SB 285-MEDICAL ASSISTANCE COVERAGE  The committee took up SB 285. MS. JACQUELINE TUPOU, staff to Senator Lyda Green, presented SB 285 on behalf of the sponsor and testified that this bill allows the state to extend targeted case management to various user groups that aren't currently included in its authority. By doing so, it allows for refinancing of general fund expenditures by reimbursing the schools for the targeted case management services. Secondly, it changes the state's rehabilitative services to match the federal definition of rehabilitative services. Doing this ensures reimbursement for the school-based Medicaid rehabilitative services. It's estimated that this legislation will potentially save approximately $270 [thousand] in FY 05. SENATOR WILKEN asked, "How does this roll into what we did a couple years ago about -- we asked someone to start billing the feds for something. Where are we on that project?" SENATOR LYDA GREEN responded that this bill was directly related to that legislation and she deferred to Commissioner Gilbertson. MR. JOEL GILBERTSON, Commissioner, Department of Health and Social Services (DHSS), said that SB 285 accomplishes two purposes, and testified as follows: One purpose does deal with school-based Medicaid ... to improve and increase the flexibility for school districts ... being able to bill for Medicaid services and to assist them in the documentation of those services. Also, to address a deficiency found in the current authority of the department to move forward [on what] was found by the Department of Law. The first of these two deals with the ability of the schools to adequately document for services so that they can bill. For this reason, the legislation itself now directly cites the code of federal regulations in the definition of rehabilitative services. The unambiguous linkage of the state and federal definition will permit services recommended by the physician or provider - normally included in the student's IEP [Individual Education Plan] - those services normally recommended, not prescribed, can be billed under Medicaid. We have an approved state plan for therapies, normally OT, PT, speech, some assisted devices for hearing, some transportation services, nursing services, and it is the department's intent, after passage of this legislation, to submit another state plan amendment of the Medicaid program, to broaden the scope, and to include psychological evaluation and counseling services. However, absent this change, and this inclusiveness of the federal language, under the CFR, we are now working under a paradigm in which the doctor has to prescribe services as opposed to services recommended in the IEP, to allow those services to be billed under Medicaid. Also, the amendment is needed because when the department began to implement school-based services legislation, SB 345, which was passed in 2002, the Department of Law noted that while the bill had added school-based rehabilitative services to the list of covered Medicaid services, in AS 47.07.030, the statutory definition of rehabilitative services in AS 47.07.900 was left unchanged. So the scope was changed but not the definition. That restricts rehabilitative services only to those adult individuals who are substance abusers or who are chronically medically ill. As a result, the department cannot issue regulations allowing the school districts to bill for rehabilitative services. SB 285 fixes this problem by including a separate definition for rehabilitative services for school districts in AS 47.07.063, which supersedes the previous definition that was in AS 47.07.900. The second point of this legislation addresses targeted case management [TCM] services. Currently, those services are optional services under federal Medicaid law. This change, being put forward in this legislation, coincides with the department's general effort to replace the general fund in the provision of health care services across the state. Current law restricts the provision of targeted case management services to substance abusers, chronically mentally ill adults, and SED (severely emotionally disturbed) children. TCM for these groups is funded at the Medicaid program match rate of 58 percent federal, 42 percent state. This is a change from the current funding of these services, which is at 100 percent general fund dollars. The amendment will permit DHSS to identify additional groups that are currently receiving case management services that are funded by the general funds, and replace that with the Medicaid match rate of 58 percent federal funds. Some examples of services that can be provided through TCM services include: Children under the care/custody of the Office of Children's Services or Department of Juvenile Justice [DJJ] who are not currently in detention beds; children in the Infant Learning Program, some public health nursing services; children within the educational system who have an IEP; and targeted tribal groups. The fiscal note notes only minimal general fund savings for FY 05. It is a zero fiscal note because the governor's budget already includes a $270 thousand savings assuming the implementation of this legislation and the successful implementation of TCM services in FY 05. Much work has to be done to begin the services. Obtaining federal approval of the state plan amendment to draw down the necessary funds has recently become a more prolonged process than previously. State plan amendments are becoming more difficult to receive approval on, but we do ultimately receive approval. This is an approvable state plan amendment, so we do anticipate implementation at some point during FY 05, and will realize these savings. In addition, billing, accounting, and case management systems will need modification in order to submit and support this new claiming activity. These are some of the reasons for there being minimal savings for FY 05, but we believe that future savings will be much larger for the state. CHAIR DYSON acknowledged that Senator Guess was participating in the meeting via teleconference. SENATOR GREEN said she wanted to respond to inquiries she has received from school districts on this issue and asked when this process would be in place. COMMISSIONER GILBERTSON responded there is a two-pronged effort to implement this legislation, recalling a previous discussion with Senator Green to get this fast-tracked. He said the regulations were developed and a state plan amendment was submitted which was the federal side of this to get approval to provide these services. The state plan amendment was approved for some services, largely therapies; the deficiency in the regulations was noted by the Department of Law. He said as soon as this legislation is passed and the legislative authority exists to engage in the services, regulations would be put out again, there would be a comment period, and finalization of the regulations. An additional state plan amendment will be submitted to expand the scope of services to include counseling and psychological evaluation. Those services would be subject to the time process of getting the state plan amendment approved. Historically this hasn't taken long, but as of late it has taken quite a bit of time to get approval by the federal government, he said. SENATOR GREEN asked, "Possibly next fall?" COMMISSIONER GILBERTSON replied this would be the goal. SENATOR WILKEN commented on the fiscal note, saying that this had been about a $4 million savings, which was an additional amount of money that could be spent in the schools. SENATOR GREEN said she didn't remember the amount. COMMISSIONER GILBERTSON responded that a sizable amount of federal money will be gathered through school-based Medicaid claiming. That money goes to the school districts, and the districts provide towards the general fund maximum, with 42 percent drawing down 58 percent of federal monies. The $270 thousand is the savings the state anticipates in FY 05. As a result of the second part of this legislation, TCM services that allow for claiming some federal match dollars on services currently being paid for with general fund dollars, that scope of business and amount of claiming is expected to increase over the long-term. Acknowledging the start-up time, "we don't anticipate a large savings in FY 05." SENATOR WILKEN questioned what this would mean to the 53 school districts and asked, "What will be freed up?" MR. JON SHERWOOD, DHSS, responded that Senator Wilken "was in the ballpark" regarding the total amount of funds, saying that this would bring into the school district the mechanism the school district provides to general funds [indisc. due to coughing] and the state process through the federal funds. Mr. Sherwood said he was not aware if estimates had been revised regarding how fast the money would come in or if the amount was still the same. Some of that depends on seeing what the federal government actually approves. SENATOR WILKEN said the bill would go on to Finance, and asked Mr. Sherwood if there was a way to profile one district, such as Anchorage, and give a range (low/high) of what it may mean five years from now. MR. SHERWOOD responded that the department could come up with an estimate. CHAIR DYSON said, "We would enjoy seeing that when it gets to Finance." He asked Senator Guess if she had any questions and then asked her if she was somewhere where she could receive a fax. SENATOR GRETCHEN GUESS replied that unfortunately she was not near a fax, however, she understood the changes that Ms. Barrans had discussed regarding the proposed CS to SB 277. [SB 277 was previously heard during today's meeting.] CHAIR DYSON then asked if there were any additional questions on SB 285. Hearing none, he said he would entertain a motion. SENATOR GREEN moved SB 285 from committee with individual recommendations and accompanying fiscal notes. CHAIR DYSON asked if there were any objections. Seeing and hearing none, it was so ordered.