CS FOR SENATE BILL NO. 105(HES) "An Act relating to eligibility requirements for medical assistance for certain children, pregnant women, and persons in a medical or intermediate care facility; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-chair Wilken informed that this bill would amend "the eligibility income levels for Denali KidCare and Medicaid under the special income limits for nursing homes and home and community based waiver services." JOEL GILBERTSON, Commissioner, Department of Health and Social Services, explained that this bill was introduced by Governor Frank Murkowski and was subsequently amended by the Senate Health, Education & Social Services (HES) Committee. He stated that the Governor's bill specified that the eligibility income levels for the Denali KidCare program and pregnant women "would be frozen" at the federal maximum allowable poverty level of 200 percent, and at 300 percent of the special income standards for individuals in long-term care under the Medicaid program and for individuals receiving home and community based waiver services. Commissioner Gilbertson continued that the HES version of the bill amends these levels to 175 percent of poverty levels for the Denali KidCare program and pregnant women program, and he noted that a new negative $7,151,300 fiscal note, dated April 8, 2003 from the Department of Health and Social Services accompanies the HES version of the bill. He stated that the poverty level specified in the HES version of the bill would eliminate an additional 1,200 individuals from the Title 21 Denali KidCare and pregnant women programs above the number specified in the Governor's bill. He stated that some of the impact "is buffered" by provisions specifying that pregnant women and children in the Denali KidCare program who establish eligibility by June 30, 2003 would continue to be provided coverage for nine months and six months, respectively, under existing eligibility rules. Commissioner Gilbertson stated that the Governor continues to support the bill at the 200 percent of poverty level for children in the Denali KidCare program and pregnant women and 300 percent for individuals needing long-term care. Co-Chair Green asked whether Alaska's poverty calculation receives additional adjustments at the federal level. Commissioner Gilbertson explained that the State currently specifies the eligibility level for the Denali KidCare and pregnant women program at 200 percent of the federal poverty level, which he noted, is adjusted and inflation-proofed annually. Furthermore, he declared, the federal government awards the State of Alaska an additional inflation factor of 25 percent. Therefore, he clarified; the State's established poverty level for these programs is 200 percent above the national poverty level calculated for Alaska. Additionally, he pointed out that individuals in the programs are held harmless for their permanent fund dividends (PFDs). He qualified that "the income standards are uniquely adjusted for the Alaska situation" in terms of the federal calculated poverty level and "the hold harmless clause" for the PFDs. Commissioner Gilbertson reiterated that the Governor continues to support the levels specified in the original bill as opposed to the HES version's amended levels. Co-Chair Green calculated that the State's poverty level for these programs "is 250 percent above" the normed federal poverty level. Commissioner Gilbertson stated that when comparing Alaska's poverty level standards to the national standard poverty level for the "Lower 48," that is correct. Co-Chair Green asked whether additional adjustments result from a State-conducted asset test regarding the Denali KidCare program. Commissioner Gilbertson clarified that the State does not conduct an asset test for the Denali KidCare program. Co-Chair Green noted therefore "it is a fairly short window of an income level at a certain level that qualifies a person for this program." Commissioner Gilbertson responded yes. Co-Chair Green specified that the program recipients "could either be uninsured or underinsured." Commissioner Gilbertson concurred. Senator Hoffman declared that this bill reduces health care to pregnant women, children, and the disabled to save less than $300,000 in general funds. He noted that other cost saving options must be available "that have less impact" on those in need. He asked for confirmation that the Administration supports these cuts that would affect approximately 800 individuals to save this level of funding. Commissioner Gilbertson responded that, were the Governor's bill adopted, approximately 800 people would be affected. However, he clarified that the HES version, which is before the Committee, would narrow the program further. He clarified that the savings resulting from the Senate HES version would be $7.2 million. Commissioner Gilbertson informed the Committee that this bill is an effort by the Administration to contain "the rapid escalation of growth of our program, 40 percent growth in the last five years" of these three Medicaid programs. He advised that to strengthen the program and ensure continuing Medicaid benefits "for low income beneficiaries, …. this is the size of a Medicaid program that the we can support in terms of the number of eligible individuals." He stated that the State currently has the highest income standards allowed under federal law, and that the Governor's bill "would lock in" those standards. Commissioner Gilbertson continued that rather than being a statement that this reduction would have "no impact," the State "has undergone exponential growth in our Medicaid program," and in order to continue the program, "some of the optional categories" must be addressed. He continued that the State must acknowledge that it "has reached a capacity where further growth in those programs will threaten the viability of the program itself and threaten the ability of the State itself to fund the core services that are covered for individuals currently enrolled in the program." He stated that the poverty levels in the Governor's bill would not jeopardize those individuals currently in the program provided they not experience an increase in their income level, but would allow for a downsizing of the program over time. He stated that the Senate HES committee version "would roll back the standards," and consequently incur a larger reduction. He stated that the bill recognizes that there are benefits to the continuation of these types of programs such as reducing the amount of low birth rate babies and providing insurance coverage for pregnant women, children and the disabled; however the costs of these programs "coupled together" is leading to a situation wherein the ability of the State "to pay for good services and have good reimbursement rates for those individuals who are currently covered" is being threatened. Senator Hoffman expressed that while this bill might produce short- term savings, the long-term costs might increase. Commissioner Gilbertson acknowledged that there are savings resulting from providing State funded insurance coverage although other health care options, such as community health centers, "3-30 grants and clinics," uncompensated care awards, volunteer services by providers, and other insurance coverage might be available. He acknowledged that the State does "have a problem with individuals being uninsured or underinsured." However, he continued, as the programs continue to experience growth and "the State's income standards rise to the point where we see individuals that are moving into higher income brackets being eligible for State programs," the State might not have the resources "to provide its match so we can have a good reimbursement rate for low income individuals and provide needed services." Senator Hoffman acknowledged this, but asked whether the fiscal note's projected program savings or other State programs would be negatively affected by not providing these services to the three identified groups. Commissioner Gilbertson clarified that the HES committee substitute, rather than the Governor's version of the bill, would affect program eligibility standards. He stated that the HES committee substitute is projected to produce $7.1 million in savings, and he continued, research does not indicate additional demand would be placed on other services the Department provides. He stated that pregnant women currently in the program would continue to receive care. He acknowledged that prenatal care has positive results in terms of health care dollars spent and that it is unknown what health care options future pregnant women could receive, but "it is expected that they would still receive care." Senator Hoffman voiced that the long-term costs of the HES version of the bill would outweigh the short-term savings. Commissioner Gilbertson stated that the Administration agrees that savings do occur from providing health care to children and pregnant women, and that is the reason the Governor's bill proposes to "lock in" the current standards. Senator Hoffman asked whether the Department supports the HES amended standards. Commissioner Gilbertson expressed that the Governor's administration does not support the HES committee substitute. Senator Hoffman voiced support of the Governor's version of the bill. Co-Chair Wilken asked for clarification that 150 percent of the federal poverty level is the minimum level the State could authorize, as referenced in the "2003 Federal Poverty Guidelines for Alaska" [copy on file] chart provided by the Department. Commissioner Gilbertson responded, that in order "to access the federal enhanced match rate," the State must establish a minimum 150 percent of federal poverty level standard. He shared that the enhanced match rate increases the federal match contribution for the Denali KidCare program from 60 percent to 71 percent. Co-Chair Wilken asked for confirmation that the income figures in the chart do not include the permanent fund dividend. Commissioner Gilbertson replied that is correct. Senator B. Stevens asked whether the information in the chart includes the 25 percent Cost of Living Allowance (COLA). Commissioner Gilbertson responded that it does. Co-Chair Wilken noted that 1,200 individuals "would lose services." He asked the Department to provide detailed information as to who would be affected. Commissioner Gilbertson responded that this information is included on page two of the HES fiscal note. He noted that both the HES and Governor's version of the bill maintain the 300 percent of the special income standard for individuals requiring long-term care or home or community based waiver services. He stated that the Governor's 200 percent of federal poverty standard would reflect a net decease of 61 cases in the Denali KidCare program in 2004, whereas the HES version would incur a net decrease of 1,213 cases. Co-Chair Wilken asked the deadline for individuals to qualify under the existing standards. Commissioner Gilbertson responded that it is June 30, 2003. Co-Chair Wilken asked the total number of individuals in the affected programs. Commissioner Gilbertson responded that the total number of individuals in the program would be supplied. He estimated that approximately 26,000 children are in the Denali KidCare program; therefore, he calculated that approximately four percent of the children in the program would be affected. Co-Chair Wilken asked the Department to provide the total number of individuals in the programs as well as information regarding other health care options. Senator Hoffman questioned the percentage calculation of those being affected by changes in the Denali KidCare program. Co-Chair Wilken asked the Department to confirm the percentage of program participants who would be affected. Co-Chair Green moved to report CS SB 105 (HES) from Committee with individual recommendations and accompanying fiscal note. Senator Hoffman objected. A roll call was taken on the motion. IN FAVOR: Senator Bunde, Senator B. Stevens, Co-chair Green, and Co-chair Wilken OPPOSED: Senator Hoffman, Senator Olson ABSENT: Senator Taylor The motion PASSED (4-2-1) CS SB 105(HES) was REPORTED from Committee with a new negative $7,151,300 fiscal note, dated April 8, 2003 from the Department of Health and Social Services.