SB 266 - MEDICAID COVER/HEALTHY FAMILIES AK PROGRAM JAY LIVEY, Deputy Commissioner of DHSS, gave the following overview of SB 266 with Bob Labbe of the Medicaid Division and Pam Muth from the Division of Public Health. The Kennedy Hatch bill passed Congress last fall. That legislation made federal money available to states to expand health care coverage for children. Alaska's allotment from that bill is about $5.6 million. A state match is required which will amount to $2.2 million. DHSS has estimated that 23,000 children in Alaska are uninsured, of which about 11,500 are under the 200 percent poverty level. The 200 percent poverty level in Alaska amounts to $33,000 for a family of three. The federal requirements for implementation are as follows. The benefit package that is provided to children through this program must meet certain standards. It must contain a certain amount of prevention coverage for children and well-child care. Second, each child served must be screened for medicaid eligibility; Congress does not want medicaid eligible children to be on the child health program because of its higher federal match. Third, the federal law requires that any Indian Health Service (IHS) eligible children, who are also eligible for the new child health program, must be served by the child health program. Number 148 SENATOR GREEN asked if families with IHS coverage cannot be encouraged to use that coverage instead. MR. LIVEY replied DHSS could discuss the options available for health care with those families but the federal law requires that if an individual, who is eligible for IHS, wants to sign up for the child health program, that individual could not be refused based on the IHS eligibility. MR. LIVEY continued the overview. The state did get considerable flexibility in designing the new program. DHSS can decide the level of eligibility for the coverage and the delivery mechanism for the program itself. The state has the option of impementing the child health program through a medicaid expansion, a private coverage expansion, or a combination of the two. The Governor's bill uses a medicaid expansion and increases the level of eligibility to 200 percent of the poverty level for children and pregnant women. Currently, the Alaska medicaid program is at the federal minimum levels of coverage. DHSS chose to implement this program through the medicaid program for two reasons. First, the state will get a lot more bang for each general fund dollar spent, and second, an administration has already been established for the medicaid program that is serving 50,000 children. MR. LIVEY discussed a few other related points. The first is the relationship between child health expansion and welfare reform. The welfare reform program has helped people get off of public assistance and into jobs but many of those jobs do not provide health care coverage. The child health program will allow many of those families to continue their health care coverage while improving their job skills and prospects. DHSS does not want people to quit their jobs just to go back on public assistance to get health care coverage. Second, DHSS thinks the child health program is associated with the federal matching assistance percentage change. Last year, Congress changed Alaska's federal matching assistance percentage rate for medicaid which allows the state to collect more federal dollars for the medicaid program. That action freed up a lot of general fund monies in the budget. The federal matching assistance percentage rate change will be reviewed by Congress in three years. One of the cases made when Senator Murkowski got the bill through was that Alaska would use some of that money to expand health care coverage. DHSS was previously unable to do because of the expense. When the rate change comes up for reauthorization in three years, DHSS believes having health care expansion on the books will help the reauthorization effort. Third, DHSS chose to expand coverage for pregnant women in SB 272 at up to 200 percent of the poverty level for a couple of reasons. First, research has shown that prenatal care results in better birth outcomes. Second, it makes sense to insure the children before birth if coverage is going to continue afterward so that the children are healthy starting out. A state plan must be approved by the federal government by September 30 to guarantee the state's allotment of $5.6 million for this year. The federal government told DHSS the state plan must be submitted by July 1 so that it can be reviewed and enacted on by September 30, therefore legislation needs to pass during this session to give DHSS adequate time to prepare the plan. Number 029 MR. LABBE gave the following explanation of the sections of the bill, and action taken by the House HESS committee. The same bill was introduced in both bodies. Section 1 expands coverage under the medicaid program for children under age 19, and pregnant women, at up to 200 percent of the federal poverty level. Currently the state is providing coverage mandated under the federal program for pregnant women and children up to age 6, whose income is up to 133 percent of the poverty level, to children ages 6 to 14 living at up to 100 percent of the poverty level, and to children over 14 if their family receives cash assistance, which is at about 70 percent of the poverty level. TAPE 98-33, SIDE A MR. LABBE continued. DHSS had a choice of going with the private model or the medicaid model. If DHSS used the private model, it would have screened children first for medicaid eligibility. If eligible, those children would be placed on the medicaid program. DHSS's reason for choosing the medicaid model was largely influenced by the fact that more children could be served. Under the medicaid program and new child health block grant, American Indians and Alaska Natives can be eligible for medicaid, and medicaid will be the primary payer rather than IHS. SB 272 will allow IHS providers to bill the medicaid program for services to clients who are eligible for medicaid. The federal government will reimburse the state for 100 percent of those medicaid costs, so no general fund money will be involved. DHSS estimates that anywhere from 25 to 40 percent of the children who will be covered in this expansion will be Alaska Natives. If DHSS chose the private option, it would not get the 100 percent reimbursement, so state funds would have to be used. DHSS also looked at the fact that the child health program will serve a relatively small group and Alaska already has a large medicaid population so there will be some efficiency in pooling. Other provisions were added to the child health program to allow for continuous health care coverage for children for up to 12 months a year. Currently, medicaid eligibility is on a month to month basis which causes a certain amount of administrative confusion and interrupts treatment. DHSS has proposed up to six months of continuous eligibility so that if a child qualifies at the month of application, he/she would be covered for six months. That provision applies not only to the new group but to the entire child medicaid population. MR. LABBE stated the third section of the bill contains language to allow the state to cover, as a medicaid service, targeted case management, a service for pregnant women and children under age 5, in an effort to support the Healthy Families Program. DHSS does not plan to provide that service in the short run but it wants to have the authority to reimburse the Healthy Families Program for medicaid eligible children that it serves. A number of states have used a similar provision as a refinancing vehicle. DHSS also added a section for comprehensive pregnancy related services in an effort to help cover services of direct entry midwives which has been taken care of in another bill. Section 4 amends the current statute to allow DHSS to do managed care without getting a federal waiver. DHSS has had authority to do a managed care model since the Balanced Budget Act passed Congress last year, but it has not implemented anything yet. Section 5 contains a technical change. Section 6 is tied to the child health program. Under the block grant, states are able to charge premiums for pregnant women and children between the 150 and 200 percent poverty level. DHSS has been advised, however, that if it does a medicaid expansion, it cannot charge premiums. DHSS felt cost sharing on a sliding fee basis was reasonable so it is included in the bill in case Congress revisits this issue. CHAIRMAN WILKEN asked Mr. Labbe to return on Wednesday morning at 9:00 a.m. to finish the sectional analysis. MR. LABBE agreed.