SENATE FINANCE COMMITTEE April 7, 2009 9:04 a.m. 9:04:02 AM CALL TO ORDER Co-Chair Stedman called the Senate Finance Committee meeting to order at 9:04 a.m. MEMBERS PRESENT Senator Lyman Hoffman, Co-Chair Senator Bert Stedman, Co-Chair Senator Charlie Huggins, Vice-Chair Senator Johnny Ellis Senator Donny Olson Senator Joe Thomas MEMBERS ABSENT None ALSO PRESENT Senator Bill Wielechowski; Senator Joe Paskvan; Darwin Peterson, Staff to Co-Chair Stedman; Max Hensley, Staff, Senator Ellis; Jake Hamburg, Staff, Senator Paskvan; William Streur, Deputy Commissioner, Medicaid & Health Care Policy, Department of Health and Social Services; Mr. Sam Trivette, Self. PRESENT VIA TELECONFERENCE Pat Luby, Advocacy Director, Alaska Association of Retired Persons (AARP), Anchorage; Rebecca Madison, Alaska Tribal Health Consortium; Shelly Hughes, Alaska Primary Care Associates. SUMMARY SB 1 "An Act increasing the minimum hourly wage, and creating an annual adjustment to the minimum hourly wage based on the rate of inflation; and providing for an effective date." CSSB 1 (FIN) was REPORTED out of Committee with "no recommendation" and with a previously published zero fiscal note by the Department of Labor and Workforce Development. SB 133 "An Act creating a statewide electronic health information exchange system; and providing for an effective date." SB 133 was HEARD and HELD in Committee for further consideration. SB 170 "An Act modifying the Alaska unemployment insurance statutes to comply with the requirements of the federal economic stimulus bill by redefining the base period for determining eligibility for unemployment benefits; and providing for an effective date." SB 170 was HEARD and HELD in Committee for further consideration. SENATE BILL NO. 1 "An Act increasing the minimum hourly wage, and creating an annual adjustment to the minimum hourly wage based on the rate of inflation; and providing for an effective date." 9:04:19 AM Co-Chair Stedman noted that SB 1 is in its second hearing in the Senate Finance Committee. He stated his intent was to adopt the committee substitute (CS) and take additional public testimony. Co-Chair Hoffman MOVED to ADOPT CSSB 1 LS0006/T. Co-Chair Stedman OBJECTED for explanation. DARWIN PETERSON, STAFF TO CO-CHAIR STEDMAN, spoke about the legislation. He informed that the CS version C states that the Alaska will choose the greater of the state and federal minimum wages until the effective date of January 1, 2010 at which time the state minimum wage will be increased to $.50 above the federal minimum wage and that rate will be maintained. 9:07:33 AM AT EASE 9:07:40 AM RECONVENED Co-Chair Stedman WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. SENATOR WIELECHOWSKI, discussed the legislation. He expressed appreciation for the finance committee's work on the legislation. He stated that the achieved compromise recognizes that there are people in the community who are concerned about the increases, as well as those who believe that the state needs an increase. Alaska will fall below the federal minimum wage in July 2010 if the current version of the bill is not accepted. The bill follows the long standing policy in the state of remaining above $.50 over the federal minimum wage. Co-Chair Stedman MOVED to ADOPT Amendment 1. Co-Chair Stedman OBJECTED for discussion. He explained the Amendment. Page 1, lines 7 - 9: Delete "the higher of $7.15 an hour or, for work performed on or after the effective date of an actual increase of the federal minimum wage to a rate higher than $7.15 an hour," Insert "$7.25 an hour until December 31, 2009, and thereafter not less than" Page 1, line 14: Delete "January 1, 2010" Insert "July 24, 2009" 9:10:30 AM Co-Chair Stedman WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. 9:11:43 AM Co-Chair Hoffman MOVED to report CSSB 1 out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. Co-Chair Stedman mentioned the zero fiscal note from the Department of Labor (DOL). CSSB 1 (FIN) was REPORTED out of Committee with "no recommendation" and with a previously published zero fiscal note by the Department of Labor and Workforce Development. SENATE BILL NO. 170 "An Act modifying the Alaska unemployment insurance statutes to comply with the requirements of the federal economic stimulus bill by redefining the base period for determining eligibility for unemployment benefits; and providing for an effective date." 9:13:00 AM Senator Ellis addressed the legislation and the importance of quick action. He opined that the millions of dollars available to the state would strengthen the state's unemployment trust fund protecting business and providing money for one time job training for Alaskans who are unemployed. This legislation creates a minor change updating the unemployment law. Alaska has modernized the unemployment system for the state. MAX HENSLEY, STAFF, SENATOR ELLIS, spoke to the legislation. Senate Bill 170 updates Alaska's unemployment insurance statutes to conform to the federal unemployment insurance modernization provisions included in the American Recovery and Reinvestment Act of 2009, commonly known as the federal stimulus bill. ARRA provides over $16 million in funding to support these changes, which includes just over $1 million in administrative assistance. This funding is conditional on making the changes included in SB 170. Of the three provisions necessary to receive this funding, Alaska is already in compliance with the two more difficult requirements. The bill meets the final requirement by creating an alternative base period to determine an unemployed person's eligibility for unemployment insurance. Thirteen Governors (including seven Republicans) from across the country have expressed their intention to make these changes, and four states already comply. Iowa and South Dakota have already passed legislation to modernize their UI systems and accept their share of the federal money, and Georgia is in the process, with the support of each of their Governors. Any funding sources Alaska chooses not to take advantage of will be re- allocated to the federal UI program that will put it to use rather than being used to reduce federal deficit spending. The Alaska Department of Labor estimated that the alternative base period would make approximately 1,300 more Alaskans eligible for unemployment insurance compensation each year. This change will help low-income Alaskans weather the national economic downturn without placing an undue hardship on employers and small businesses that support the UI trust fund. The estimated impact on the UI trust fund in calendar year 2008 had this change been in place would have been approximately $1.9 million in additional payments (on top of the $121 million paid out already). This amount is small enough in comparison to the overall size of the fund's corpus - $351 million at the end of 2008 - the annual investment returns, and the additional federal funds which would become available, that the impact on business taxes would be negligible. 9:18:07 AM Co-Chair Hoffman MOVED to ADOPT CSSB 170 (FIN) LS0762/S. Co- Chair Stedman OBJECTED for discussion purposes. Mr. Peterson addressed the CS and the Amendment. Alaska law must comply with the Federal Unemployment Tax Act as a condition of certification for federal unemployment compensation administrative grants totaling approximately $20 million. If Alaska were decertified due to a failure to enact this legislation, the state risks loosing the full federal unemployment tax act credit of 5.4 percent translating to a loss of $111 million in annual tax credits for Alaskan employers. The Alaska unemployment security act stipulates that the state complies with federal law for the administration of the unemployment insurance program. Tribal entities' services require coverage and federally recognized tribes require the choice to become federally recognized employers for the payment of unemployment insurance taxes. He discussed the letters available (Copy on File) describing the need for this legislation and citing the prevailing federal law. He addressed one letter in particular by the Clark (Click) Bishop, Commissioner, Department of Labor and Workforce Development Co-Chair Stedman WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. Senator Huggins stated that he assumed that a representative from the administration would come forward before the bill moves. 9:22:57 AM Senator Ellis MOVED to ADOPT Amendment 1. Co-Chair Stedman OBJECTED for discussion. Senator Ellis explained the change, which clarifies the title. Page 1, lines 1 - 2: Delete "to comply with the requirements of the federal economic stimulus bill" Co-Chair Stedman WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. 9:24:30 AM Senator Huggins informed about concerns from the administration regarding the federal stimulus funds. He opined that most Alaskans appreciate information concerning the administration's position on the stimulus money. Co-Chair Stedman proposed that representation from the administration is encouraged when the bill returns to the finance committee. Senator Ellis stated his thorough understanding that the money is available one time only. He concluded that money placed into the unemployment trust fund to aid employers is helpful because it remains in the trust fund contributing to the fund's health. The job training money is allocated for job training centers. SB 170 WAS HEARD AND HELD IN COMMITTEE FOR FURTHER CONSIDERATION. 9:25:51 AM AT EASE 9:28:22 AM RECONVENED SENATE BILL NO. 133 "An Act creating a statewide electronic health information exchange system; and providing for an effective date." 9:31:55 AM Senator Joe Paskvan discussed the legislation. Alaska health care providers and patients continue to rely on an outdated healthcare infrastructure, with many providers using only paper based systems, which contributes to dangerous drug interactions, missed diagnoses, costly delays, duplicate testing and administrative overhead. According to national studies, these problems contribute to approximately 5% of health care expenditures or $250 million annually in Alaska and unnecessarily degrade the quality of health care for all Alaskans. SB 133 modernizes Alaska's healthcare IT infrastructure by developing a secure electronic Health Information Exchange (HIE) system to improve the safety, cost effectiveness, and quality of healthcare in Alaska. This standards-based electronic health network will allow individual Alaskans to have their own personal health record and to authorize their health care providers to exchange electronic medical records in a timely, secure manner. The use of such technology requires careful and strict privacy protection measures. Current Federal and State laws already provide a number of standards protecting a patient's privacy and personal information. The privacy and security rules contained in the Health Insurance Portability and Accountability Act (HIPAA) most directly and extensively impact the HIE system. HIPAA establishes individuals' right to review and obtain a copy of their health information, requires notice of privacy practices, limits the use of records and the disclosure of information, and institutes strict security standards. SB 133 establishes further strict standards to secure and protect the confidentiality of individually identifying health information of a patient. These standards include a secure and traceable electronic audit system to allow patients to see who has viewed their record, restrictions on how information may be used, patient consent requirements, an ability to opt out of the health information exchange system, and notification of confidentiality violations. When complete, the Health Information Exchange System will have the capability to provide any Alaskan with a secure Personal Health Record, including authorization for their health care providers on the network to have access to electronic records required for continuity of care, such as hospitalization records, prescription information, vaccinations, allergies, imaging records, laboratory results, etc. The Network will support telemedicine services, the transfer of high resolution images for patient care, video conferencing, and Voice over Internet applications for providers. Over 300 health organizations in Alaska are eager to participate in the electronic Health Information Exchange system. JAKE HAMBURG, STAFF, SENATOR PASKVAN, presented the PowerPoint slide show "Deploying a Health Information Exchange for Alaskans. He began with Slide 2 "Medical Care From Paper to Electronic": „Alaska's health care providers are now making major investments ($100M+) in moving from paper records to Electronic Medical Records „Alaska's health care providers are aligned in support of creating a statewide Health Information Exchange network so patient records may be securely exchanged between providers for timely and safe patient care „State of Alaska plays a key role as a partner in Alaska's developing Health Information Exchange 9:33:42 AM Mr. Hamburg discussed Slide 3, "Health Information Exchanges, National Effort: State Solutions": „National Health Information Network" concept created in Bush administration and enhanced in Obama administration through ARRA 2009 stimulus „Successful State Models: …DHIN - Delaware Health Information Network „Statewide and regional health information exchanges have developed over the last 10 years in other states …CalRHIO - California, Los Angeles County …FHIN - Florida Health Information Network …Regenstrief - Indiana Eight County Network 9:36:23 AM Alaska eHealth Network: Slide 5: „Provide rapid access by authorized providers to critical patient information at the point of care medical history allergies medication status laboratory reports immunization status imaging reports „Reduce redundancy in medical testing and procedures „Improve patient safety through reducing medication reconciliation errors „Reduce provider administrative costs for data management „Expedited response to public health emergencies 9:36:56 AM Alaska eHealth Network. Slide 6: „Do not require centralized patient health record repositories: health providers continue to own their records „Facilitate connectivity with patient's Personal Health Record choices „Respect patient decisions to opt-out of network participation „Provide significant penalties for data breaches 9:37:15 AM Slide 7: „Federal and private research projects 5% savings in annual U.S. health care expenditures from full deployment of inter-operable electronic medical records „For Alaska's $5B health care industry, annual savings could reach $250M. „For the State of Alaska's $250M GF Medicaid expenditures, annual savings could exceed $10M Slide 8: „5 year $35 million project to deploy a secure network supporting the exchange of electronic health records between all Alaska health care providers „$12.0 million currently awarded through 2008 from Federal Communications Commission, US Dept. of Health and Human Services, State of Alaska, Alaska Federal Health Care Partnership 9:37:35 AM Board of directors. Slide 9: „Incorporated non-profit August 2008 …Alaska Native Tribal Health Consortium (designated lead partner) …Alaska State Hospitals and Nursing Homes Association …Alaska Primary Care Association …Premera Blue Cross/Blue Shield …State of Alaska DHSS …Alaska Federal Health Care Partnership (DOD, VA, USCG, Indian Health Service) …University of Alaska …Alaska E.H.R. Alliance (private physicians) …American Association of Retired Persons 9:38:29 AM Next Steps: 2009-2010. Slide 16: „Secure $1.3M for FY2010 and $1.0M in FY2011 from State of Alaska for network development …Ensures match for federal stimulus funds „Engage contractor/vendors to deploy Health Information "bridging" software to interconnect Alaska's various Electronic Medical Records systems „Align the Health Information Exchange with State systems: MMIS, API, Public Health data „Add Internet2 connectivity for telemedicine applications, teleconferencing, voice-over-internet, and consults from lower-48 academic/teaching hospitals 9:39:22 AM Sustainability: Slide 17 Establish the Alaska eHeath Network business structure to sustain network and software services through provider and payor contributions AeHN Estimated recurring costs after FY11: $5.0M $1.3M administration/business operations $3.7M contractual HIE technical/software services Estimated recurring AeHN revenues after FY11: $5.0M …$1.5M 1500+ physicians/clinicians …$0.5M 26 Hospitals …$0.5M Laboratories/Pharmacies/Imaging Centers …$1.0M State of Alaska …$1.0M Private Insurers …$0.5M Alaska Federal Health Care partners SB133 Facilitates HIE development: Slide 18. „Positions Alaska for substantial stimulus funding „Demonstrates state commitment to support and participate in Alaska's Health Information Exchange development „Provides for DHSS oversight, engagement, and long-term participation plan „Provides framework for designation of a qualified state Health Information Exchange entity „Ensures privacy protections 9:40:52 AM Summary recommendations: Slide 20: „A. Passage of SB133 „B. State DHSS oversight, support, and designation of HIE organization „C. Provide stimulus match of $1.3M in FY10 and $1.0M in FY11 The outcomes: Slide 21: „Timelier access to safer health care for Alaskans „$1M annual State investment yields ~5% savings in future State expenses for Medicaid, employee health care, state- operated health care programs Co-Chair Hoffman asked about the $5 billion spent on health care and potential annual savings of $250 million. He requested more information about the amounts and how much is dedicated to personnel. He asked for the breakdown between private entities versus the state's savings. How much of the savings will pertain to the state. Mr. Hamburg answered that the cost savings to the state's healthcare system is the annual $250 million. The state's savings is $10 to $12 million dollars annually. 9:42:46 AM Co-Chair Hoffman requested identification of the saving's location. Mr. Hamburg replied that the state is currently paying for duplicate testing existing during moves from facility to facility. Costs are reduced by the implementation of a health information exchange system. Senator Paskvan stated that Rebecca Madison was available to add specific detail to answer Co-Chair Hoffman's question. Co-Chair Stedman noted that the fiscal note reflects the assumption that the state will accept the federal stimulus money. He asked about the consequences of refusing the federal funds. Senator Paskvan replied that the loss of stimulus funds equals $13 million dollars for the current year and $7 million for the following year. Co-Chair Stedman asked if the amounts are reflected in the fiscal note. Mr. Hamburg added that the capital dollar requests are requested in FY10 to ensure that the state qualifies for the greatest amount of federal dollars. 9:44:35 AM Senator Olson noted that the acceptance of federal stimulus dollars will prolong set up of the program. He wondered what supplemental amount the state is then responsible for in the following year. Mr. Hamburg noted that the state's involvement includes the capital funds and either the designated operating cost or the user fees. Senator Olson commented that some private practice practitioners might have difficulty connecting to the network. Mr. Hamburg explained that the plan requires five years for full implementation. Senator Olson asked if a solo practitioner will contribute via affordable fee structure. Mr. Hamburg replied that the issue is resolved in regulation or non-profit solution. 9:46:23 AM Mr. Hamburg stated that the federal stimulus makes it easily accessible for providers to access involvement in the system. Senator Olson asked about rural clinics and their involvement in the program. Mr. Hamburg answered that there is a native health system developing an electronic health record system and striving to network into the state system. Senator Thomas understood that more than one large depository is available. He noted the fiscal note with three dollars for every dollar that the state has spent. Mr. Hamburg answered that the fiscal note is based on a $54.34 million federal match for 2012 and beyond. He noted that if the state designated the entity the cost is less and dependent upon the user fee charged for system participation. 9:48:48 AM WILLIAM STREUR, DEPUTY COMMISSIONER, MEDICAID & HEALTH CARE POLICY, DEPARTMENT OF HEALTH AND SOCIAL SERVICES stated that the administration's position on the bill is in support of the concept and creation of a health information network. He informed that the administration felt that too little information is available regarding the ramifications of accepting the stimulus funds. The administration is waiting for additional guidance regarding acceptance of the funds. Co-Chair Stedman requested clarification as the fiscal note is $27.9 million. He asked if the state secures the federal stimulus funds, will the administration go forward with the legislation. Mr. Streur clarified that the administration's position regards the concept of health information exchange. Due to the expense involved, the administration cannot take a position on the funding itself. 9:50:55 AM MR. SAM TRIVETTE, SELF, spoke in support of SB 133. He urged consideration of moving the legislation forward. He noted that legislation frequently pits one person against another, but this bill allows everyone to win. He encouraged spending money to save money. He relayed a personal story regarding a medical error. PAT LUBY, ADVOCACY DIRECTOR, ALASKA ASSOCIATION OF RETIRED PERSONS (AARP), ANCHORAGE (testified via teleconference). He testified in support of SB 133. He stated that SB 133 will reduce medical errors in hospitals. He informed that the electronic health records could provide information for a person who might not be able to speak for themselves. 9:54:22 AM REBECCA MADISON, ALASKA TRIBAL HEALTH CONSORTIUM (testified via teleconference). She reported that providers in other states with electronic health records report significant savings to Medicaid through health information exchange. Multiple health care agencies in Alaska support the bill including federal agencies, the Department of Health and Social Services, private physicians, primary care providers, hospitals and nursing homes. Senator Olson asked if the health corporations have weighed in on the legislation and cost. Ms. Madison asked if Senator Olson was referring to Alaskan health corporations. Senator Olson concurred that he was referring to Alaskan corporations. Ms. Madison stated that many Alaskan corporations entered partnership agreements. 9:56:28 AM SHELLY HUGHES, ALASKA PRIMARY CARE ASSOCIATES (testified via teleconference). She expressed appreciation to the Senate Finance Committee. She appreciated Senator Paskvan and his sponsorship of the bill. She relayed that much time and consideration has gone into the creation of SB 133. She noted that the Primary Care Associates appreciates the protection of the patient's confidentiality. 9:58:08 AM Co-Chair Stedman asked about the issue of the acceptance or refusal of the stimulus money. He asked if this is time sensitive assuming that the administration accepts the money. 9:59:10 AM Mr. Streur answered that the timeline for acceptance of the money includes a 90 percent match plus 100% funding to assist in the development during 2010 and 2011. At the end of 2011 the department returns to the Medicaid match rate of 54.24 percent. Co-Chair Stedman asked about the six full time positions and the capital expenditures of 27.9 million of which $25.1 are federal. He noted that the legislature does not have to take action on the bill. He struggled with the timing issue as session ends soon. Does this put us in any jeopardy to postpone accepting the money? Mr. Streur responded that he was unable to answer the question at this time. Co-Chair Hoffman requested the information the department is lacking. Mr. Streur explained that the department must vet out the information ensuring that there are no "strings attached" to these funds prior to moving forward. 10:01:27 AM Co-Chair Hoffman recalled Mr. Streur commenting that he anticipated an answer. He asked who would provide the department with the information. Mr. Streur replied that the information would be forthcoming from the federal government. Co-Chair Hoffman asked if a specific person was in contact with the department. Mr. Streur stated that the department corresponds with various people in the center for Medicaid and Medicare services. Co- Chair Hoffman asked when the department expects a response. Mr. Streur answered that he would have the information by the end of the session. Co-Chair Stedman noted that the legislation had a large fiscal impact. He noted concern about the legislation adopted without the federal funds coming through. He requested more information about the timing once the department has it. 10:02:42 AM Mr. Streur was hopeful that a decision would be made sooner rather than later. SB 133 was HEARD and HELD in Committee for further consideration. ADJOURNMENT The meeting was adjourned at 10:03 AM.