ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
April 15, 2015
8:05 a.m.
MEMBERS PRESENT
Senator Bill Stoltze, Chair
Senator John Coghill, Vice Chair
Senator Charlie Huggins
Senator Bill Wielechowski
MEMBERS ABSENT
Senator Lesil McGuire
COMMITTEE CALENDAR
SENATE BILL NO. 89
"An Act relating to a parent's right to direct the education of
a child; and relating to questionnaires administered in
schools."
- MOVED CSSB 89(STA) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 1
"An Act prohibiting smoking in certain places; relating to
education on the smoking prohibition; and providing for an
effective date."
- MOVED CSSSSB 1(STA) OUT OF COMMITTEE
HOUSE BILL NO. 142
"An Act establishing Elders' Day."
- MOVED HB 142 OUT OF COMMITTEE
SENATE BILL NO. 74
"An Act relating to permanent fund dividends; relating to a
medical assistance reform program; establishing a personal
health savings account program for medical assistance
recipients; relating to the duties of the Department of Health
and Social Services; establishing medical assistance
demonstration projects; and relating to a study by the
Department of Health and Social Services."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 89
SHORT TITLE: PARENT RIGHTS: EDUCATION; SCHOOL ABSENCE
SPONSOR(s): SENATOR(s) DUNLEAVY
03/25/15 (S) READ THE FIRST TIME - REFERRALS
03/25/15 (S) EDC, STA
03/31/15 (S) EDC AT 3:30 PM BUTROVICH 205
03/31/15 (S) Scheduled but Not Heard
04/02/15 (S) EDC AT 3:30 PM BUTROVICH 205
04/02/15 (S) Heard & Held
04/02/15 (S) MINUTE(EDC)
04/07/15 (S) EDC AT 3:30 PM BUTROVICH 205
04/07/15 (S) Heard & Held
04/07/15 (S) MINUTE(EDC)
04/09/15 (S) STA AT 9:00 AM BUTROVICH 205
04/09/15 (S) <Pending Referral>
04/09/15 (S) EDC AT 3:30 PM BUTROVICH 205
04/09/15 (S) Moved CSSB 89(EDC) Out of Committee
04/09/15 (S) MINUTE(EDC)
04/10/15 (S) EDC RPT CS 3DP 1DNP NEW TITLE
04/10/15 (S) DP: DUNLEAVY, GIESSEL, HUGGINS
04/10/15 (S) DNP: GARDNER
04/14/15 (S) STA AT 8:00 AM BUTROVICH 205
04/14/15 (S) Heard & Held
04/14/15 (S) MINUTE(STA)
04/15/15 (S) STA AT 8:00 AM BUTROVICH 205
BILL: SB 1
SHORT TITLE: REGULATION OF SMOKING
SPONSOR(s): SENATOR(s) MICCICHE
01/21/15 (S) PREFILE RELEASED 1/9/15
01/21/15 (S) READ THE FIRST TIME - REFERRALS
01/21/15 (S) HSS, STA, FIN
01/30/15 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
01/30/15 (S) HSS, STA, FIN
02/11/15 (S) HSS AT 1:30 PM BUTROVICH 205
02/11/15 (S) Heard & Held
02/11/15 (S) MINUTE(HSS)
03/11/15 (S) HSS AT 1:30 PM BUTROVICH 205
03/11/15 (S) Moved CSSSSB 1(HSS) Out of Committee
03/11/15 (S) MINUTE(HSS)
03/13/15 (S) HSS RPT CS 2DP 3NR SAME TITLE
03/13/15 (S) DP: GIESSEL, ELLIS
03/13/15 (S) NR: STEDMAN, KELLY, STOLTZE
04/02/15 (S) STA AT 9:00 AM BUTROVICH 205
04/02/15 (S) Heard & Held
04/02/15 (S) MINUTE(STA)
04/09/15 (S) STA AT 9:00 AM BUTROVICH 205
04/09/15 (S) Heard & Held
04/09/15 (S) MINUTE(STA)
04/15/15 (S) STA AT 8:00 AM BUTROVICH 205
BILL: HB 142
SHORT TITLE: ESTABLISH ELDERS' DAY
SPONSOR(s): REPRESENTATIVE(s) FOSTER
03/09/15 (H) READ THE FIRST TIME - REFERRALS
03/09/15 (H) STA
03/24/15 (H) STA AT 8:00 AM CAPITOL 106
03/24/15 (H) Moved HB 142 Out of Committee
03/24/15 (H) MINUTE(STA)
03/25/15 (H) STA RPT 7DP
03/25/15 (H) DP: TALERICO, STUTES, KELLER,
GRUENBERG, VAZQUEZ, KREISS-TOMKINS,
LYNN
03/27/15 (H) TRANSMITTED TO (S)
03/27/15 (H) VERSION: HB 142
03/30/15 (S) READ THE FIRST TIME - REFERRALS
03/30/15 (S) STA
04/15/15 (S) STA AT 8:00 AM BUTROVICH 205
BILL: SB 74
SHORT TITLE: MEDICAID REFORM/PFD/HSAS/ER USE/STUDIES
SPONSOR(s): SENATOR(s) KELLY
03/13/15 (S) READ THE FIRST TIME - REFERRALS
03/13/15 (S) HSS, STA, FIN
03/13/15 (S) HSS AT 1:30 PM BUTROVICH 205
03/13/15 (S) -- MEETING CANCELED --
03/23/15 (S) HSS AT 1:30 PM BUTROVICH 205
03/23/15 (S) Heard & Held
03/23/15 (S) MINUTE(HSS)
04/01/15 (S) HSS AT 1:30 PM BUTROVICH 205
04/01/15 (S) Heard & Held
04/01/15 (S) MINUTE(HSS)
04/02/15 (S) STA AT 9:00 AM BUTROVICH 205
04/02/15 (S) <Pending Referral>
04/03/15 (S) HSS AT 1:30 PM BUTROVICH 205
04/03/15 (S) -- MEETING CANCELED --
04/08/15 (S) HSS AT 1:30 PM BUTROVICH 205
04/08/15 (S) Heard & Held
04/08/15 (S) MINUTE(HSS)
04/10/15 (S) HSS AT 1:30 PM BUTROVICH 205
04/10/15 (S) Moved CSSB 74(HSS) Out of Committee
04/10/15 (S) MINUTE(HSS)
04/11/15 (S) HSS RPT CS 3DP 1NR NEW TITLE
04/11/15 (S) DP: GIESSEL, ELLIS, STOLTZE
04/11/15 (S) NR: STEDMAN
04/13/15 (S) STA AT 8:00 AM BUTROVICH 205
04/13/15 (S) Heard & Held
04/13/15 (S) MINUTE(STA)
04/14/15 (S) STA AT 8:00 AM BUTROVICH 205
04/14/15 (S) Scheduled but Not Heard
04/15/15 (S) STA AT 8:00 AM BUTROVICH 205
WITNESS REGISTER
SENATOR MIKE DUNLEAVY
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Prime sponsor SB 89.
BETHANY MARCUM, Staff
Senator Mike Dunleavy
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding SB 89.
SUSAN MCCAULEY, Director
Division of Teaching & Learning Support
Alaska Department of Education & Early Development
Juneau, Alaska
POSITION STATEMENT: Addressed concerns with SB 89.
BRANDON BREFCZYNSKI, Staff
Senator Bill Stoltze
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Addressed the Committee Substitute for SB 1.
SENATOR PETER MICCICHE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Prime sponsor of SB 1.
ANDREA WATTS, Staff
Representative Neil Foster
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of HB 142.
DENISE DANIELLO, Executive Director
Alaska Commission on Aging
Alaska Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Supports HB 142.
HEATHER SHADDUCK, Staff
Senator Pete Kelly
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Reviewed the changes made to SB 74.
VALERIE DAVIDSON, Commissioner
Alaska Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Addressed concerns for SB 74.
JON SHERWOOD, Deputy Commissioner
Medicaid & Health Care Policy
Alaska Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Addressed questions regarding SB 74.
BECKY HULTBERG, President/CEO
Alaska State Hospital and Nursing Home Association
Juneau, Alaska
POSITION STATEMENT: Addressed concerns for SB 74.
JEREMY PRICE, State Director
Americans for Prosperity-Alaska
Anchorage, Alaska
POSITION STATEMENT: Supports SB 74.
ACTION NARRATIVE
8:05:05 AM
CHAIR BILL STOLTZE called the Senate State Affairs Standing
Committee meeting to order at 8:05 a.m. Present at the call to
order were Senators Wielechowski, Coghill, Huggins, and Chair
Stoltze.
SB 89-PARENT RIGHTS: EDUCATION; SCHOOL ABSENCE
8:06:11 AM
CHAIR STOLTZE announced the consideration of SB 89. [The work
draft CS for SB 89, version 29-LS0735\G was adopted on 4/14/15.]
Noting that public testimony was closed, he asked if any
committee members had amendments to offer.
8:06:51 AM
SENATOR COGHILL moved to report the committee substitute (CS)
for SB 89 from committee with individual recommendations and
attached fiscal note.
CHAIR STOLTZE objected for discussion purposes.
SENATOR WIELECHOWSKI stated that he was not expecting the bill
to move during the current committee meeting. He said the bill
is a pretty significant change to Alaska's law and there are
some pretty significant problems with the bill. He said he was
wondering if the committee could hear from the Department of
Education.
CHAIR STOLTZE said the committee will hear from the Department
of Education.
8:07:51 AM
SENATOR MIKE DUNLEAVY, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 89, introduced himself.
SENATOR WIELECHOWSKI asked the following:
On page 2, lines 13-17, there is a requirement for
parental notification of not less than 2 weeks, but
not more than 6 weeks before any activity, class, or
program that includes content involving human
reproduction or sexual matters.
He asked if a penalty is involved if a teacher or school does
not follow the strict notification timeline.
SENATOR DUNLEAVY replied that currently there are no penalties
in the bill. He specified that following the timeline is
"expected" to be followed once the bill is passed into law.
SENATOR WIELECHOWSKI inquired if a teacher is prohibited from
answering a student's question on date rape without first
receiving a permission slip.
SENATOR DUNLEAVY specified that the bill is an attempt at being
reasonable, meaning there will always be questions that come up
in the classroom with the teacher. He replied no, there would
not be a situation where a child asks a question and the teacher
says, "Hold that thought, we'll get back to you in two weeks."
CHAIR STOLTZE welcomed him to depart from Senator Dunleavy to
Superintendent Dunleavy and noted he is probably aware of
existing reporting requirements.
8:10:00 AM
SENATOR WIELECHOWSKI said language on page 2, lines 18-20,
states that parents can remove children for any reason for
religious holidays as defined by the parent. He asked if the
parent needs to notify the school district as to what religious
holiday they would be following.
SENATOR DUNLEAVY answered that parents would notify the school
so that absence is understood and allowed.
SENATOR WIELECHOWSKI asked if a pagan holiday would be allowed
as a religious holiday.
SENATOR DUNLEAVY answered that the religious holiday is the
parent's choice.
SENATOR WIELECHOWSKI addressed page 2, lines 21-22 as follows:
The school district must provide the parent with an
opportunity to review the content of an activity,
class, performance standard, or program.
He asked if the proviso gives parents the opportunity to review
tests before being administered.
SENATOR DUNLEAVY answered no. He detailed that there will be no
avenue to read an assessment and breach security.
SENATOR WIELECHOWSKI remarked that the way he reads the language
is that parents would have the opportunity to review tests. He
asked if clarifying language should be considered that excludes
tests.
SENATOR DUNLEAVY answered that there is no wording regarding
testing.
SENATOR WIELECHOWSKI asked where "performance standard" is noted
if that included tests.
SENATOR DUNLEAVY answered no. He specified that "performance
standard" would include publicly listed standards for each of
the courses.
SENATOR WIELECHOWSKI asked how long the parent has to review.
SENATOR DUNLEAVY replied that the period of time for a parent to
review has not been stipulated in the bill. He said the school
board could decide on the local level.
SENATOR WIELECHOWSKI asked if guidance should be provided on the
length of time a parent has to review.
SENATOR DUNLEAVY replied that the bill allows the school
district to decide.
8:12:59 AM
SENATOR WIELECHOWSKI addressed page 3, Section 3, the Alaska
Association of School Boards (AASB) testified against the
provision. He asked if Senator Dunleavy considered AASB's
concerns.
SENATOR DUNLEAVY answered yes. He specified that the belief is
the concerns of parents outweigh AASB's concerns.
SENATOR WIELECHOWSKI said he contacted AASB the previous day and
asked for information on what sort of survey questionnaires are
being asked. He disclosed that AASB agreed to provide the
information and asked that the committee not move the bill out
prior to receiving the information.
CHAIR STOLTZE noted that mail has been received on the issue.
SENATOR DUNLEAVY remarked that he was the president of the Mat-
Su schoolboard and was familiar with AASB's purpose in terms of
what it advocates for.
SENATOR WIELECHOWSKI asked what the rationale was behind Section
3, page 3.
8:14:54 AM
SENATOR DUNLEAVY responded that after discussions with many
parents that any type of questionnaire should get permission
from parents before their children are surveyed. He summarized
that parents should be informed so that they can make informed
decisions.
SENATOR WIELECHOWSKI addressed page 4, Section 6, and noted that
the section was new where school districts may require physical
examinations of teachers as a condition of employment. He asked
if Senator Dunleavy could provide background information on the
proviso.
8:16:02 AM
BETHANY MARCUM, Staff, Senator Dunleavy, Alaska State
Legislature, Juneau, Alaska, answered that there is no state
requirement for school districts to conduct physical exams for
teachers. She detailed that should a school district decide to
require a physical exam, the section allows the school district
to require the examination. She added that the school district
would not be required to pay for the physical exams.
SENATOR WIELECHOWSKI asked to clarify that the purpose of the
section is not to allow school districts to discriminate against
those who may have physical disabilities.
MS. MARCUM answered that school districts requested to have
their burden reduced regarding state requirements like physical
exams.
SENATOR WIELECHOWSKI addressed Section 7 and said the section
states the following:
A school district may not permit an abortion services
provider or an employee or volunteer of an abortion
services provider to offer, sponsor, furnish course
materials, or provide instruction relating to human
sexuality or sexually transmitted diseases.
He asked if the school district is required to perform a
background check to ensure that people who are volunteering in
the classroom or offering instruction are not volunteers for
abortion services providers.
SENATOR DUNLEAVY answered no.
SENATOR WIELECHOWSKI asked if there is a penalty if a volunteer
of an abortion services provider is allowed to teach one of the
classes.
SENATOR DUNLEAVY answered that there is no penalty to the school
district if unknowingly there was an individual in an official
capacity that taught the class. He detailed that there are no
background checks to determine if somebody was related to an
abortion service provider.
SENATOR WIELECHOWSKI asked if the proviso would apply to those
who have financially contributed to abortion services providers.
SENATOR DUNLEAVY answered that the intent of the bill is not to
do what Senator Wielechowski described.
SENATOR WIELECHOWSKI asked if a parental classroom volunteer who
happens to be a volunteer at an abortion services provider would
be banned from the classroom.
8:18:24 AM
SENATOR DUNLEAVY answered that the intent of the bill would not
ban the individual that Senator Wielechowski described.
SENATOR WIELECHOWSKI asked if a school nurse who happened to be
a volunteer for an abortion services provider would be able to
provide instruction relating to human sexuality.
SENATOR DUNLEAVY answered that the school nurse's capacity would
be that of an employee and not as an individual acting as a
representative or activity presenter on behalf of an abortion
service provider. He specified that the bill would not preclude
the individual in being employed by the school district.
SENATOR WIELECHOWSKI noted that the bill does not have a penalty
or require a background check. He asked to verify that a school
district that repeatedly allows a volunteer from an abortion
services provider to offer a class would not face a penalty or
punishment.
SENATOR DUNLEAVY answered as follows:
I think in a court proceeding they would say that is a
leading question. If there is an individual that is
hired in an official capacity, has been vetted by the
school district, whether they would be a nurse or
classroom, and their primary purpose or function is to
teach the content and adopt the curriculum of the
school district or to perform the duties as adopted by
the school district, this bill would offer no
penalties for that individual.
CHAIR STOLTZE stated that his hope is the questions will be not
to affirm a statement but to really ask a question.
8:20:32 AM
SENATOR WIELECHOWSKI noted that some hospitals offer abortion
services in emergencies, primarily in the case of the life of
the mother. He asked if the bill's definition of abortion
services provider includes the hospitals that he described.
SENATOR DUNLEAVY answered that the hypothetical hospitals that
Senator Wielechowski alluded to could possibly be covered by the
bill.
SENATOR WIELECHOWSKI asked if the Alaska Regional Hospital or
the Veterans Affairs (VA) Hospital performs emergency abortions,
would volunteers from Alaska Regional or VA hospitals be
permitted to provide instruction.
CHAIR STOLTZE asked to verify that the instruction pertains to
sexuality.
SENATOR DUNLEAVY answered that a person would not be allowed if
the individual has a direct association with an abortion
provider and their purpose is to educate children on human
reproduction and human sexuality.
8:22:17 AM
SENATOR WIELECHOWSKI stated that he has heard concerns that
performance standard reviews could be affected if more than 5
percent of parents opt out of testing.
SENATOR DUNLEAVY presumed that Senator Wielechowski was alluding
to federal funding where sanctions are possible if assessments
are less than 95 percent.
SENATOR WIELECHOWSKI asked what the potential sanctions are.
SENATOR DUNLEAVY answered that there could be a loss of federal
funding through Title 1 of the Elementary and Secondary
Education Act (ESEA).
SENATOR WIELECHOWSKI asked if a loss of funding would occur on a
school, district, or statewide level if 5 percent of parents
from a particular school decided to opt-out their children from
testing.
SENATOR DUNLEAVY replied that Senator Wielechowski's question
cannot be answered because to his knowledge, the loss of funding
through sanctions has not been tested.
8:24:21 AM
SENATOR WIELECHOWSKI asked how much federal funding does the
state receive for education.
SENATOR DUNLEAVY answered that based upon the types of programs,
federal funding ranges from $60 million to $220 million. He
specified that federal funding is in the $60 million range for
the state's instructional or title grants.
SENATOR WIELECHOWSKI asked if the state could be losing funding.
SENATOR DUNLEAVY replied that since the advent of the No Child
Left Behind Act of 2001, a state could lose everything, but the
sanction has not been tested. He noted that the recent iteration
of ESEA by the U.S. Department of Education was a unilateral
change that was done without Congress and its constitutionality
has been questioned.
CHAIR STOLTZE asked that a representative from the Department of
Education & Early Development address the committee.
8:26:19 AM
SUSAN MCCAULEY, Director, Division of Teaching & Learning
Support, Alaska Department of Education & Early Development,
Juneau, Alaska, revealed that there is a potential loss of
funding for all title programs where a state law permits
students to opt out of federally and state mandated assessments.
She specified that the U.S. Department of Education is concerned
that participation under the mandated 95 percent threshold may
mask student performance. He disclosed that total funding for
Alaska's title programs is $96.8 million.
SENATOR WIELECHOWSKI asked if Ms. McCauley had other concerns
with any other parts of the legislation or did she support the
legislation.
CHAIR STOLTZE inquired if Ms. McCauley's statement addressed a
concern or some issues.
8:28:34 AM
MS. MCCAULEY replied that the department's primary concern is
with the potential federal funding implications from state
legislation that permits opting out. She asserted that her
statement does not question a parent's right to advocate what
they feel is best.
SENATOR WIELECHOWSKI asked if there are other implications from
the bill that the committee should be made aware of.
MS. MCCAULEY remarked that the state's accountability system for
student learning is based largely on the result of the state
assessments. She detailed that the state assessments drive
improvement plans for schools and districts. She asserted that a
domino-effect could occur if participation falls under 95
percent where the state does not receive a good indication of
how schools and districts are doing.
8:30:23 AM
CHAIR STOLTZE asked if asserting parental rights is the piece of
the puzzle that collapses everything.
MS. MCCAULEY answered that she would not characterize the opt-
out implications the way Chair Stoltze did. She explained that
student learning growth from year to year and current mechanisms
of school accountability are largely based on student
performance on state mandated assessments.
CHAIR STOLTZE noted that the conversations he has had with
educators is that testing is one of the most wasted activities
in their classrooms.
SENATOR WIELECHOWSKI asked if the testing is mandated by state
or federal law.
MS. MCCAULEY answered that that assessments are mandated by
both.
SENATOR WIELECHOWSKI asked to verify that state law could be
changed to say "no testing."
MS. MCCAULEY answered yes.
SENATOR WIELECHOWSKI remarked that the committee could consider
the "no testing" option. He asked to verify that the state could
decide not to test and say that it does not want the federal
government's $96.8 million.
8:32:23 AM
MS. MCCAULEY answered that current federal law requires
assessments to be administered to all students. She concurred
with Senator Dunleavy that potential consequences are a bit
untested.
CHAIR STOLTZE commented that the state will have to look at all
of its relationships with the federal government. He asked if
the department is looking at the cost-benefit from federal
enticement.
MS. MCCAULEY replied that a daily tension exists in the line
between funds that hopefully do good things for students,
particularly students with challenges, and the state's system of
education done in a manner that the state wants to do.
8:34:38 AM
SENATOR WIELECHOWSKI asked if Ms. McCauley is concerned with the
requirement on page 2 to provide parent notification not less
than two weeks, but not more than six weeks prior to discussions
on human reproduction or sexual matters. He remarked that
showing the movie "Gone with the Wind" where people are kissing
could be defined as human reproduction or a sexual matter.
MS. MCCAULEY replied that school districts are probably better
equipped to respond to how parent notification timelines have
impact on their processes. She noted that many districts have
chosen to have parent notification processes in place because
notification is considered to be a good practice for educational
topics that parents may wish to not have their children
participate in. She said the districts that do not have
notification processes in place will consider the new
requirement burdensome, for others the requirement won't be
different from current practices.
8:36:18 AM
SENATOR WIELECHOWSKI asked if the current law allows parents to
withdraw their children from classes, programs, or activities.
MS. MCCAULEY replied that currently there is no state law that
requires or prohibits parents from withdrawing their children.
She noted that some districts do allow parents to withdraw their
children.
SENATOR WIELECHOWSKI stated that to his understanding, school
districts currently allow parents to withdraw their kids for
issues that they are concerned with. He asked if a problem
exists that the Legislature needs to fix.
MS. MCCAULEY stated that she is not informed in a manner that
can answer Senator Wielechowski's question. She reiterated that
there are districts that have processes that would comply with
the language in the bill.
SENATOR HUGGINS said he is proud to disclose that he had three
children that graduated from Alaska school systems. He opined
that the most important component for success of a child is
parental involvement. He asked where Ms. McCauley would rank
parental involvement on her scale as a professional.
MS. MCCAULEY answered that she agreed with Senator Huggins that
parent involvement has an enormous impact on student learning,
achievement, and success.
CHAIR STOLTZE asked where Ms. McCauley would rank parent
involvement on her scale.
MS. MCCAULEY answered that parental involvement would be right
at the top.
SENATOR HUGGINS commended the bill sponsor for introducing
legislation that will reinforce the bonding between the system,
teacher, parent, and student.
CHAIR STOLTZE announced that he will remove his objection. He
asked if any committee member would like to reassert an
objection.
8:40:41 AM
CHAIR STOLTZE announced that hearing no objections, CSSB 89(STA)
moved out of the Senate State Affairs Standing Committee.
8:40:45 AM
At ease.
SB 1-REGULATION OF SMOKING
8:43:05 AM
CHAIR STOLTZE announced the consideration of SB 1. He declared
that public testimony for SB 1 is closed.
8:43:50 AM
SENATOR COGHILL moved to adopt the CS for Sponsor Substitute
(SS) for SB 1, version 29-LS0003\S as the working document.
CHAIR STOLTZE objected for discussion purposes.
8:44:13 AM
BRANDON BREFCZYNSKI, Staff, Senator Bill Stoltze, Alaska State
Legislature, Juneau, Alaska, provided an overview of the CS for
SB 1 as follows:
Section 1, page 4, line 7, the word "shall" was
changed to "may" adopt regulations.
Section 1, page 4, lines 18 and 25, there is a change
for the notice of prohibition, all "Smoking Prohibited
by Law" signs are reducing the maximum penalty from
$100 to $50.
AS 18.35.316, powers and duties of the commissioner
from the previous CS has been deleted.
Section 2, page 5, line 27, AS 18.35.336, violations
and civil penalties from the previous CS has been
deleted and amended to reflect existing statute. AS
18.35.340(a), civil complaints and penalties which
requires the commissioner to develop and maintain a
procedure for processing reports of violations and
conforming changes have also been added to this
section.
Section 3, page 6, line 1, is reinstating existing
statute and adding conforming changes.
Sections 4-7, pages 6-7, they are all reinstating
existing statutes and adding conforming language.
Sections 8-11, page 7, are reinstating existing
statutes and adding conforming changes. For clarity,
the previous CS, the HSS version, had all of the
statutes eliminated, so we are putting them back in
the State Affairs CS.
8:46:31 AM
SENATOR PETER MICCICHE, Alaska State Legislature, Juneau,
Alaska, said the bill exists and has survived as something
designed to protect Alaskans from the effects of secondhand
smoke while they are at the workplace. He asserted that the bill
reinforces the fact that the law is largely self-enforcing and
not designed to be heavy-handed or punitive.
SENATOR WIELECHOWSKI asked what was specifically changed in the
provisions.
MR. BREFCZYNSKI explained the changes from the Health & Social
Services (HSS) version as follows:
· Removed the new penalties and fines.
· Changed from the Department of Health and Social Services
(DHSS) to the Department of Environmental Conservation
(DEC) where it exists currently.
· Removed the powers and duties of the commissioner's section
which does not exist in current statute, which included the
power to adopt regulations which DEC does not currently
have.
· Reinstated all of the existing penalties, fines, and
enforcement abilities of the Department of Public Safety
and the DEC.
SENATOR WIELECHOWSKI asked for an explanation of the rationale
behind putting enforcement back with DEC.
CHAIR STOLTZE answered that moving enforcement back with DEC is
consistent with the intent of the sponsor. He said there was a
lot of enforcement uncertainty with HSS and pointed out that the
bill is largely a clean air issue that falls under DEC's
purview. He noted that current enforcement in smoking
prohibition areas has mostly been through self-regulation with
very few citations issued. He summarized that the change to the
bill accomplishes the sponsor's goal of creating the statewide
ban without bringing in a lot more government.
8:50:03 AM
CHAIR STOLTZE removed his objection to adopting the CS. He
disclosed that Senator McGuire had expressed an interest in
addressing the issue with e-cigarettes. He revealed that the
number one issue of correspondence during the session came from
individuals who wished to use e-cigarettes as their less un-safe
option to smoke as a cessation tool. He summarized that the
discussion continues on e-cigarettes. He asked if Senator
Micciche had any comments on e-cigarettes.
SENATOR MICCICHE replied no. He said the bill has a ways to go
and all issues are being evaluated. He stated that the bill is
about protecting Alaskan workers while trying to find the best
way to do that while impacting the public and businesses as
little as possible. He asserted that he is still listening to
the public.
8:51:49 AM
CHAIR STOLTZE asked if there were any amendments. He requested
that Mr. Brefczynski address the bill's fiscal notes.
MR. BREFCZYNSKI specified the fiscal notes as follows:
· Department of Transportation & Public Facilities (DOT&PF)-
Alaska Marine Highway System: $2,400 for FY16, $1,000
thereafter.
· DOT&PF-International Airports: zero fiscal note.
· DOT&PF-State Equipment Fleet: $1,500.
· DOT&PF-Administration Support: $10,600 for FY16, $1,100
thereafter.
· Department of Commerce, Community, and Economic
Development: zero fiscal note.
· Alaska Court System: zero fiscal note.
· DHSS-Division of Public Health: zero fiscal note.
· DEC-Division of Environmental Health: zero fiscal note.
CHAIR STOLTZE noted that he questioned some of the fiscal notes
and said commentary will be left for the next committee.
SENATOR MICCICHE detailed that the fiscal notes are largely for
signage and the goal is to find a donor so that there is no cost
to the state.
8:53:55 AM
SENATOR COGHILL moved to report SB 1, version S, with individual
recommendations and the attached fiscal notes.
8:54:12 AM
CHAIR STOLTZE announced that hearing no objections, CSSSSB
1(STA) moves out of the Senate State Affairs Standing
Committee.]
8:54:14 AM
At ease
HB 142-ESTABLISH ELDERS' DAY
8:56:09 AM
CHAIR STOLTZE announced the consideration of HB 142.
8:57:20 AM
ANDREA WATTS, Staff, Representative Neil Foster, Alaska State
Legislature, Juneau, Alaska, provided an overview of HB 142 as
follows:
House Bill 142 is an act that establishes Elders' Day.
Elders of all cultural and ethnic backgrounds hold a
special place in the hearts of Alaskans. Elders'
knowledge and experiences provide a link from the past
to the present, a link that connects us to our
ancestors. Elders also serve a vital role as teachers
and mentors, guiding younger generations through the
many facets of life. Celebrating and honoring our
elders on winter solstice, a time of change and
optimism, not only recognizes the value of those who
came before us, but the significance of the lessons
and knowledge they selflessly leave behind for us to
take into the future.
CHAIR STOLTZE asked if there is a specific date for winter
solstice.
MS. WATTS explained that depending on the year, winter solstice
various from December 21-22.
CHAIR STOLTZE asked if winter solstice has any religious
connotations.
MS. WATTS answered that there may have been connotations in the
past, but the bill just recognizes the change of time and
seasons.
SENATOR WIELECHOWSKI asked for a definition of elders.
MS. WATTS answered that elder denotes respect and dignity. He
specified that elder is a word that really exemplifies a person
who is honored in their community. She said an elder could be a
teacher, grandparent, coach, or military veteran. She summarized
that a person honored as an elder really is in the eye of the
beholder.
SENATOR WIELECHOWSKI asked if there is an age when a person
becomes an elder.
MS. WATTS answered no.
CHAIR STOLTZE asked if the statutes might have to be tightened
to determine what "venerable" is.
MS. WATTS replied that "venerable" is determined by an
individual's perception of the elder.
8:59:33 AM
DENISE DANIELLO, Executive Director, Alaska Commission on Aging,
Alaska Department of Health and Social Services, Juneau, Alaska,
read a statement of support as follows:
Alaska's elders, regardless of their culture, ethnic
heritage, or where they live, are valuable members of
our society; their wealth of knowledge, wisdom, and
vast experiences should be honored and shared to
enrich everyone's life. Older people have lived long,
they have successes as well as mistakes and they have
learned from these life experiences; for this reason,
Alaska's elders, tradition bearers, pioneer, and
mentors who link the past with the present can help
future generations by offering their wisdom and
guidance to keep life moving forward in a positive
direction. Just because this is a concisely stated
piece of legislation, please don't undervalue its
significance. We feel that Alaska's older people are
truly a renewable resource and each one of us has the
responsibility to honor and respect our elders, this
is something that our parents have taught us over many
generations. The renowned Tlingit elder, Dr. Walter
Soboleff, has reminded us to take care of the old
person that we will become, so we think this is sage
advice and appreciate your hearing of this bill today.
CHAIR STOLTZE asked where her perception was derived that elders
were undervalued.
MS. DANIELLO replied that she did not mean to say that any
committee member undervalues elders.
9:02:00 AM
SENATOR COGHILL moved to report HB 142 [29-LS0456\W] from
committee with individual recommendations and attached zero
fiscal note.
CHAIR STOLTZE announced that without objection, HB 142 moves out
of Senate State Affairs Standing Committee.
9:02:18 AM
At ease.
SB 74-MEDICAID REFORM/PFD/HSAS/ER USE/STUDIES
9:03:57 AM
CHAIR STOLTZE announced the consideration of SB 74.
9:04:07 AM
SENATOR COGHILL moved that the committee adopt the CS for SB 74,
[version 29-LS0692\F], as the working document.
CHAIR STOLTZE objected for discussion purposes.
9:04:28 AM
HEATHER SHADDUCK, Staff, Senator Pete Kelly, Alaska State
Legislature, Juneau, Alaska, reviewed the changes made to SB 74
as follows:
Section 1, page 1, line 10 through page 2, line 3:
· This sections allows DHSS to enter into a
contract through the competitive bidding process
under the State Procurement Code for durable
medical equipment or specific medical services
provided in the Medicaid program.
MS. SHADDUCK detailed that the new Section 1 has no impact on
the current used durable medical equipment bill that is running
through both bodies. She continued to address the changes as
follows:
Section 2, page 2, lines 4-16:
· Subsection (a) directs the department to
establish a computerized income, asset, and
identity eligibility verification system for the
purpose of verifying eligibility, eliminating
duplication of public assistance payments, and
deterring waste and fraud in the public
assistance programs.
· Subsection (b) directs the department to enter
into a competitively bid contract with a third-
party vendor for the eligibility verification
system. The department may also contract with a
third-party vendor to provide information to
facilitate reviews of recipient eligibility
conducted by the department.
Section 4 (Section 2 in Version S):
· Page 4, line 14-22, (8) redesigning the payment
process, changes specifically list payment
reforms that should be included:
Æ’(A) premium payments for centers of
excellence;
Æ’(B) penalties for hospital-acquired
infections, readmissions, and outcome
failures;
Æ’(C) bundled payments for specific episodes
of care; and
Æ’(D) global payments for contracted payer,
primary care managers, and case managers for
a recipient or for care related to a
specific diagnosis
· Page 6, lines 7-8, adds new (14) to the annual
report related to Medicaid reform. DHSS will also
report on the cost, in state and federal funds,
for providing options services under AS
47.07.030(b), the Medicaid program.
Section 5, page 6, lines 14-19:
· Requires the Legislature to approve any new
additional groups added to the Medicaid program
on or after March 23, 2010.
Section 12 - (Section 9 in Version S):
· At the request of Legislative Legal, made
technical fixes to the conditional effect
language in Subsections (a) through (e) by
replacing "that section" with the specific
provision reference of the bill.
Conforming changes were made to renumber sections and
references to specific sections.
9:08:17 AM
SENATOR WIELECHOWSKI asked what the rationale was behind the
date: March 23, 2010, in Section 5, page 6.
MS. SHADDUCK answered that the intent was to have the
Legislature approve additional groups prior to Medicaid
expansion. She noted that the date is an official reference to
when the Affordable Care Act (ACA) went into effect.
SENATOR WIELECHOWSKI asked if any legal opinions were sought out
as to whether the section potentially violates federal law.
MS. SHADDUCK answered no.
SENATOR WIELECHOWSKI noted that Legislative Legal Services
advised his office that the section potentially violates federal
law. He added that his office will seek out further
documentation.
MS. SHADDUCK related that the U.S. Supreme Court rule will cover
any groups that are optional under ACA. She said she will talk
to Legislative Legal Services to get some legal opinions.
SENATOR WIELECHOWSKI stated that he would like to hear from the
Department of Health and Social Services (DHSS).
9:10:56 AM
VALERIE DAVIDSON, Commissioner, Alaska Department of Health and
Social Services, Juneau, Alaska, stated that she will comment on
sections that the department has concerns over as follows:
Section 2, the department actually has a new
computerized public assistance system: Alaska's
Resource for Integrated Eligibility Services (ARIES).
ARIES pretty much meets all of the requirements except
the only feature it does not have is an income, asset
and identity eligibility verification system. We are
anticipating that this section would really require a
plug-in feature for the existing system and not
require us to go out and develop an entirely new
system which could cost millions, but a plug-in would
be a lot more affordable and efficient; if that is the
intent of the CS, then we are a lot more comfortable
with that, we anticipate a fiscal note for this and
that will be forthcoming from our vendor.
Page 4, Section 8, lines 14-21, we are fine with
these, the only question we had was on line 19,
whether we might consider changing "and" to "or"
because the bundle payments and global payments may
conflict; if on the other hand this was to develop a
payment process that includes these options, then that
is something certainly a little bit easier to live
with, but we want to make sure that by having "and,"
those don't present the opportunity to conflict with
each other.
Page 6, Section 5, this section appears to require the
department to seek the approval from the Legislature
for any mandatory coverage for Medicaid. The way that
Medicaid is administered, there are mandatory services
and there are optional services. Mandatory services
are exactly that, they are mandatory. The department's
position is it's highly unusual for the department to
be required to seek the advanced approval of the
Legislature to comply with federal law. Mandatory
groups do actually get added. We have a couple of
examples and quite frankly, we don't want to be in a
position of jeopardizing our entire Medicaid program
simply because we were not required with a mandatory
provision of federal law.
She stated that Deputy Commissioner Sherwood will provide
examples of where some mandatory groups have been added.
9:15:32 AM
JON SHERWOOD, Deputy Commissioner, Medicaid & Health Care
Policy, Alaska Department of Health and Social Services, Juneau,
Alaska, explained that mandatory groups do not get added often
and typically are part of larger structural changes to the
Medicaid program's barter healthcare system. He detailed that
examples include special Medicare beneficiaries which are
mandatory groups created to provide assistance to low income
Medicare recipients with their co-payments, premiums, or
deductible expenses. He said another example of a mandatory
group that was added by the ACA was for children who age-out of
state foster care, a mandatory coverage group that would be
impacted by the provision.
9:17:37 AM
CHAIR STOLTZE said the committee was not dealing with Medicare
expansion, but noted that there was a lot of intertwined
connectivity. He asked if Section 5 is a deal breaker.
COMMISSIONER DAVIDSON declared that the department opposes
Section 5.
CHAIR STOLTZE asked if the department vigorously opposes Section
5.
COMMISSIONER DAVIDSON answered yes.
SENATOR COGHILL opined that Section 5 appears to say if Congress
is going to unilaterally change the state's budget that the
Legislature should have a say.
9:19:09 AM
MR. SHERWOOD answered that the department typically has to
submit a new plan amendment for a new federal mandate in order
to assure implementation. He added that the Legislature would
become aware of the new mandate through the budget process if
increased expenditures are required. He revealed that there is
no direct approval for a federal mandate and state statutes
instruct compliance with the federal law, both for eligibility
categories and services.
SENATOR COGHILL commented that he is willing to take the chance
with the provision because Medicaid has always been called a
state-federal partnership. He remarked that unilateral action
can quickly overrule the state and create difficulties. He
remarked that he would want to find out prior to a bill being
sent to the Legislature and the mandate is already set into
motion. He opined that more Medicaid mandates will occur as
Medicare starts to wonder more frequently into the Medicaid
wrap-around services.
CHAIR STOLTZE remarked that he has the same concerns about the
state's appropriations and financial responsibilities where
Alaska is on the hook in its relationship with the federal
government.
9:21:54 AM
SENATOR HUGGINS asked if illegal aliens have access to Medicare
or Medicaid via presidential executive orders.
MR. SHERWOOD answered that the general rule for Medicaid is a
person must be a U.S. citizen or a legal permanent resident that
has been present in the U.S. for at least five years. He noted
that one exception applies to emergency services.
9:24:12 AM
CHAIR STOLTZE noted that his office received an e-mail prior to
the committee meeting from Mr. Tony Newman, Legislative Special
Assistant for DHSS. He asked if Mr. Newman's e-mail should be
included as the department's position.
COMMISSIONER DAVIDSON answered yes.
SENATOR WIELECHOWSKI asked if Commissioner Davidson supported SB
74.
COMMISSIONER DAVIDSON answered that DHSS has no position on the
bill, but opposes Section 5. She added that the department
believes that reform and expansion go hand-in-hand. She said the
department would like to see a Medicaid expansion provision in
the bill.
SENATOR HUGGINS asked to verify that the department has no
position on the bill.
COMMISSIONER DAVIDSON reiterated that the department has not
taken an overall position on the bill, but the department does
oppose Section 5.
SENATOR HUGGINS commented that he see reform as an avenue to
have a conversation about expansion. He remarked that expansion
is not part of the bill and he's a bit disappointed. He thanked
Commissioner Davidson for stating her position.
9:26:34 AM
SENATOR WIELECHOWSKI noted that the Governor has introduced his
own bill to reform and expand Medicaid. He asked that
Commissioner Davidson describe some of the reform efforts in the
Governor's bill and how much the state would save.
COMMISSIONER DAVIDSON answered that SB 74 and the Governor's
bill are closely aligned in terms of reform efforts. She noted
that some of the provisions in the Governor's bill includes
specific language on the following:
· Use an 1115 Waiver to negotiate with the Centers for
Medicare & Medicaid Services (CMS) that will allow the
state to take advantage of 100 percent federal match.
· Work with the tribal health system to enhance their
ability to provide care for beneficiaries.
· Engage with an independent third party to make
recommendations and report at the beginning of the
next session for a provider-tax.
She detailed that in order to implement the provider-tax,
separate legislation would be required. She disclosed that
Alaska is the only state without a provider-tax. She explained
that most states typically impose a provider-tax on hospitals
and nursing homes.
COMMISSIONER DAVIDSON set forth that Medicaid expansion and
reform is healthy for Alaskans and detailed as follows:
· Increases access to healthcare coverage.
· Saves the state $107 million over the first 6 years.
· Saves resources that the state is currently paying for with
100 percent from the General Fund.
· Good for the economy by infusing over $1 billion in new
resources into Alaska.
· Acts as a catalyst for reform.
She reiterated that reform and expansion go hand-in-hand. She
voiced that reform is a constant process that happens all of the
time. She asserted that DHSS has already undertaken reform
efforts based on current and prior administrations. She remarked
that since reform efforts have been undertaken, the state should
do expansion.
9:30:26 AM
CHAIR STOLTZE noted that he had asked at the previous committee
meeting that Commissioner Davidson provide a projection on
departmental letterhead, absent expansion, for the anticipated
growth in Medicaid up to 2030.
COMMISSIONER DAVIDSON answered that Medicaid's growth
projections are expected to range from $4.5 billion to over $6
billion by 2032. She disclosed that the projections do not take
into account the reform efforts that the department is
undertaking. She said DHSS recognizes that the Medicaid program
in its current form is not sustainable and there's no choice but
to reform.
9:32:30 AM
CHAIR STOLTZE asked if there is an aversion to providing the
committee with a projection document as part of the record. He
said a Medicaid growth projection from DHSS is an important part
of the record.
COMMISSIONER DAVIDSON replied that DHSS will provide the
document to the committee.
CHAIR STOLTZE noted that his request will give Commissioner
Davidson an opportunity to provide her own numbers in contrast
to the projections that she has challenged.
SENATOR WIELECHOWSKI asked how much uncompensated care there is
in Alaska, who pays for the uncompensated care, and how much
uncompensated care is expected to be covered by the federal
government if Medicaid was expanded.
CHAIR STOLTZE pointed out that the committee does not have an
expansion bill. He said the expansion bill was not referred to
the committee.
COMMISSIONER DAVIDSON answered that according to the Alaska
State Hospital and Nursing Home Association (ASHNHA), Alaska
hospitals provide over $100 million in uncompensated care
annually. She noted that Arizona saw a 30 percent reduction in
uncompensated care during its first 6 months of expansion and
added that ASHNHA has testified that they projected a 30 percent
drop in their uncompensated care. She said with regard to who
pays for uncompensated care, everyone does because a hospital
has to increase what they charge to recoup their loss.
9:34:36 AM
CHAIR STOLTZE noted that the Governor has said that expansion is
reform. He asked if there has been an evolution by the
administration that just spending more money is not reform.
COMMISSIONER DAVIDSON replied that she does not recall the
Governor making the statement that expansion is reform. She
reiterated that expansion and reform actually goes hand-in-hand.
She opined that if the Governor's position was that expansion is
reform, then he would probably have introduced a bill that was
just on expansion, but he instead chose to do a bill that is
both expansion and reform.
CHAIR STOLTZE commented that there may have been an evolution by
the Governor.
SENATOR HUGGINS said there are studies that indicate "ObamaCare"
has had little or no effect on uncompensated care or emergency
room usage.
9:36:46 AM
COMMISSIONER DAVIDSON replied that the states in the study may
have benefited from a bill similar to Governor Walker's that
requires identifying someone that over utilizes the emergency
room department.
SENATOR WIELECHOWSKI noted that Commissioner Davidson mentioned
the total savings on the Governor's reform bill of $107 million.
He said he thought the total savings over 6 years was $330
million.
9:38:27 AM
COMMISSIONER DAVIDSON specified that the savings for the state's
general fund would be $107.8 million in the first 6 years.
CHAIR STOLTZE pointed out that an expansion bill is in another
committee. He asked that questions be general and not too
involved in the expansion bill.
SENATOR WIELECHOWSKI asked why the state should expand now
versus waiting until reforms kick in.
9:40:05 AM
COMMISSIONER DAVIDSON asserted that reforms had already kicked
in. She detailed that the reforms began in the prior
administration in addition to the reforms that were undertaken
in December, including benefits from the super-utilizer program.
She revealed that the ACA's enhanced federal match of 100
percent for Medicaid expansion only lasts through 2016. She
detailed that the state has already missed $146 million or
$400,000 per day from the federal match opportunity. She
specified that federal match over the coming calendar years as
follows:
· 2017: 95 percent
· 2018: 94 percent
· 2019: 93 percent
· 2020 and beyond: 90 percent.
She noted that 93 percent federal match is the same for the
state's aviation or runway improvements and 90 percent is the
same match for transportation and road improvements. She
summarized that the state has an opportunity to make Alaskans as
healthy and productive as possible using 100 percent federal
funds in the first year.
9:42:28 AM
She addressed recent testimony from two different providers:
PeaceHealth Hospital from Ketchikan and Central Peninsula
Hospital from Soldotna. She detailed that PeaceHealth received
an innovation grant from the Centers for Medicare & Medicaid
Services (CMS) and spent $700,000 to be able to lose $1.5
million in order to improve health outcomes for their
population. Central Peninsula said they had interest in pursuing
a Medicaid demonstration project described in the Governor's
bill that would change the way Medicaid is reimbursed. She
specified that Central Peninsula preferred to use the resources
from Medicaid expansion because they would not realize the
savings and make much progress. She said similar to PeaceHealth,
Central Peninsula intends to spend money to lose money.
9:45:43 AM
BECKY HULTBERG, President/CEO, Alaska State Hospital and Nursing
Home Association (ASHNHA), Juneau, Alaska, provided general
comments on SB 74 as follows:
We've had a really good dialog this session about
reform and I think that is healthy and it's also step
one of what needs to be an ongoing dialog. We agree
with the sponsor and the department that Medicaid
costs are growing at an unsustainable rate.
In my past job I sat in this building and said
healthcare costs are growing at an unsustainable rate
and that is still the case; but, I think to understand
why healthcare costs are growing at an unsustainable
rate, we have to look at how we pay for healthcare and
what we pay for, I'm going to take a bit of a step
back and talk about that because it is essential to
reform and how reform can actually move forward and
make change. Our healthcare payment system right now
incentivizes the wrong things. We work within what is
called a fee-for-service system which basically means
providers get a fee for each service that they
provide. Providers are thus financially rewarded based
on the volume of care provided, not necessarily the
value of that care, value meaning that the quality and
cost of that care are both considered. So we know that
nationally the trend in healthcare is toward paying
for value, toward paying for quality outcomes, and
toward incentivizing providers for reduced cost in
getting those outcomes; but this is a really huge
shift in how care is delivered and how payment is
made, it is going to take time, it's going to be
disruptive, and systematic change will not happen
until those financial incentives change. Portions of
this bill do begin to address that question of payment
reform. Some payers are already making this
transformation, Medicare is moving toward value-based
purchasing, pretty aggressively; so this is coming,
the question for us is how we are going to respond in
this environment. Providers are working to make this
transition in a pretty challenging economic
environment and I just want to take a minute because
again, I think this is essential to reform.
9:48:12 AM
MS. HULTBERG continued her overview as follows:
Hospitals are a unique industry sector in many ways.
One of the most significant ways that our industry is
unique is that we are legally required to give our
services away for free, that's because the federal
Emergency Medical Treatment and Labor Act (EMTALA),
requires hospitals to take care of patients that are
present at the emergency room whether they can pay or
not; this uncompensated care amounts to over $100
million per year and that's a conservative estimate
for Alaska hospitals, some hospitals have testified
that it is between 10 and 20 percent of their charges.
Alaska hospitals' other area of financial pressure is
Alaska hospitals are facing very significant financial
pressures from the Medicare program. Alaska Hospitals
will see $600 million in Medicare reductions in a 15
year time horizon; that started in 2010, it goes out
to 2024. There are another $300 million of cuts under
consideration, which could bring the total cuts to
Alaska hospitals to almost $900 million, that's a lot
of money coming out of the system.
The cuts have come through a couple of ways and I want
to address that and I think part of this refers to
something Senator Huggins has spoken about regarding
Medicare crowd-out. Some of those cuts did come as a
result of ACA, between $250 million and $300 million
of those cuts came about because of the act. The
assumption was that if uncompensated care goes down,
which it should, if people have coverage through the
exchanges or through Medicaid expansion, the hospitals
could absorb Medicare cuts. In states that have not
expanded Medicaid, those uncompensated care reductions
have been much, much less. The concern for non-
Medicaid expansion-states is that the hospitals are
going to take those cuts regardless. Now I want to
point out that while some of the cuts originated in
ACA, they are now not really linked to it because
Republican budget proposals have kept the cuts, even
as they propose repealing the ACA, so we have to
assume those cuts are here to stay and they are an
economic reality that our industry is now learning to
deal with.
So in this economic environment it is kind of hard to
talk about reform because what do you want out of
reform? The goal of reform is bending the cost curve
and reducing the cost of healthcare. So in an
environment where we are taking money out of the
system, we are saying now we need to take more out of
the system, that's a really challenging conversation
to have with any industry.
9:50:42 AM
MS. HULTBERG continued her overview as follows:
But we are here supporting reform for a couple of
reasons. First, we know it's the right thing to do and
it's absolutely what we have to do as an industry to
survive. Secondly, because we have this opportunity
with the carrot of Medicaid expansion to put some
money back into the system to help us reform as we are
taking money out and so I think that's why
understanding that this bill is related to reform that
from a hospital perspective it's hard to have the
reform conversation without having the expansion
conversation. Couple quick reasons, Medicaid reform is
not a point in time event, it's an ongoing process and
again, I want to thank this committee and the
Legislature for really considering these issues this
year. We will be successful in reform and we are
having these conversations every year, so I think it
has been a good dialog, but we shouldn't necessarily
wait for reform because we will never arrive, the
industry is too dynamic, it is too complex, and it is
changing too fast to ever say that we have really
arrived at reform. Second, innovation and change
require capital. For any business to fundamentally
change its business model, and that's what is being
required in healthcare right now, that is not
something that can be done without an investment and
it is certainly not something that is easy to do when
you are taking money out of that system, which is what
is happening right now. So if we are going to succeed
at reform, we are going to have to find a way to
invest to change how care is delivered, and we're
going to have payers who are willing to have the
conversations about how do we pay for value instead of
paying for volume, those two things have to go hand-
in-hand.
As the commissioner mentioned, PeaceHealth-Ketchikan
talked about how they have been successful at reform,
they have been successful at coordinating care; they
received a $3 million innovation grant to fund their
project, the result of that project has been better
quality outcomes and reduced revenue at the hospital.
So you have to ask the question, under our current
system, if they are to reform without a grant, they
will be spending money to lose money to improve care;
there are not many businesses that choose that path.
So how do we as a state help to drive reform in that
economic environment? The answer is we have to help,
especially our smaller facilities that do not have
financial capacity, identify resources that they can
invest in reform and then we have to have the
conversation about how we pay for value so that we can
sustain that reform; that's really where Medicaid
expansion comes in because the reduction in
uncompensated care improves margins, which then allows
for the risk capital for innovation. From our
standpoint, this is an issue on many levels, it is
from a hospital perspective an important issue about
providing care for the vulnerable in our community,
it's an economic issue, and it's a fiscal issue; but,
it's also very much an issue about how we are going to
sustain the business model of the hospital that
provides care in the community and that's, I think,
for us a really important conversation. Our hospitals
cannot pick up their practices and move, they are
here, they are integral parts of the community and
often they are the backbone of a community. So the
question for us and why we are here saying we want to
reform is that we know we must reform to remain
viable, but the landscape looks really challenging.
According to the National Rural Health Association, 48
Critical Access Hospitals (CAH) have closed their
doors. CAH are hospitals below 25 beds, 48 have closed
their doors since 2010, and an estimated 300 more are
at risk. As we look at this era of disruptive change,
we have to figure out how we navigate it and navigate
it in an environment of reduced resources; we believe
reform is critical to that conversation but we also
believe that expansion is critical to that
conversation.
So Mr. Chairman, those are just my general comments
about the bill. I am happy to answer any specific
questions about the legislation. I think we believe,
again, reform and expansion should go hand-in-hand,
but we do appreciate the efforts of the bill's sponsor
to address this difficult question of reform.
9:55:23 AM
CHAIR STOLTZE pointed out that the President said ACA was going
to be established to cover people with better healthcare and
spend less money. He asked if Ms. Hultberg was actually shocked
that the things the President said are a little upside down.
MS. HULTBERG replied that the healthcare industry was going
through changes before ACA and noted that the economic
environment for healthcare was difficult before the ACA. She
disclosed that businesses were driving their own change. She
added that commercial payers are the best payers for hospitals.
She opined that ACA accelerated change, but it was not the
driving force necessarily for some of the changes that were
currently being seen. She disclosed that the American Hospital
Association supported ACA and was willing to work with the
administration because of the increased coverage covered by the
act. She summarized that the state has to figure out how to
navigate the current business landscape in order to maintain
hospitals, provide quality care, and ensure continuity of
services regardless of what an individual thinks might happen in
the future or what happened in the past.
CHAIR STOLTZE opined that "reform" is a broad and nebulous term.
He said the terms "cost control," "cost containment," and
"sustainability" narrows the discussion in making a sustainable
program. He remarked that the approximate $ 6 billion projection
by 2032 would be a pretty healthy chunk of the state's budget
with Permanent Fund earnings used well before federal mandates
are met. He reiterated that the term "reform" leaves a lot of
the other discussions off of the table because everybody is a
reformer.
9:58:41 AM
MS. HULTBERG affirmed Chair Stoltze's point and related that
Medicaid reform can be divided into three "buckets" as follows:
1. Programmatic Reform: making reforms in the existing
program.
2. Benefit Redesign: looking at what other states have done to
things like benefit plans and co-payments.
3. Payment Reform: making sure the state is paying for the
outcomes it wants.
CHAIR STOLTZE stated that he is a little concerned about the
sentiment, "Pass the bill and we'll work on it." He said he
wants to make sure the committee understands how the bill is
going to affect the state and the providers. He opined about
seeing an awakening of the providers realizing that expansion is
not just a free check.
SENATOR WIELECHOWSKI commented that ASHNHA has a lot of non-
profits who are providing care and not making a profit off of it
because the government requires that care be provided for anyone
that walks in the door. He said providers are losing $100
million per year in uncompensated care and asked if it is fair
to say that the Legislature has the ability to help ASHNHA
members recover a significant portion from uncompensated care by
expanding Medicaid.
MS. HULTBERG answered yes. She asserted that expansion will help
ASHNHA help the state invest in the kind of care redesign and
reform that assists in lowering the cost curve over the long
term which is a real win for everyone.
SENATOR WIELECHOWSKI stated that the current healthcare business
model is not good. He remarked that the healthcare system
continues to need significant improvement and he was glad to see
the committee addressing reform. He asked if any ASHNHA
organizations will go out of business if they continue to
provide $100 million-plus in uncompensated care.
10:01:42 AM
MS. HULTBERG revealed that hospital finances are a significant
spectrum where some facilities are very profitable and some are
on the margin. She remarked that she is concerned about ASHNHA's
Critical Access Hospitals as the economic environment becomes
increasingly difficult.
SENATOR WIELECHOWSKI commented that he would hate to see
hospitals shutdown and Alaskans lose access to medical care
because ASHNHA organizations are providing $100 million in
uncompensated care. He asserted that the Legislature not taking
the opportunity to fix the problem in the next week would be
extremely unfortunate for Alaskans.
10:02:30 AM
SENATOR COGHILL said a whole range of delivery services for
Medicaid must be looked at, not just hospitals. He asked if
ASHNHA organizations are using telemedicine.
MS. HULTBERG replied that telemedicine is really exploding in
the Lower 48 and has a lot of promise in Alaska. She said
Alaska's tribal system is very sophisticated in its use of
telemedicine. She admitted that Alaska is behind the rest of the
country in the adoption of telemedicine due to barriers that she
is not equipped to address.
SENATOR COGHILL stated that prior to adding more people, a
connection must be made between hospitals with expertise and
some of the needs in other communities. He noted that not just
the hospitals are feeling the weight of change, but people who
have delivered services that have not been paid because of
system changes, like elder care or child care. He asserted that
due to not changing behavior, profit and nonprofit deliverers
who do not get paid may not be capable of adding a new
population.
10:05:32 AM
CHAIR STOLTZE remarked that there are two bills, one that is the
Governor's bill and the other referred to as the "reform cost
containment" bill. He specified that the "reform cost
containment" bill was directed by the legislative process, a
deliberative consideration by three committees with public
testimony and multiple hearings. He said Governor Walker made a
pretty public demand that his bill have a less deliberative
process of only two committees. He asserted that the Legislature
put more due diligence on the "reform cost containment" bill
than on the Governor's bill. He remarked that the Governor made
a pretty public "request slash demand" and the Legislature
yielded to the invasion from another branch of government out of
respect and courtesy. He said the "reform cost containment" bill
process has been more deliberative on cost containment and
reform then on the expansion. He noted that several admissions
have been made to hurrying it up on expansion, but the committee
does not deal with expansion and only has one vehicle that has a
very deliberative legislative process.
SENATOR HUGGINS asked to verify that nonprofit hospitals have a
mechanism to distribute some of their revenue back into the
community.
10:07:15 AM
MS. HULTBERG answered that there are specific requirements to
maintain not-for-profit status that a facility provides a
certain amount of community benefit. She detailed that community
benefit can include uncompensated care and other subsidized
services where the facility knows that they are never going to
make break-even, but the services are considered a community
benefit.
SENATOR HUGGINS asked to establish that the dollars for
providing community benefits come out of the non-profit system.
MS. HULTBERG answered that the assumption is that the community
benefit dollars would have been paid in taxes so the benefit is
going back into the community in a different way, recognizing
that taxes also are a benefit to the community.
SENATOR HUGGINS asked how big the pot was for larger hospitals.
MS. HULTBERG answered that the pot was in the hundreds of
thousands of dollars.
CHAIR STOLTZE pointed out that the largest taxpayers in two of
the largest municipalities are private hospitals: Alaska
Regional of Anchorage and Mat-Su Regional in the Mat-Su Borough.
MS. HULTBERG agreed that the two noted hospitals are very large
taxpayers and there is a community benefit associated with being
a large taxpayer as well.
CHAIR STOLTZE disclosed that Mr. Price had comments from the
private sector.
10:09:42 AM
JEREMY PRICE, State Director, Americans for Prosperity-Alaska,
Anchorage, Alaska, explained that Americans for Prosperity is an
organization devoted to economic freedom. He detailed that
Americans for Prosperity define economic freedom as policies
that help small businesses and individuals be successful by
keeping the cost of government and taxes low. He said Americans
for Prosperity supports SB 74 and considers the bill as a great
piece of legislation that takes a valiant approach to reforming
the cost of Medicaid. He asserted that reform is the first part
of the equation that must be figured out first. He noted reports
that Medicaid spending will continue to increase even without
expansion. He asserted that should Alaska expand Medicaid, the
federal government may reduce their payment share after the
state is on the hook.
10:14:08 AM
CHAIR STOLTZE noted that Commissioner Davidson mentioned in a
previous committee meeting that she wanted to meet and hear from
all of the stakeholders' voices. He opined that Mr. Price's
testimony represents the interests in a lot of folks in the
legislators' districts. He said unfortunately there has not been
a willingness from some stakeholders to voice their opinion. He
stated that there are a lot voices in the Medicaid debate, not
just the recipients, but the folks that are paying the bills.
MR. PRICE pointed out that private practice physicians are
coming out in support of reform, but against expansion. He
opined that private practice physicians have said that ACA is
killing their businesses and Medicaid patients are treated as a
charitable contribution to their communities. He said private
practice physicians are out there, but they are afraid of
testifying against the bill because of intimidation,
retaliation, losing customers, and taking on the Governor.
CHAIR STOLTZE announced that he will recess to a call of the
chair to leave flexibility open to continue the discussion on a
major piece of legislation. He asked that Senator Kelly attend
the next committee meeting to address the bill's close out. He
inquired if Ms. Shadduck had any closing remarks.
10:17:20 AM
MS. SHADDUCK declared that she wanted to point out a few
provisions that are absolutely unique to Senator Kelly's bill.
She opined that SB 74 has a bigger focus on fraud, extensive
legislative reporting requirements, payment reform, and fiscal
notes that reflect costs that are not shown in the Governor's
bill. She pointed out that Commissioner Davidson and Ms.
Hultberg both said payment reform is absolutely something that
should be done by changing from a fee-for-service to an
incentive based service. She detailed that SB 74 has a fiscal
note that reflects incentive based service reform. She revealed
that the Medicaid managed care case management demonstration
program is unique to Senator Kelly's bill. She said extensive
studies have shown that doing managed care or case management in
the Medicaid program saves money and noted that SB 74 is
projected to show up to 20 percent in savings; however, DHSS has
shown no savings in their fiscal note and are not comfortable
with submitting an indeterminate fiscal note.
CHAIR STOLTZE pointed out that Senator Kelly will have a voice
on the fiscal note conversation in the Senate Finance Committee.
MS. SHADDUCK disclosed that DHSS was excited that SB 74 adds
some positions for fraud prevention and addresses cost
containment; however, the costs only show up on Senator Kelly's
bill.
CHAIR STOLTZE acknowledged the assistance of Senator Coghill,
Representative Vazquez, and legislative staff members for
providing ideas that made it into the bill. He noted that
Representative Vazquez has experience from the Department of Law
with fraud investigations and brought relevant issues to the
discussion. He stated that SB 74 was a collaborative effort, but
the substance of the bill was yielded to the sponsor.
10:20:37 AM
CHAIR STOLTZE announced that the committee will stand in recess
to the call of the chair. [The committee did not reconvene and
SB 74 was held in committee.]