Legislature(1995 - 1996)
04/11/1995 08:40 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL 301 "An Act relating to the medical assistance program; and providing for an effective date." Co-Chair Hanley explained the intent of HB 301. The State of Alaska at this time has two methods of controlling Medicaid spending: 1. Regulation of "amount, duration and scope"; and, 2. Turning on and off optional services through appropriation levels. He continued, the Department of Health and Social Services (DHSS) has regulatory control over "amount, duration and scope", whereas the Legislature controls funding of optional services. HB 301 was introduced to lessen the impact of recent short-funding of the optional services list. Co-Chair Hanley stated that Medicaid provides medical coverage under two service lists, mandatory and optional. Federal law requires DHSS to provide all eligible Alaskans mandatory services. Congress allows states to provide, and will help pay for, services not on the mandated list. Those services are included in Alaska's Medicaid plan through amendment AS 47.07.035, referred to as the "options list". Although, Co-Chair Hanley pointed out that the options list has not been fully funded for several fiscal years, but advising that all optional services are available to children regardless of the appropriation levels. Co-Chair Hanley summarized that the enclosed attached Letter of Intent would clarify that the Medical Assistance Division, DHSS would have to live within the appropriation level made in the FY96 operating budget. Representative Brown asked if management of the list would be determined by the individual need or a class of service. Co-Chair Hanley commented that the Department should make that decision. He reflected on the success of the Oregon Health Plan and noted information in the file regarding that system. KAREN PERDUE, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained that there are clear definitions 2 explaining which services are essential in federal law. She stressed that they should not be violated. Commissioner Perdue emphasized that the 10.6% growth rate had been a modest projection and noted that it would not be feasible to "squeeze" out significant coverage from the existing Medicaid budget. Commissioner Perdue stressed that the Department does not want to spend supplementally, although implementing HB 301 would create that need. It would not be possible to "squeeze" out enough money to cover the variety of mandatory options. She added that the legislation would require the Department to extensively investigate each option which would demand a long period of analysis time. She requested that the responsibility of rewriting the options be part of a public process. Commissioner Perdue recommended that at this time, the focus should be on the seven (7) options previously funded. Commissioner Perdue requested more flexibility to the Department to investigate those options as opposed to the others. Commissioner Perdue pointed out that the most essential options would be #9 (optometry service), #8 (speech, hearing and language) and #6 (adult dental). She concluded that all of the services are important, but the three above mentioned services are the most serious. RANDY SUPER, ACTING DIRECTOR, DIVISION OF MEDICAL ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, provided the Committee with a handout, "Division of Medical Assistance". [Attachment #1]. He explained that the charts illustrate the percentage of the population covered by Medicaid in Alaska for the last year. Children represent the majority of those served by the program, although their services accounted for 35% of all Medicaid eligible payments, whereas the disabled adult group showed the highest percentage of Medicaid spending. Mr. Super continued, 30% of all Medicaid payments go to hospitals, then nursing homes receive 19%, followed by physicians receiving 18%. He added that nursing home expenditures for the aged are the largest single service/assistance category of Medicaid spending amounting to nearly $30 million for nursing home services last year. Alaska Families with Dependant Children (AFDC) recipients both children and adults account for the largest amounts of Medicaid spending for hospital, physician services, and dental care. He added that disabled persons account for the most spending followed by pharmacy services; followed by the intermediate care facilities for the mentally retarded. Commissioner Perdue pointed out that those persons with 3 disabilities and the senior citizens are heavy users of the system and that they have great medical needs. She stressed that this creates a large management challenge even thought these are the people who really need the services. Co-Chair Hanley requested more information on how the formula and growth rate were determined. He suggested the inclusion of intent language with the bill. Co-Chair Hanley noted his frustration in determining the growth cause and asked that the Department to develop more accountability in that system. Mr. Super noted that the first ten services listed on Page 7 of the handout are currently not funded. NANCY WELLER, DIVISION OF MEDICAL ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, spoke to the public hearing process sponsored by the Department for individuals to voice their concerns regarding which programs should be eliminated. She advised that the dental, speech, hearing and vision services were of greatest concern to the Department. Ms. Weller elaborated that there are no other providers of these services, consequently, no other options for the recipients. The Department only covered emergency relief of pain and acute infection for dental problems. She reminded the Committee that the cost of dental services in Alaska is the highest in the nation and that many low income people are at high risk for poor dental health because of their poverty. Ms. Weller stressed that many of these people have disabling conditions which require them to use medications that destroy oral health. She emphasized that this was the most medically necessary service on the list. The speech and language limitation creates a negative effect for those persons receiving rehabilitation for stroke and traumatic brain injuries necessary to restore their cognitive abilities. The only place that a person would be able to receive those services would be in a nursing home, a cost which is inordinately high. Ms. Weller continued, hearing loss is a major concern of the Native organizations. The loss of those services has removed funding for hearing aids. A person not being able to purchase a hearing aid becomes a quality of life issue as hearing aids are very expensive but can dramatically change a persons ability to participate. Representative Martin questioned expenses in the division between those persons qualified for Public Health Services and Native hospitals. 4 JAY LIVEY, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained that many Indian Health Service beneficiaries are Medicaid eligible. If an Indian Health Service beneficiary was also Medicaid eligible, and received services, the federal government would pay 100% for that person's service. He added that there are certain services which are not provided by the Indian Health Service. There currently exists a service delivery system oriented toward in-patient services. Commissioner Perdue added that in-patient services are well covered by the Indian Health Services although many of the out-patient services are not fully covered. She acknowledged that a problem exists with "double counting", citing five doors of "eligibility" for Medicaid services. Commissioner Perdue summarized her concerns for the Department. She stated that the bill provides too much flexibility, in particular, creation of the scenario that no other costs should be added to the program. There currently exists authority to "squeeze" costs from the system under that itemized coverage. She added that the bill would allow the Department to pick and choose among the options. Although, she felt that the essential focus of the debate should be with items #9, #8 and #6. She stated that covering those options was most important. Commissioner Perdue added, under the 10.6% growth rate, the Department could not "squeeze" enough money from the system to meaningfully cover options #9, #8 or #6. She asked to return to the Committee with a reduced amount of money, reduced scope and duration plan of scope in order to cover some parts of options #9, #8 and #6. Commissioner Perdue explained that the Medicare population of citizens are very desperate. These are people with high medical needs, usually disabled or elderly. Their need for some services on the list would be far more than the average insurance actuarial pool. She emphasized that there are currently 25,000 children receiving coverage. Representative Parnell commented that the list was limiting, although was not accurately reflecting the priorities. Commissioner Perdue responded that the Department does not want to or have the time to rewrite the option list. She emphasized that this would be a major responsibility and that it should be a public process. She asked to limit the authority to options agreed upon in advance. (Tape Change, HFC 95-82, Side 2). 5 Co-Chair Hanley observed the need to reevaluate the priorities list. He pointed out that 2% of the population is consuming 41% of the funds. Commissioner Perdue acknowledged that the frustrations are real and voiced her enthusiasm to embark on an Oregon Plan type process. She emphasized to do this through a suspension of regulations would not be helpful. Representative Parnell questioned the Department's intention in addressing the Medicaid situation for the next 3.5 years. Commissioner Perdue requested the opportunity to create dialogue during the interim with selected members of the Legislature regarding the reasonable growth rate of the program. HB 301 was HELD in Committee for further discussion.