SENATE BILL NO. 32 "An Act relating to medical assistance payments for home and community-based services." 9:50:14 AM Senator Ellis presented SB 32. Senate Bill 32 creates a mechanism for regular Medicaid rate review for providers of home- and community-based services to Alaska's elderly and developmentally disabled citizens. Institutional service providers receive regular reviews in order to bring rates in line with costs. However, home and community-based services (HCBS) have been conclusively proven to lower overall long-term Medicaid costs. One recent study in the academic journal Health Affairs found that states with long- established high proportions of HCBS spending saw a 3% overall decrease in long-term care spending between 1995 and 2005 as opposed to a 14.5% increase in low- HCBS states. The study concluded: "Justifications based on financial constraints can no longer be credibly offered as reasons for forcing such people [seniors and persons with developmental disabilities] into nursing homes and other institutions. HCBS programs may be one instance in which offering people greater 1 choice also helps reduce costs." Over the last few years, however, rates for home- and community-based services have been frozen. During that time, not only have costs increased, the medical environment - including regulations, technology, and client expectations - has shifted dramatically. These shifts threaten the continued viability of the hundreds of HCBS providers, primarily private businesses that employ thousands of Alaskans in every region of the state. Home and community based services are the key to helping our seniors and those living with developmental disabilities live their lives as productive members of our communities while controlling the growth of health care costs. Without the regular review process in Senate Bill 32, many providers will be forced out of 1 Health Affairs 28, no. 1 (2009): 262-272. business and HCBS services will be taken away from thousands of Alaskans across the state. 9:58:25 AM Senator Ellis noted that most providers have not seen increases in ten years. He pointed to problems with contractor's assessments precluding testimony from smaller providers. He explained that SB 32 gives the Department of Health and Social Services (DHSS) the flexibility to devise a cost based system, while repairing the disparity between home and community based services and institutional care rates. Hospitals and nursing homes require regular rate reviews. Home and community based services deserve the same treatment from the state. 10:00:19 AM Co-Chair Hoffman asked for a list of home and community based providers. He asked how the fiscal notes would affect their earnings. Senator Ellis noted that new and possibly reduced fiscal notes would be provided to the committee. He emphasized that the legislation is not a rate increase, but a mechanism for rate review. He believed that work in the finance committee could further reduce the cost. He informed that DHSS could provide the requested provider information. 10:01:55 AM Co-Chair Stedman observed that the fiscal notes are $4.4 million for FY10 and $8 million for FY11. A committee substitute (CS) bill is in the works, but information for committee members is today's goal. Senator Ellis stressed that the fiscal impact could be reduced. Senator Olson asked how non-Medicaid eligible individuals would be impacted by the mandatory rate review. Senator Ellis explained that SB 32 addresses providers that are reimbursed through Medicaid. Senator Olson stated that he had not witnessed a component of the fiscal note for providers ineligible for Medicaid. 10:03:32 AM MAX HENSLEY, STAFF, SENATOR ELLIS, responded to questions. He informed that there are approximately 350 home and community based providers, who receive approximately $140 million in Medicaid funding per year. Mr. Hensley informed that Section 1 of SB 32 creates a rate review process for home and community based services as well as assisted living homes, which are outside of the Medicaid arena. Section 1 adds personal care services and assisted living homes for needy and vulnerable adults to the services receiving the rate review process. As drafted, the bill only covered home and community based services provided though a Medicaid waiver. Mr. Hensley reviewed Sections 2 and 3, which are conforming language for the assisted living homes for needy and vulnerable adults. Section 4 creates an annual report to the legislature detailing trends in rates based on the review process in the bill, and sunset that reports in 2014. He stressed that the legislation is designed as a management tool. 10:06:15 AM Mr. Hensley explained that Section 6 delays the implementation of the program for two years to allow DHSS to create the methodology to set the rates. 10:07:25 AM JON SHERWOOD, DIRECTOR, OFFICE OF PROGRAM REVIEW, DEPARTMENT OF HEALTH AND SOCIAL SERVICES (DHSS), observed that the process has been collaborative. The department hired a consultant to review the program. The department is committed to moving forward with a rate setting system, but is still seeking compromise, including adequate direction without restriction in the rate setting process of larger hospitals and nursing homes. The department supports the process of accountability. 10:09:21 AM Senator Olson questioned how the legislation would affect residents of the Mary Conrad center in Anchorage. Mr. Sherwood observed that they would not be affected by SB 32. Senator Olson asked if semi-private home services providers were affected. Mr. Sherwood answered that the legislation requires the department to change rates reflecting costs incurred by providers. Senator Olson asked if the legislation would affect health care corporations in rural Alaska. 10:10:51 AM Senator Ellis acknowledged that there are home and community based providers, especially in rural Alaska, who would benefit from the legislation. The intent of the legislation is to find the proper balance. Rural providers are struggling and the state is in danger of losing a cross section of service providers. 10:12:19 AM Senator Huggins requested clarification regarding the two year delay in the implementation of SB 32. Mr. Sherwood agreed that the department requested the two year delay. Senator Huggins asked if the department has concerns for home and community service organizations that might not survive two years. He felt concern about the attrition of these services. Mr. Sherwood answered that two years was an ambitious goal for implementing a cost based rate system. He explained the difficulty in creating the system. Senator Huggins asked when the five year repealer would begin. Mr. Hensley explained that the repealer addresses the report from the department and takes effect June 30, 2014, meaning that the report would occur during the first three years of the program. 10:14:27 AM DENISE DANIELLO, DIRECTOR, ALASKA COMMISSION ON AGING testified in favor of SB 32. Good Morning. My name is Denise Daniello and I am the executive director of the Alaska Commission on Aging. I am here to testify in support of CSSB 32, a bill to allow for regular rate reviews of home- and community- based services for Medicaid-eligible persons similar to the process used by hospitals and nursing homes. We believe that this proposed legislation addresses the need for a fair and consistent process to maintain the systems of care for vulnerable Alaskans and promotes sounds fiscal planning for providers and the State. The Governor's Council on Disabilities and Special Education, the Alaska Mental Health Board, Advisory Board on Alcoholism and Drug Abuse along with the Alaska Mental Health Trust Authority, the Suicide Prevention Council, the Alaska Brain Injury Network and the Alaska Commission on Aging have jointly identified the establishment of a regular and periodic schedule of rate reviews for home and community based services as one of our four legislative priorities for 2009. The provisions that address our legislative priority are included in SB 32 sponsored by Senator Ellis. Alaska's most vulnerable populations depend heavily on a network of community nonprofit provider agencies. Before last year's rebasing for FY09, many home and community-based service providers had been over a decade without a rate review receiving the same level of reimbursement while their costs continued to climb along with demand for more services. Home- and community-based services are an effective and efficient means of providing care for nearly 57,000 Alaskans who would otherwise need to be served by more costly institutions. Investment in the foundation of home- and community-based services is prudent to assure that services meet the needs of all vulnerable Alaskans to maintain their quality of life and to hold down the costs of higher level health care. According to 2006 estimates provided by Senior and Disabilities Services, the average annual cost of a semi-private room in a nursing facility was $172,685 compared to $21,436 for the Medicaid waiver. It should also be kept in mind that as more individuals are able to receive home- and community-based services, fewer of them will need to enter much more costly institutions such as nursing homes. Thus, it is quite possible that by adequately funding these critical pieces of the continuum of care may result in an ultimate cost savings for the State. Older Alaskans depend on home- and community-based services which help them to continue living in their home communities for as long as possible close to family, friends, and cultural tradition. For seniors, these services may include home-delivered meals, transportation, chore services, care coordination, assisted living homes, and other services. Thirty-six percent of the 3,498 individuals served by Medicaid waivers are older Alaskans - the majority of whom are elders in their 80's on the Older Alaskans waiver. This bill has broad support from a coalition of providers who have also signed on to our joint Trust and Advisory Boards' position paper. They include · Alaska Association on Developmental Disabilities, serving 2,636 Alaskans · AgeNet, serving 18,953 Alaskans · Personal Care Attendant Providers' Association, serving 3,807 Alaskans · Assisted Living Association of Alaska, serving 1,500 Alaskans · Alaska Behavioral Health Association, serving 26,285 Alaskans 10:19:24 AM TIM SCHUERCH, POLICY ANALYST, ALASKA NATIVE HEALTH BOARD represented the state's Native Health Organizations. He stressed that providing basic services in outlying areas has grown expensive. The medical inflation index and employer's health insurance increase every year. The rates for home and community based services have been frozen for nine years. A rate freeze for cost effective services does save money overall by preventing and intervening up front. The Alaska Native Health Board supports SB 32. Concerns include gathering the necessary data. He stated that the two year delay was crucial to work with the department to create a rate establishing methodology. 10:22:16 AM PAT LUBY, ADVOCACY DIRECTOR, ALASKA ASSOCIATION OF RETIRED PERSONS (AARP), ANCHORAGE (testified via teleconference), in favor of the legislation. The goal of home and community based services is to avoid premature institutionalization for individuals. Rates must undergo review ensuring that providers are accurately reimbursed. Older citizens have fewer options without the help of home and community based services. MARITA KAPLAN, SENIOR CITIZENS OF KODIAK (testified via teleconference). She urged the committee to allow the annual rate review. The Senior Citizens are challenged with keeping services alive and having trained staff available. Home based services are essential for families striving to keep elders at home. JACK NIELSON, DEPARTMENT OF HEALTH AND SOCIAL SERVICES (testified via teleconference). He stated that he works in the office of rate review, which works directly with cost reporting and rate setting proposed under SB 32. Co-Chair Hoffman asked if the department believes that the rate review must occur annually or is a less frequent review prudent. 10:27:26 AM Mr. Nielson replied that his work was involved with statutes and regulations. Requirements outlined in federal statutes outline the requirements for rate setting in the Medicaid program. The department must provide access to services for clients with rates that are consistent with economy and efficiency, which has an element of cost. The current laws do not require a cost review each year. STEVE LESKO, PRESIDENT OF KEY COALITION OF ALASKA (testified via teleconference) in favor of the legislation. He asked that the impact on families be considered. This governs rebasing, which accounts for mandatory pass through costs on a periodic basis. Community and home based programs do not have access to such a process. This fiscal year marks the fifth year of the rate freeze. These factors have devastating consequences on the community. He mentioned a few of the ways impacts are perceived. Families receive fewer and fewer services. Care for so many is not an option it is a matter of life and death. 10:33:37 AM CONNIE SIPE, EXECUTIVE DIRECTOR FOR CENTER FOR COMMUNITIES, SITKA (testified via teleconference) representing a non- profit based in Sitka. She spoke in favor of the legislation. She explained that the budget is made up of 50 percent Medicaid reimbursements. She stated that the center does not receive grants. She spoke of the areas served in Southeast Alaska. She stated that the center had 113 clients in Sitka, Kake, and Ketchikan. Medicaid pays for the services. She felt that her organization had been unfairly treated in the Medicaid arena for home and community based services leading to many position cuts. SB 32 is necessary to keep home and community based services stable. 10:38:38 AM EMILY ENNIS, EXECUTIVE DIRECTOR, FAIRBANKS RESOURCE AGENCY (testified via teleconference), in support of SB 32. Medicaid supported home and community services enable the care of people who are not able to independently care for themselves. She believed that the Medicaid community services along with hospitals and nursing homes represent Alaska's long term healthcare system in the community. 10:42:32 AM DON CLINE, THERAPIST, BRISTOL BAY BEHAVIORAL HEALTH COORPORATION, DILLINGHAM (testified via teleconference), spoke in support of SB32. He mentioned the recent termination of the crisis center, "Our House," which served as respite for the chronically mentally ill. The center was closed and the service is missed by both the families and the mentally ill individuals. 10:46:05 AM RACHEL GREEN, REPRESENTATIVE FROM THE PALMER SENIOR CENTER (testified via teleconference), in support of SB 32. She supported the bill due to the regular rate review of state services. The senior citizen population is increasing, and senior citizen services have been underfunded for many years. This bill allows the necessary tools to provide educated funding decisions for home and community based services now and in the future. 10:48:19 AM EMMA HUNTSMAN, SELF, BARROW (testified via teleconference), in support of SB 32. She spoke in support of the North Slope area. She spoke in support of Medicaid and annual rate reviews. She relayed appreciation for the benefits of Medicaid utilized by her disabled son. 10:51:14 AM