SENATE BILL NO. 93 "An Act relating to a workforce enhancement program for health care professionals employed in the state; and providing for an effective date." 9:29:56 AM Senator Wilson gave a brief overview of the bill and read from the Sponsor Statement (copy on file): Urban and rural Alaskan communities face a serious shortage of healthcare providers. If not immediately addressed, this shortage will rapidly worsen. Senate Bill 93 builds upon successes of the Alaska Health Care Professions Loan Repayment and Incentive Program, commonly referred to as the SHARP Program. Established in 2012, SHARP is a loan repayment and direct monetary incentive program that helps reduce shortages by filling vacant healthcare provider positions in some of the most underserved areas across the state. SHARP I and SHARP II leveraged federal, state, Alaska Mental Health Trust Authority, and employer funding, with a focus on rural, remote, and safety net providers. To date, the program, which is administered by the Department of Health and Social Services, has supported more than 250 practitioners in nearly 60 sites across the state. SHARP III fills the gap between the Federally funded SHARP I program and the State-funded SHARP II program by allowing private sponsorship in the form of local government, philanthropic foundation or employer support. SHARP III focuses on private-public partnerships, recruitment, and retention, by offering incentives to new and experienced professionals who may have exhausted other loan repayment options or who no longer carry educational loan debt. These professionals must meet eligibility criteria and be engaged in qualified employment. The program does not require any state general funds; user fees cover the cost of program administration. SHARP III is a budget-neutral initiative that addresses service shortages in our current healthcare landscape, leverages community-level investment across the state, and improves health outcomes of Alaskans. I encourage your support of this legislation. 9:33:25 AM JILL LEWIS, DEPUTY DIRECTOR, DIVISION OF PUBLIC HEALTH, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, addressed the presentation "SB 93 Medical Provider Incentives/Loan Repayment: Ms. Lewis looked at Slide 2, "SB 93": ? Establishes a Health Care Professionals Workforce Enhancement Program to address shortage of health care workforce. ? Health care professionals agree to work for three years in underserved areas in exchange for repayment of student loans or direct incentives. ? Employers fully fund the program. No unrestricted general funds are involved. ? Replaces the existing program in AS 18.29 scheduled for sunset June 30, 2019. Ms. Lewis stated that the Heath Care Professionals Workforce Enhancement Program was referred to as SHARP III. She said that under the program employers would be able to take advantage of a federal tax exemption available only to state-run programs. She said that the public/private partnership would increase the number of providers, while minimizing the use of state funds. 9:34:31 AM Ms. Lewis informed the committee that health care was one of the largest and dynamic industries in the state and the availability of health care services was important for miniating health, managing disease, reducing cost from unnecessary emergency room visits, hospital readmissions, and temporary staffing costs. To meet the ongoing demand the state must continue to address the shortage of health care professionals. Ms. Lewis highlighted Slide 3, "Challenges in health care access": ? Alaska needs a more optimal distribution of health care professionals, across regions, across disciplines and across populations served. ? Many citizens, especially in rural and frontier areas, continue to experience challenges with accessing health care. One reason access to care is limited, particularly in rural Alaska, is due to shortages of healthcare professionals. ? Health care sites struggle with recruiting and retaining health care professionals. ? Health care professionals have challenges with large student loan debt, high cost of living in rural and remote locations, and resulting financial pressures. 9:35:27 AM Ms. Lewis showed slide 4, "SHARP-2": ? Operated 2013 2018 ? No new contracts after 2015 due to GF budget reductions ? 83 contracts: 39 Tier 1 and 44 Tier 2 ? 47-53% positions very hard-to-fill ? $25,560 average payment per contract per year ? 10-30% employer match ? 31 employers distributed across 25 communities ? Primarily non-profit and hospital associated ? Similar numbers of tribal and non-tribal affiliated organizations Ms. Lewis informed that the SHARP II program was scheduled to sunset June 20, 2019. The federally funded SHARP I option would not be affected by sunsetting or SB 93; the program will continue. She said that other health care practitioner programs were needed to continue to reduce workforce shortages throughout the state. 9:37:31 AM Ms. Lewis discussed Slide 5, "An innovative solution": A publicprivate partnership that ensures access to  health care by expanding the distribution of health  care professionals all Alaskans at no cost to the  state.  ? SHARP-3 builds on the success of SHARP-1 and SHARP-2 with new practice settings, new occupations, new employers, new locations, and new roles. ? Benefit will not be limited to rural areas or primary care; there is also room for specialists and urban health care professionals. ? Takes advantage of a federal law that exempts loan repayment from federal income tax if awarded through a state-run program. ? Public-private partnerships increases the number of providers while minimizing the use of state funds. 9:38:22 AM Ms. Lewis referenced Slide 6, "Benefits": • Health care sites can hire much needed staff • Health care professionals get assistance with their student loans • Alaskans have improved access to health care • Access to health care is important for maintain health • and reducing costs • All without the use of undesignated general funds 9:38:52 AM Ms. Lewis reviewed Slide 7, "SHARP-3": ? Health care professionals receive student loan repayment and/or direct incentives for working in underserved areas. ? Employer sites provide health care services in underserved or health care professional shortage areas. 3-year contract with renewals; 12-year lifetime limit. ? Employer payments fully cover cost of the professional's program payment and an administrative fee. ? An advisory council recommends eligibility criteria, prioritization of sites and professionals for participation, and contract awards. Ms. Lewis explained that health care professionals applied to join the program and chose whether they wanted to get student loan repayment, a direct incentive, or a combination of both. She reiterated that the program was of no cost to the state. 9:40:48 AM Ms. Lewis addressed Slide 8, "SHARP-3": ? Tier 1: dentist, pharmacist, physician o $35,000/year regular or $47,250 very hard-to-fill ? Tier 2: dental hygienist, registered nurse, advanced practice registered nurse, physician assistant, physical therapist, clinical psychologist, counseling psychologist, professional counselor, board certified behavior analyst, marital and family therapist, or clinical social worker o $20,000/year regular or $27,000 very hard-to-fill ? Tier 3: not otherwise eligible under Tier 1 or Tier 2 o $15,000/year regular or $20,250 very hard-to-fill Ms. Lewis shared that the three different tiers offered different payment maximums for health care professionals. She noted that Tier 3 was new under SB 93. 9:41:44 AM Senator Micciche asked whether there was clear-cut criteria for "hard to fill" as listed on the slide. Ms. Lewis noted that the term was documented in current regulation and was part of the SHARP II program. She said that very hard to fill required documentation by the employer that the position had been vacant for at least a year and employers had to demonstrate how actively they had recruited for the position. 9:42:31 AM Senator Olson asked about the percentages of hard to fill positions between rural and urban clinics. Ms. Lewis stated that the difficulty particularly effected urban areas. She said that much of the health care in the state was served in a hub and spoke model, which saw concentrations of physicians in urban areas that also served rural areas. She said that geographic limitations existed but that the SHARP III program would be open to urban areas, as well as rural, and would include specialties the state was in dire need of but had never had an incentive program before. Senator Olson assumed that inner cities qualified for being "underserved" as well. Ms. Lewis explained that there were healthcare shortages within individual occupations. She said that employers had to provide care to underserved populations (uninsured or on Medicaid). 9:44:38 AM Senator Olson considered Slide 4 and asked what the difference was between Gulf Coast versus Anchorage. Ms. Lewis asked him to restate the question. Senator Olson discussed the percentages listed at the bottom of Slide 4. Ms. Lewis stated that the Gulf Coast was part of the area around Kodiak, Dillingham, and the Kenai. 9:45:57 AM Senator Wilson stated that the final report to the legislature on the SHARP II program released in December 2018, Anchorage only had 2 behavioral health; 4 dentists; 2 medical, while the Gulf Coast had 2 health; 4 dentists; 2 medical. Co-Chair von Imhof asked if Senator Wilson was citing vacancies. Senator Wilson relayed that the numbers represented people participating in the program. 9:47:02 AM Senator Shower referenced the "hub and spoke" model mentioned in the presentation. He lamented the cost of travel for providers. He asked whether the model was working. He wondered whether the program would truly be covered by the employers and not the state. Ms. Lewis stated that the hub and spoke model had been used in the state for a great deal time, and telehealth expanded the model. She stated that there were ways that technology was helping keep costs down. She said that travel for health care a burden on both patients and heath care professionals. Senator Shower requested assurances that the state would not ever be burdened with the cost of staffing hard to fill positions. Ms. Lewis stated that SHARP-III used no state funds, and 100 percent of funding was provided by employers. She reiterated that the program was voluntary. She shared that the state funded program allowed for health care practitioners' loan repayment to be exempt from federal income tax, which was a boon to the professional and reduced costs to the employer. She restated that employers would pay all costs. 9:50:46 AM Senator Wilson added that the hub and spoke model provided different levels of service for small communities. 9:51:43 AM Senator Shower thought the model was inefficient. He wondered how the Washington, Wyoming, Alaska, Montana, and Idaho (WWAMI) program could be ties into the SHARP III program. Ms. Lewis stated there was more than one underlying reason why the state had healthcare shortages. One problem was attracting professionals to rural areas and getting them stay. Additionally, the state did not train and educate its own heath care professionals in all necessary areas; particularly physicians and dentists. She stated that individuals that had gone through the WAMMI, and had repayment, could qualify for the SHARP III program once they were fully trained and in practice. 9:53:54 AM Co-Chair von Imhof thought it was a positive direction that the private sector was helping to fund programs that it found important. She reminded the committee to speak to the bill but appreciated Senator Showers comments. She stated that the private sector would not step in across the board to help with public services because it was not profitable to do so. She thought that it was refreshing to see some private sector efforts to help off-set some costs in high need areas. 9:54:55 AM Senator Micciche thought the bill was a clear example of the use of designated general funds (DGF). He reiterated that although it looked like the program was part of the state budget, it was not, costs were covered by the private sector. 9:55:43 AM Ms. Lewis returned to Slide 8. She noted that Tier 3 was an innovation that had been crafted using feedback from the health care industry. Tier 3 allowed physicians that were otherwise not eligible and would include drug and alcohol counselors, pathologists, radiologic technologists, infection prevention specialists, care coordinators, and other. She said that Tier 3 was intentionally broad to include professionals that were necessary to deliver quality health care. She said that the council would set the priorities to assure that the applicant addressed a real shortage need in the state. 9:57:35 AM Ms. Lewis turned to Slide 9, which showed a flow chart of the program's process: Health care professionals work at eligible site for a calendar quarter Sites report quarterly to SHARP on professionals' hours worked SHARP adjusts maximum payment amount for hours worked SHARP adjusts maximum payment amount for hours worked SHARP invoices sites for professional's program payment and administrative fee Sites send SHARP their quarterly payment SHARP makes loan payments to lenders, and/or direct incentives to professionals SHARP provides data to the Advisory Council for evaluation and planning 9:59:01 AM Senator Micciche asked whether an employer had to register in advance to be a member of the program. Ms. Lewis stated that eligible sites had to provide care to the underserved population in a state designated shortage area, defined in regulation. Employers and professionals could apply separately and seek each other out; a health care professional who was looking for loan repayment would seek out an eligible site when seeking employment. Senator Micciche understood that the employer was not charged unless they hired a program eligible employee. Ms. Lewis confirmed that there was no cost to the employer until after the professional had provided a quarter of care. 10:00:24 AM Ms. Lewis referenced Slide 10, "In closing?": SB 93  ? Keeps health care professionals in rural communities ? Promotes health and economic community stability ? Ensuring a healthier future for all Alaskans ? At the lowest possible cost. 10:00:54 AM Senator Olson considered the student loan repayment program and asked how individuals could qualify for that program. He wondered about students that had financed their own education through bank loans. Ms. Lewis affirmed that commercial loans were included in the loans that could be repaid. She said that personal loans were not eligible for repayment. 10:01:51 AM Senator Shower asked whether the statute was needed to give authority for providers to join the program. He wondered why government was getting involved. Senator Wilson saw the program as a public-private partnership. He said that employers could do it on their own but would not receive the federal tax benefits available by going through the state. He reiterated that the goal of the bill was to help the state with provider shortages. Senator Shower asked whether the legislation was required to provide the tax benefits, of could private entities receive the benefits on their own. Senator Wilson explained that authority needed to be established within stature to allow the department to receive the funds for dispersal to private entities. 10:04:26 AM Senator Micciche surmised that there was tax protection in two directions. The statue made it a state loan repayment program; a deduction for those contributing to the program as an employer and not counted as income for the employee as a loan repayment. Ms. Lewis stated it was true that the loan repayment option for health care professional in the state-run program would be considered income. The direct incentive would be considered taxable income. The tax benefit for the employer was more of a cost-savings, rather than a tax benefit. 10:07:03 AM Senator Olson asked what happened to medical professionals that already had loans paid off. He wondered how the program would be an incentive for those that did not have loan debt. Ms. Lewis stated that there were a great many mid-career professionals, without loans, would benefit from the direct incentive. 10:07:53 AM Senator Wilson addressed the Sectional Analysis (copy on file): Section. 1. Adds a new Article 2, Health Care Professionals Workforce Enhancement Program, to AS 18.29, Health Care Professions Loan Repayment and Incentive Program. Sec. 18.29.100. The legislative intent is to increase the availability of health care services throughout the state, especially to underserved individuals or in health care professional shortage areas. Sec. 18.29.105(a). The program's purpose is to address the increasing shortage of health care professionals in the state by expanding the distribution of health care professionals. Sec. 18.29.105(b). Outlines the structure of the program, including application processes, public notice requirements, and a 12-year lifetime maximum for participation. Sec. 18.29.105(c). Outlines the role and structure of the advisory council. Sec. 18.29.105(d). Outlines the responsibilities of the commissioner and his or her relationship with the advisory council. Sec. 18.29.105(e). Outlines requirements for the department's annual report to the advisory council. Sec. 18.29.105(f). Specifies the department may contract for services and adopt regulations. 10:10:11 AM Senator Wielechowski asked whether designated funds would be used if the the department were to contract for services. Senator Wilson answered in the affirmative. 10:10:29 AM Senator Wilson continued to address the Sectional Analysis: Sec. 18.29.110. Details the requirements for employer payments. Sec. 18.29.115. Establishes the structure for initial and renewal payments and sets out annual maximum limits for student loan repayments and direct incentives for Tiers I, II, and III. Sec. 18.29.120. States eligible professionals may receive direct incentive quarterly cash payments. Employers provide the payment amount. Sec. 18.29.125. Pertains to student loan repayments. Sec. 18.29.130. Details the eligibility requirements for direct incentive payments and student loans. Sec. 18.29.190 Contains the Definitions Section. Section 2. Repeals the existing health care loan repayment and incentive program in AS 18.29.010 18.29.099, which is scheduled to sunset July 1, 2019. Section 3. Applicability to applications or contracts on or after July 1, 2019. Section 4. Contains transition language stating the existing advisory council will act as a transition council until a new advisory council is appointed by the commissioner. Section 5. States if sec. 1 of this Act takes effect after July 1, 2019, sec. 1 of this Act is retroactive to July 1, 2019. Section 6. States sec. 5 of this Act takes effect immediately under AS 01.10.070(c). Section 7. States that except for sec. 6, the effective date is July 1, 2019. 10:13:26 AM Senator Wielechowski asked about Page 7, lines 23-25 of the bill. He asked whether the sponsor had a sense of what percentage of people who received SHARP benefits were Tier 3 health care professionals. Ms. Lewis stated there were currently no Tier 3 contracts as the tier was new after the passage of SB 93. She expected that the contracts would be mostly health care professional jobs. She noted that if there was a shortage of any position, that was not a direct care professional but was necessary to provide healthcare, the council would weigh the application and decide whether incentivization was in the best interest of the state. 10:15:17 AM Co-Chair von Imhof noted that there was invited testimony. RACHEL GEARHART, CO-CHAIR, SHARP ADVISORY COUNCIL, offered her credentials. She noted that her district, District Q, was not considered a federally geographic healthcare professional shortage area; unless you worked for a tribal health organization you could not be eligible for student loan repayment through SHARP I. She pointed out that the certain members of the committee did not live in federally geographic healthcare professional shortage. She felt that those that did could appreciate the problem and support the legislation. She had participated successfully in the SHARP II program. She believed that the SHARP III program would help to recruit and retain quality staff to serve vulnerable and underserved Alaskans. She cited a study by the National Health Care Retention and Registered Nurse Staffing Report, since 2013 the average hospital had turned over 85.2 percent of its workforce. She noted that turnover was costly. 10:19:45 AM Ms. Gearhart continued to discuss the myriad of ways in which the program would enhance healthcare services within the state. She offered that the therapeutic alliance that a provider has with a client is considered the most important factor in determining how well they will work together. She said that connection between providers and clients resulted in better health outcomes. She concluded that SHARP III support for service helped all Alaskans live their own best lives. 10:22:17 AM Senator Wielechowski was curious whether the program was a tax on every health care provider in the state. Ms. Gearhart stated that the program was entirely voluntary. She thought that the program leveled the playing field for smaller agencies. There were large employers that used sign-on bonuses and other incentives that not all agencies had the ability to offer. She relayed that since the program did not require state general funds, innovative partnerships could be sought. Senator Wielechowski wanted to see how the program was administered. Co-Chair von Imhof reiterated that the program was voluntary. She asked Ms. Gearhart to provide information on how the funding was sourced. Ms. Gearhart noted that the there was a 5 percent administrative fee that would help to fund the program. 10:24:34 AM Senator Olson asked what percentage of the program was effective, and what was the most effective part of the program Ms. Gearhart agreed to provide graphs demonstrating retention. She shared that between SHARP 1 and SHARP 2, the program had served 328 different contracts. She said that data could be shared for each site or within the entire state. Senator Olson thought that the federally funded program would be more restrictive. Ms. Gearhart answered in the affirmative. Those people would be required to work within a geographic health professional shortage area. 10:25:35 AM Senator Bishop appreciated the program and likened it to an apprenticeship program. 10:26:33 AM Co-Chair von Imhof OPENED public testimony. ERIC BOYER, ALASKA MENTAL TRUST AUTHORITY, ANCHORAGE (via teleconference), testified in support of the bill. He relayed that the authority had invested in the SHARP I and SHARP II programs, resulting in the recruitment and retention of clinicians across the state. He asserted that the bill would expand healthcare access for trust beneficiaries. He stressed the importance of the program. He relayed that the legislation would result in more trust beneficiaries getting necessary care in their community of residence. 10:28:28 AM NANCY MERRIMAN, EXECUTIVE DIRECTOR, ALASKA PRIMARY CARE ASSOCIATION (via teleconference), strongly supported the bill. She highlighted three ways the bill would help serve Alaskans. She discussed the shortage of healthcare providers in the state. She detailed that SHARP and other programs had been critical for community health centers. The program had been able to address some disparity in distribution of providers. She thought the program was innovative and reminded that it was of no cost to the state. She said that the program would offer a valuable state infrastructure without the use of state general funds. She expounded on her support of the legislation and the SHARP III program. 10:32:19 AM Co-Chair von Imhof CLOSED public testimony. Senator Micciche understood that the SHARP III program used no state funds. He noted that the contract fee for those that chose to participate, which increased to 6.5 percent in year 5, would cover the one position that would be added. Ms. Lewis answered in the affirmative. She reiterated that the program was voluntary for employers and would be of no cost to employers unless they chose to participate by hiring someone and offering them the incentive. There was no requirement that the incentive be offered. 10:34:00 AM Co-Chair Stedman addressed FN 1 from DCCED, OMB Component 2360. The fiscal note was zero. Co-Chair Stedman addressed FN 2 from DHSS, OMB Component 2877. The fiscal note had $814,300 in FY 20; and $2,060,000 in FY 21, increasing to $5,043.0 in FY 2025. He noted that DGF did not have budgetary impact and used pass-through funds. The bill did not reflect the growth in government that the committee was trying to control. 10:36:13 AM Senator Micciche thought the use of DGF was an important point for the public to understand. SB 93 was HEARD and HELD in committee for further consideration. Senator Wilson thanked the committee for hearing the bill. 10:37:51 AM Senator Micciche thought the note was indeterminate, and the fiscal impact reflected on the note was only for illustrative purposes. Ms. Lewis confirmed that the figure was an estimate. Co-Chair von Imhof discussed housekeeping.