the rates had not been raised in 15 years and felt the reality was that the matter would not be addressed again before another 15 years. He believed that by the third year of the implementation when the rate would be $100, that would be the actual recommended compensation amount. Senator Gary Wilken appreciated the committee hearing the bill and Senator Mike Miller for sponsoring the legislation. Senator Gary Wilken said one of the recommendations of the Long-Term Care Task Force was to keep the elderly in home environments for as long as possible and this legislation would help accomplish that. KAY BURROWS, Director, Division of Senior Services, Department of Administration, testified via teleconference from Anchorage in support of the bill. She told the committee there were Alaskans who spent their adult lives being the best they could be and where now vulnerable, alone and at-risk for illness, disability and homelessness. There were also Alaskans willing to help those fellow citizens; to provide a home, caring, hope and a chance for a loving, caring environment where Alaskans could age with day to day peace. The State Of Alaska needed to help those Alaskans to find each other and to make it work. This bill would do that. Most could pay their own way and only needed help finding each other. Some needed the help Medicaid provided. However, this bill related to those who were not able to get Medicaid support immediately or were too vulnerable to wait the system out before their world disintegrated into terror, homelessness and despair. Alaskans who provided those services needed a living wage. That was what this bill was about. The rate had not changed since 1986. However, the care needs had greatly increased. The facilities were now able to care for people in assisted living homes with much higher needs than before. The patient's choice was to not live in a nursing home. The state as public funders should be not to have them in a nursing home if at all possible. There had been a significant industry growth in assisted living facilities. Since 1996, the Division of Senior Services had seen these homes grow in number from approximately 65 to 95 licensed homes today. There were 90 to 100 adults each month that would be covered under this bill. Thirty-eight percent had Alzheimer's disease, 12 percent had other mental illnesses, six percent were adults with developmental disabilities, 12 percent were chronic alcoholics, 32 percent were physically disabled or were vulnerable adults who would be on the street otherwise. Seventy percent were over the age of 60. Most of them received this type of general relief funding for one year or less until other parts of the system could take care of them. These were truly the most needy. She referred to the rate study, which was funded by the Alaska Mental Health Trust Authority and done by the nationally known Assisted Living Training Institute. The study reported that 33 homes provided actual financial information; 20 percent of those were from the Division of Mental Health. Those figures built the rate the division believed to be appropriate. The study also showed that the current rate if it only adjusted 1986 rate for inflation, the cost of living and social security, would be $68. Actual costs were $73 per day with higher costs for those needing extra assistance. The study had other recommendation, which the division planned to follow up with regulations. They included increased training and education requirements for assisted living administration and staff. The division also planned to look at separate and additional standards for those homes that housed 15 and fewer patients and those that housed 16 and over. The division was very supportive of this bill. Senator Loren Leman had a question on the fiscal notes and wanted to know the source of the geographic differential factors. He was specifically interested in the Kenai Peninsula. DWIGHT BECKER, Protective Services Coordinator, Division of Senior Services, Department of Administration, testified via teleconference from Anchorage. He explained the geographic differential rates were currently in the Department of Health and Social Services regulations, which the Department of Administration had been following to apply to the administration of general medical relief. The Kenai Peninsula fell within the SouthCentral region, which had an index of one. There was currently no increase for that area. He detailed the index breakdown and the different rates for each area of the state. The index was consistent with the pay rates for state service and also for Medicaid rates. Senator Loren Leman wanted to know how long ago the rates were revised. Dwight Becker said the last major change to the general relief regulations was made in 1983 but that other studies and adjustments were done since then. Senator Loren Leman felt they did not reflect studies the committee had seen. ALISON ELGEE, Deputy Commissioner, Department of Administration responded to Senator Loren Leman's question. While they were developed in regulation several years ago, they were directly tied to differential from AS 39 that applied to revenue sharing and determined the state employee pay rates. Co-Chair John Torgerson added education as well. Senator Loren Leman asked if the department felt it was time to analyze those. Alison Elgee replied they did think it was appropriate and had introduces prior legislation to amend the schedule for pay differentials. However she felt that continued differential rates for the rural areas was necessary to foster the assisted living industry. Senator Loren Leman was aware of that past legislation and wanted to ensure consistency. Alison Elgee said the geographic differential was not in statute but in regulation and department would revise those regulations with the passage of this bill. Co-Chair John Torgerson was concerned with the fiscal note. Were the only funds available general funds, or could federal funds or other sources be utilized? Alison Elgee replied that the program would assist those who were in the process of qualifying for Medicaid or other assistance. There were others who would never qualify for Medicaid because they would never require full nursing home care. The department pushed the Medicaid process as rapidly as possible. The department also required patients to utilize their own resources first. Many of the clientele represented here were covered by adult public assistance and social security payments. SSI and APA payments would cover most of the $30 per day rate and the division only made up the difference. The Division of Senior Services budgeted $400,000 to augment the rate to make up the difference. She explained that was why the fiscal note was disproportionately higher than the underlying cost of the present program. Co-Chair John Torgerson referred to Section 6 that stated if there was not enough funds for the entire program, the division would establish by regulation a pro-rata payment system. However, the other sections dictated that the rate could never go below $50. Alison Elgee explained there were two rates, the base rate and the augmented rate. The augmented rate was designed to pay up to $22 but was very specific in terms of the needs of the individual that was treated and was negotiated with the provider. Section 6 allowed for changes to the augmented portion of the rate only. Co-Chair John Torgerson asked if this would take away the department's ability to pro-rate funding if the full appropriation was not granted to the program. Alison Elgee believed the intention of the program was to keep the base rate intact without pro-ration. JEFF JESSIE, Executive Director, Alaska Mental Health Trust Authority, testified via teleconference from Fairbanks in support of the bill. This bill was a high priority for the trustees. Having funded the rate study and looked at the information supplied by the Commission on Aging, the Trust believed that this was an essential component of a long- term strategy to meet the growing needs of a variety of the Trust's beneficiaries in the coming millenium. The elderly population in Alaska was the largest growing segment. Fully 50 percent of those individuals over the age of 85 had some degree of Alzheimer's disease or related dementia. Increased demands were being placed on the pioneer homes and other facilities to serve that population in an ever- increasing degree. Eventually the state would exceed the capacity to treat these individuals in nursing home settings. In fact it was not the most efficient or cost effective options of treatment nor did it meet the desire to keep people in their homes and in their home communities for as long as possible. The trustees had already authorized the expenditure of $ 300,000 in Mental Health authorized receipts for FY00 to assist in the transition to the higher rates. This was not reflected in the information provided to the committee. The Trustee's made it clear they were willing to put their money were their mouth was. They were working closely with Senator Pete Kelly, the subcommittee chair for the Department of Health and Social Services budget who was working with the Trust on the mental health budget bill. They believed in the long run, this was a cost effective Co-Chair John Torgerson asked if the $300,000 commitment was only for one year. Jeff Jessee said the authorization was currently only for FY00. Senator Lyda Green wanted to know if that was in addition to the funds listed in the fiscal note. Jeff Jessee guessed it was to augment those amounts. Kay Burrows confirmed that. Co-Chair John Torgerson clarified that was for the Department of Health and Social Services, Community Mental Health Grant fiscal note. Kay Burrows believed the $300,000 was put into the budget for the Division of Social Services portion. Jeff Jessee added that the intent of the trust authority was to support the bill. It was not important to them which division in particular the funds went to since they both served the clients. GINA MACDONALD, Special Projects Coordinator, Division of Mental Health and Developmental Disabilities, Department of Health and Social Services, came to the table to explain that the $300,000 was not currently included in the fiscal note. It was not important to the department which agency the funds went to either. Co-Chair John Torgerson clarified that there were two fiscal notes, one for Department of Health and Social Services and the other for Department of Administration. Gina MacDonald detailed and further explained there were actually four fiscal notes. Two included the geographical differential and the other two left that out. Co-Chair John Torgerson detailed the amounts requested. Senator Randy Phillips repeated his question of Senator Mike Miller if this would apply to licensed assisted living facilities only. Co-Chair John Torgerson pointed out the language stating that is was. Senator Randy Phillips wanted it clear on the record. Alison Elgee believed homes housing one to three patients did not need to be licensed. Dwight Becker confirmed that. If a non-licensed home wished to participate, the division would assist them in becoming licensed. Senator Randy Phillips stated he had experience with the non-licensed facilities. Co-Chair John Torgerson asked if the $300,000 authorization was currently contained in the $5.1 million figure from the mental health bill or would he anticipate an amendment to the bill to increase it. Jeff Jessee responded that it was his understanding that because the $300,000 was attached to legislation rather than the Governor's Operating Budget that it was not currently in the budget bill. However, the trust authority had obligated the funds. Co-Chair John Torgerson agreed that if the committee had a fiscal note before it; they could quantify the details. MONTA FAYE LANE, President, Alaska Caregivers Association and owner of two assisted living homes in North Pole, testified via teleconference from Fairbanks in support of the bill. She spoke to the services the caregivers provided. They did all the hands-on care and they needed to earn a living wage. She did not know where the committee would find all the money needed for the change, but urged the members to do so because the State Of Alaska really needed the assisted living homes. She thanked the committee for their efforts. She felt the increase should be $70 per day with the geographical differential because the cost of electricity, fuel and food in the Interior, the Northern region and the Western region. She said that if the homes could not afford to operate, they would close and the patients would need to be housed in more expensive nursing home facilities. She told the committee about the Mary Conrad Assisted Living Home Center in Anchorage that had raised its base rates to $295 per day. The rates were higher for those patients requiring extra care. The monthly rates for these services were between $9000 and $10,000. She compared that rate to the Denali Care Center of $345 per day and the hospital rate of $1335 per day. She earned $34.50 per day for a general relief client. She had an indigent patient suffering from chronic alcoholism and yet received none of the $21 million alcohol treatment funds the state issued. She had another mental health patient for whom she received only $700 per month - less than $34.50 per day. She could not evict the patient because he had no where else to go. She thanked the committee. Senator Randy Phillips commented that there was a member of the committee who worked in and around assisted living facilities. LESTER WESTLING, testified via teleconference from Fairbanks in support of the legislation and the geographic differential. He thanked the Mental Health Trust Authority for offering to assist in the funding. He talked about the benefits of assisted living services and the functions they performed. The savings to the State of Alaska would be exponential because of the ability to care for patients without the need for doctors, nurses and pharmacies on site. He stressed that the facilities could not pay employees a competitive wage. They could not offer benefits either, which he felt would keep turnover down. "Please help stabilize our businesses because we're here for you." He said he didn't want to see homes shut down because they could not afford to do business or people being warehoused because they did not have the funds necessary to pay the rate needed to live in assisted living homes. CATHY WESTLING, owner of Downtown Care, testified via teleconference from Fairbanks in support of the bill. She was greatly concerned with mental illness and alcoholism in Alaska. The state needed to be very proactive. She spoke of the difficulties in dealing with alcoholics and their related behavior problems. The employees could not be paid well or receive benefits. There was not a lot of community support. Their only reward was the feeling of doing something that was good. They saw very few patients who were financially self-sufficient. Those that did have funds, ran out after a short period of time. Co-Chair John Torgerson ordered the bill held in committee so the members could work with Jeff Jessee and the sponsor on the funding issue.