Legislature(2003 - 2004)

01/20/2004 01:44 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Subcommittee on Percent of Market Value
<Meeting will begin immediately following
the House Finance Committee Meeting>
                  HOUSE FINANCE COMMITTEE                                                                                       
                      January 20, 2004                                                                                          
                         1:44 P.M.                                                                                              
TAPE HFC 04 - 5, Side A                                                                                                         
CALL TO ORDER                                                                                                                 
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:44 PM.                                                                                                            
MEMBERS PRESENT                                                                                                               
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Hugh Fate                                                                                                        
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Bill Stoltze                                                                                                     
MEMBERS ABSENT                                                                                                                
Representative Carl Moses                                                                                                       
Representative Reggie Joule                                                                                                     
ALSO PRESENT                                                                                                                  
Joel  Gilbertson,  Commissioner,  Department  of  Health  and                                                                   
Social  Services;   Janet  Clarke,   Director,  Division   of                                                                   
Administrative  Services,  Department  of Health  and  Social                                                                   
Services; Marie  Darlin, Coordinator, AARP Capital  City Task                                                                   
Force;  Sherry   Hill,  Special  Assistant,  Office   of  the                                                                   
Commissioner, Department of Health and Social Services.                                                                         
PRESENT VIA TELECONFERENCE                                                                                                    
HB 374    An  Act  establishing  the SeniorCare  program  and                                                                   
          relating to that program; and providing for an                                                                        
          effective date.                                                                                                       
          HB 374 was heard and HELD in Committee for further                                                                    
HOUSE BILL NO. 374                                                                                                            
     An Act establishing the SeniorCare program and relating                                                                    
     to that program; and providing for an effective date.                                                                      
Co-Chair Harris  MOVED to ADOPT  the proposed Work  Draft for                                                                   
HB  374,   23-GH2123\D  dated   1/14/04.    There   being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
JOEL  GILBERTSON,  COMMISSIONER,  DEPARTMENT  OF  HEALTH  AND                                                                   
SOCIAL SERVICES spoke  in support of HB 374,  Seniorcare.  In                                                                   
December   2003   the  Governor   announced   Seniorcare,   a                                                                   
comprehensive effort  by the Department of Health  and Social                                                                   
Services  to ensure  provision  of  services  to seniors  for                                                                   
prescription drugs.                                                                                                             
Mr.   Gilbertson   explained   that   Medicare,   which   was                                                                   
established  in   1965,  has  never  provided   comprehensive                                                                   
coverage for prescription  drugs and noted that it  it is the                                                                   
sole source  of medical care for  many seniors.    Last fall,                                                                   
Congress  established   a  comprehensive  drug   benefit  for                                                                   
Medicare and passed comprehensive  legislation establishing a                                                                   
true universal drug benefit. However,  the legislation delays                                                                   
implementation  until January 2006,  and the program  costing                                                                   
$400 billion over ten years will  take time to implement. The                                                                   
need for  these services  is present  now, before January  1,                                                                   
Mr.  Gilbertson informed  the Committee  that Seniorcare  has                                                                   
three components including legislation,  a senior information                                                                   
office to access information on  the $220 million of programs                                                                   
that the  department delivers  to seniors,  and an  effort to                                                                   
lower prescription drug costs.                                                                                                  
Mr.  Gilbertson  referred to  a  chart titled  Comparison  of                                                                   
Qualifications  and   Benefits.    He  explained   a  current                                                                   
assistance program providing a  cash subsidy to seniors below                                                                   
135% of  poverty.   These seniors receive  $120 a  month with                                                                   
the  benefit  provided  by regulation.  He  discussed  income                                                                   
guidelines.  SeniorCare  would allow the option  of receiving                                                                   
prescription  drug  assistance in  lieu  of  a cash  benefit.                                                                   
Under  SeniorCare, those  individuals below  135% of  poverty                                                                   
could receive a  $1600 annual prescription drug  subsidy or a                                                                   
$120  per month  continuation  of senior  assistance.   tThis                                                                   
option would be available once annually.                                                                                        
Mr.  Gilbertson described  the  federally passed  legislation                                                                   
that currently  provides an annual  Medicare subsidy  of $600                                                                   
for seniors  below 135% of  poverty.  All seniors  regardless                                                                   
of income are eligible for a prescription  drug discount card                                                                   
allowing seniors to access a negotiated discount rate.                                                                          
Mr.  Gilbertson referred  to  a chart,  Bridging  the Gap,  A                                                                   
Comparison of Benefits.                                                                                                         
Mr.  Gilbertson   observed  that   the  legislation   has  an                                                                   
effective date of  April 1, 2004.  He concluded  seniors want                                                                   
drug  coverage at  affordable  prices and  the department  is                                                                   
committed to  starting the  program quickly, and  integrating                                                                   
it  into   existing  eligibility,   enrollment  and   payment                                                                   
Representative  Croft referred to  language on page  2, lines                                                                   
22-23 of the Work Draft, "an eligible  individual may make an                                                                   
irrevocable  election to receive  prescription drug  benefits                                                                   
annually," and  asked if the intent  is that the  election be                                                                   
"irrevocable"  for the year  or apply to  a longer  period of                                                                   
Mr.  Gilbertson  responded  that the  provision  would  allow                                                                   
individuals who  apply annually to  make the election  and it                                                                   
would be irrevocable for that  particular year.  He explained                                                                   
that  subsidies  are fairly  defined.   Allowing  seniors  to                                                                   
switch  programs  in  mid-year  would  allow  individuals  to                                                                   
collect cash for six months and  would fully extend an annual                                                                   
amount  for prescription  drug assistance  for the  remaining                                                                   
six  months. The  department assumes  the  majority of  those                                                                   
currently  in  the  program will  continue  to  receive  cash                                                                   
assistance in lieu of the prescription drug discount.                                                                           
Representative Croft  stated that it  makes sense that  it be                                                                   
irrevocable  for the year,  but questioned  if this  language                                                                   
meets  the department's  intent.   He suggested  it would  be                                                                   
clearer to  state in a separate  sentence that a  person "may                                                                   
not  revoke  for the  period  of  that  year."   As  drafted,                                                                   
Representative  Croft felt the  language might be  misread to                                                                   
mean irrevocable for perpetuity.                                                                                                
Mr.  Gilbertson  replied  that   the  language  intends  that                                                                   
eligible seniors  will elect once  per year to  choose either                                                                   
the drug prescription or cash assistance.                                                                                       
Representative Croft  asked if the cash benefit  would sunset                                                                   
in this  version of the bill  when federal law brings  in the                                                                   
Commissioner  Gilbertson  responded,  it is  consistent  with                                                                   
this version.  The entire package  of this legislation  would                                                                   
sunset  with the  commencement of  the prescription  Medicare                                                                   
benefit.   By  starting  in April  2004,  this program  would                                                                   
provide  continuing assistance  if there  is a  delay in  the                                                                   
implementation of the federal Medicare drug benefit.                                                                            
Representative  Croft referred  to language  on Page  3, Line                                                                   
15:  "However,  the department  may  pay"  and asked  why  it                                                                   
states "may" instead of "shall."                                                                                                
Mr.  Gilbertson   replied,  the   department  does   pay  and                                                                   
therefore would be amenable to  a change to the word "shall."                                                                   
Co-Chair  Harris asked  about the provision  for an  override                                                                   
relating to the preferred drug list.                                                                                            
Mr.  Gilbertson   explained  that  the  current   policy  for                                                                   
physicians to document medical  necessity on the prescription                                                                   
itself,  which allows  prescribing a  non-preferred or  brand                                                                   
name drug.                                                                                                                      
Co-Chair Harris  referred to fiscal  note #2, noting  the $12                                                                   
million  in federal  receipts  and  roughly $2.7  million  in                                                                   
general  funds for  FY 05.   He  asked if  a supplemental  is                                                                   
being prepared to cover the estimated $554,000 for FY 04.                                                                       
Mr.  Gilbertson  responded,  the  program would  run  over  a                                                                   
number of fiscal  years, and only continuously  during FY 05.                                                                   
If the program  begins in April  2004, it will run  for three                                                                   
months in  FY 04, a full  year FY 05,  and half a year  in FY                                                                   
06.  The Administration  proposes to use funds  set aside for                                                                   
the Senior Assistance  Program for the SeniorCare  program in                                                                   
FY  04. The  bill itself  carries a  fiscal note  for FY  04,                                                                   
which Mr.  Gilbertson  assumed would be  in the  supplemental                                                                   
request.   A  portion of  the  $400 thousand  surplus in  the                                                                   
Senior Assistance Program  would also be used.                                                                                  
Co-Chair Harris  requested clarification  of the  $12 million                                                                   
in federal  receipts for  FY 2005.  Mr. Gilbertson  explained                                                                   
that  the  funds  are  from  the  Office  of  Management  and                                                                   
Budget's   last  round   of  fiscal   aid   to  states.   The                                                                   
appropriation is time-limited  and not shown in FY 06 because                                                                   
continued federal funding cannot be predicted.                                                                                  
Co-Chair   Harris  questioned   if  the   federal  money   is                                                                   
unrestricted.  Mr.  Gilbertson  explained  that  the  federal                                                                   
funding is  an emergency  grant to  the states and  therefore                                                                   
does not  have the usual restrictions.   The state  has broad                                                                   
discretion  to   use  those   funds  for  senior   assistance                                                                   
Representative  Croft  MOVED  to ADOPT  Amendment  1:  delete                                                                   
"make  an  irrevocable election"  and  insert  "semi-annually                                                                   
elect", on page 2, line 23. Co-Chair  Harris objected for the                                                                   
purpose of discussion.                                                                                                          
Representative Croft  stated "annually" would  be acceptable,                                                                   
but expressed concern  that there would be a  wording problem                                                                   
if the  intent is  to allow  seniors to  make a choice  every                                                                   
year.  He offered to delete the  semi-colon and say "annually                                                                   
elect," so  that it  would read  "an eligible individual  may                                                                   
annually   elect  to  receive   prescription  drug   benefits                                                                   
provided  in  the  manner  specified  by  the  department  in                                                                   
Mr.  Gilbertson stated  that the  proposed  wording would  be                                                                   
consistent with the department's intent.                                                                                        
Representative Croft then reworded  the proposed Amendment 1,                                                                   
page 2, lines 22-23 to read:                                                                                                    
     ", an eligible individual may once annually elect to                                                                       
receive prescription drug benefits"                                                                                             
Co-Chair  Harris  asked  the   purpose  of  the  "irrevocable                                                                   
election" wording.                                                                                                              
Mr. Gilbertson  clarified the  intent of  the language  is to                                                                   
allow seniors to choose once a  year between the cash or drug                                                                   
prescription assistance.                                                                                                        
Co-Chair Harris  asked if  the maximum  a senior can  receive                                                                   
for  prescription   drug  benefits   is  $1600  year.     Mr.                                                                   
Gilbertson affirmed.                                                                                                            
Co-Chair Harris WITHDREW his objection.                                                                                         
There being NO OBJECTION, , Amendment 1 was ADOPTED.                                                                            
Representative  Croft MOVED  to ADOPT  Amendment 2.  Co-Chair                                                                   
Harris objected for the purpose of discussion.                                                                                  
     Amendment 2 reads:                                                                                                         
     Page 3, line 15                                                                                                            
     Delete:   "may"                                                                                                            
     Insert:   "shall"                                                                                                          
Representative   Croft  questioned   if  "shall"  should   be                                                                   
substituted  for "may" on  Page 3, line  15 of the  committee                                                                   
     "the  department  may  pay  for  brand-name  multisource                                                                   
     drugs if the prescriber writes  on the prescription 'The                                                                   
     brand-name   drug  is  medically   necessary'   and  the                                                                   
     prescriber  states the reason  that the brand-name  drug                                                                   
     is medically necessary."                                                                                                   
Mr.  Gilbertson  stated  that, in  these  circumstances,  the                                                                   
department  would  pay, and  agreed  that  it would  be  more                                                                   
appropriate  to  use  "shall"  pay.  He  indicated  that  the                                                                   
proposed  wording is  consistent with  department intent  and                                                                   
There being NO OBJECTION, Amendment 2 was ADOPTED.                                                                              
Tape Change, HFC04-6, Side A                                                                                                  
MARIE  DARLIN, COORDINATOR,  AARP  CAPITAL  CITY TASK  FORCE,                                                                   
spoke  in  favor  of  prescription   drug  coverage  and  the                                                                   
proposed information  office providing access  to information                                                                   
for seniors.   Referring  to the  Senior Assistance  Program,                                                                   
she  said that  although  it did  not  replace the  Longevity                                                                   
Bonus,  it  helps  over  7,000 of  the  lowest  income  older                                                                   
Alaskans.   This proposed  bill would  significantly  help an                                                                   
estimated 23,000 seniors.                                                                                                       
Ms. Darlin  concluded  the AARP strongly  supports the  third                                                                   
part of the SeniorCare program, the Preferred Drug List.                                                                        
Co-Chair Harris asked how many  seniors would be eligible for                                                                   
this needs-based program who wouldn't  have been eligible for                                                                   
the Longevity Bonus.                                                                                                            
SHERRY HILL,  SPECIAL ASSISTANT, OFFICE OF  THE COMMISSIONER,                                                                   
DEPARTMENT OF HEALTH AND SOCIAL  SERVICES responded that half                                                                   
of the 7,800 or 46.6% would be eligible for this program.                                                                       
Co-Chair Harris asked if this  program would help the closer-                                                                   
to-poverty-level   seniors   whereas  the   Longevity   Bonus                                                                   
eligibility cutoff did not.                                                                                                     
Ms. Darlin responded that it would.                                                                                             
HB  374  was   heard  and  HELD  in  Committee   for  further                                                                   
The meeting was adjourned at 2:30 p.m.                                                                                          

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