Legislature(2009 - 2010)HOUSE FINANCE 519

02/26/2010 01:30 PM House FINANCE

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01:39:59 PM Start
01:40:04 PM HB300 || HB302
03:34:16 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
Heard & Held
+ Review of Medicaid Expenditures and TELECONFERENCED
<Above Item Rescheduled from 02/25/10>
HOUSE BILL NO. 300                                                                                                            
     "An  Act making  appropriations  for  the operating  and                                                                   
     loan program  expenses of state government,  for certain                                                                   
     programs, and  to capitalize funds;  making supplemental                                                                   
     appropriations;  making  appropriations  under art.  IX,                                                                   
     sec.  17(c), Constitution  of the  State of Alaska;  and                                                                   
     providing for an effective date."                                                                                          
HOUSE BILL NO. 302                                                                                                            
     "An  Act making  appropriations  for  the operating  and                                                                   
     capital    expenses    of   the    state's    integrated                                                                   
     comprehensive mental  health program; and  providing for                                                                   
     an effective date."                                                                                                        
1:40:12 PM                                                                                                                    
Co-Chair  Hawker  commented  on  the  importance  of  today's                                                                   
topic. He shared that the task  of the committee professional                                                                   
consultant  was   to  explain   the  increased   funding  for                                                                   
Medicaid.  He  informed that  the  consultant's  task was  to                                                                   
research  the  numbers and  project  a trend  analysis.  This                                                                   
would be a cross checking of the  facts and funding. Co-Chair                                                                   
Hawker  stated  that  after her  commentary,  William  Hogan,                                                                   
Commissioner, Department  of Health and Social  Services will                                                                   
present his observations.                                                                                                       
JANET CLARKE, CONSULTANT, HOUSE  FINANCE COMMITTEE, contended                                                                   
that  her  task was  to  look  at the  Medicaid  numbers  and                                                                   
analysis to answer a few basic  questions. She noted that she                                                                   
had compiled a  21 page report and a  PowerPoint presentation                                                                   
(Analysis Alaska  Medicaid Trends, FY2010 &  FY2011, Prepared                                                                   
for  the House  Finance  Committee,  February  2010 by  Janet                                                                   
Clarke Consulting, referred to  as the Report, and PowerPoint                                                                   
Analysis Alaska Medicaid  Trends FY 2010 & FY  2011, Prepared                                                                   
for the  House Finance  Committee, February  2010, copies  on                                                                   
Ms. Clarke  commenced with  her PowerPoint presentation.  She                                                                   
declared that the purpose of this  analysis was to review the                                                                   
Medicaid  program,  determine  what is  contributing  to  the                                                                   
skyrocketing  costs  and  assist  the  finance  committee  in                                                                   
determining what the appropriate  level of spending would be.                                                                   
She added that  the Department of Health and  Social Services                                                                   
(DHSS)  had   requested  a  large  supplemental   for  FY2010                                                                   
totaling  $88.4  million.  The department  also  submitted  a                                                                   
large budget amendment  of $95 million which  would bring the                                                                   
overall  incremental  spending  for  Medicaid  in  FY2011  to                                                                   
$166.6  million. She  referred to  page 2 in  the Report  and                                                                   
page  3 in  PowerPoint  to define  Medicaid.  Medicaid is  an                                                                   
entitlement   program  created   in  1965   by  the   federal                                                                   
government, but administered by  the state to provide payment                                                                   
for  medical services  for low-income  citizens. The  federal                                                                   
and state  governments share the  cost of Medicaid,  which is                                                                   
referred  to as  the Federal  Medicaid Authorized  Percentage                                                                   
(FMAP). If  the stimulus bill  had not passed,  Alaska's FMAP                                                                   
would have been approximately  50 percent, but because of the                                                                   
stimulus  the   FMAP  is  61.12   percent  for   the  federal                                                                   
contribution.  She referred  to  the chart,  Annual  Medicaid                                                                   
Spending FY2000 to  FY2011 that reflects some  of the history                                                                   
and growth in Medicaid. In FY2000  to FY2005, there was rapid                                                                   
growth in the  program, doubling the program  costs. The blue                                                                   
line shows Total Funds and the  red line shows General Funds.                                                                   
In 2005  there were  efforts to do  some cost containment  of                                                                   
Medicaid.  From FY2005 to  FY2010 the  costs were flat;  they                                                                   
even declined in FY2007 and FY2008.                                                                                             
Co-Chair  Hawker interjected  this was  achieved without  any                                                                   
reduction in the services or programs.                                                                                          
Ms. Clarke explained  that was true, but it also  had to with                                                                   
a good  economy where people had  higher incomes and  did not                                                                   
need the  coverage. She  noted the  17.4 percent increase  in                                                                   
FY2010 and the 5.8 percent increase in FY2011.                                                                                  
1:50:13 PM                                                                                                                    
Representative  Austerman referred  to page  2 in the  Report                                                                   
noting on the  chart the initial growth starting  with FY2000                                                                   
and asked  Ms. Clarke  if that  was in  federal dollars.  Ms.                                                                   
Clarke  replied that  most  of it  was  federal dollars,  but                                                                   
added  that the  general funds  also doubled  even though  it                                                                   
took longer. She mentioned some  special-to-Alaska FMAP rules                                                                   
written into law  by former Senator Murkowski.  This FMAP had                                                                   
the federal  government paying  at 60  percent instead  of 50                                                                   
percent. There  was also a  child health startup  program and                                                                   
efforts by the federal government to pay a higher part.                                                                         
Representative Austerman asked  if the negative in FY2007 and                                                                   
FY2008  were in  both federal  and  state contributions.  Ms.                                                                   
Clarke  replied  yes;  there were  many  efforts  to  control                                                                   
Co-Chair Hawker  added that the  growth of the  Personal Care                                                                   
Attendant Program  was a major concern of many  groups in the                                                                   
1:53:33 PM                                                                                                                    
Representative  Gara questioned  if the  huge spike  in total                                                                   
Medicaid payments  compared to  the less  steep spike  in the                                                                   
state payments was attributable  to the higher FMAP. He asked                                                                   
Ms.  Clarke for  a historical  perspective of  the FMAP.  Ms.                                                                   
Clarke  responded  that  historically   the  FMAP  was  50/50                                                                   
percent  for number of  years, but  former Senator  Murkowski                                                                   
bumped the federal payment up  to 60 percent which came to an                                                                   
end when Congress lowered it back down to 50 percent.                                                                           
Representative Gara referred to  the Annual Medicaid Spending                                                                   
graph which makes  it look like the federal rate  of total is                                                                   
much steeper than  the state rate, but he did  not think that                                                                   
was true.  Ms. Clarke replied  that was correct.  The general                                                                   
funds look artificially low for  FY2010 and FY2011. She added                                                                   
that  when the  stimulus  FMAP goes  away  in December  2010,                                                                   
although  it could be  extended through  FY2011 in  President                                                                   
Obama's budget,  the state will  face a $100 million  cost to                                                                   
the state in FY2012.                                                                                                            
1:56:30 PM                                                                                                                    
Vice-Chair Thomas asked how large  the Medicaid bill would be                                                                   
if there  were no  tribal clinics  and hospitals. Ms.  Clarke                                                                   
responded that it would be a $150 million more.                                                                                 
Representative  Salmon mentioned  a report  of nonprofits  in                                                                   
Anchorage and that  the state was funding their  programs. He                                                                   
questioned  where  this money  was  coming from.  Ms.  Clarke                                                                   
answered that did not know.                                                                                                     
Representative  Doogan  surmised that  if  this  was a  50/50                                                                   
match  on  those numbers,  than  the  cost would  equal  $900                                                                   
million each, but  because there is a 60/40  mix, the state's                                                                   
share would  still be  higher. He  queried if the  difference                                                                   
was because  there are 100  percent federal programs  in this                                                                   
mix  as well.  Mr. Clarke  responded that  he was  absolutely                                                                   
right that some  services and programs qualify for  70 to 100                                                                   
percent federal money.                                                                                                          
1:59:17 PM                                                                                                                    
Representative  Doogan remarked  if there  is a  return to  a                                                                   
50/50  match on  those numbers  after the  stimulus ends,  he                                                                   
wondered how much  of the total will be affected.  Ms. Clarke                                                                   
replied that it would depend on  the national formula, but it                                                                   
could be anywhere from $100 million to $120 million.                                                                            
Co-Chair Hawker  added that the  current year benefit  of the                                                                   
federal stimulus FMAP was $125 million for the fiscal year.                                                                     
2:00:32 PM                                                                                                                    
Ms.  Clarke   explained  the   Factors  of  Medicaid   Growth                                                                   
(PowerPoint,  page  5,  Report,   page  4).  Medicaid  is  an                                                                   
entitlement program therefore  if people meet the eligibility                                                                   
requirements for the services,  then they get those services.                                                                   
She reported three  key components to growth  in the Medicaid                                                                   
program:  Price,   Population  and  Utilization.   The  price                                                                   
changes  are  measured  by  looking  at  the  change  to  the                                                                   
Consumer Price Index  (CPI). The change in the  Anchorage CPI                                                                   
is approximately  3 percent for  the first 6 months  of 2009.                                                                   
She  noted  other  increases could  be  rate  increases.  The                                                                   
department  and  legislature  have worked  to  increase  some                                                                   
rates given  to Medicaid  providers. Last  year there  was 15                                                                   
percent  rate increase  for physicians  that were built  into                                                                   
the overall budget.                                                                                                             
Ms. Clarke  continued with the  PowerPoint chart, page  6, on                                                                   
Medicaid  Enrollment  FY2010.   The  bar  chart  shows  three                                                                   
population groups in Medicaid:  elderly (green), adult (red),                                                                   
and children (blue).  In the overall enrollment  from July to                                                                   
December 2009  grew by 6900 individuals, 6100  were children.                                                                   
This shows  that 90 percent of  the overall growth is  due to                                                                   
more  children in  the  program with  the  elderly and  adult                                                                   
statistics  fairly stable  at  approximately 1  percent to  2                                                                   
percent.  On page  7,  Medicaid Children  Monthly  Enrollment                                                                   
going back  to July 2008, the  blue bar is  Regular Medicaid-                                                                   
below 150 percent of the Federal  Poverty Level (FPL) and the                                                                   
red is  the Denali  KidCare program from  150 percent  to 175                                                                   
percent  FPL.  In  July  2008   there  were  60,000  enrolled                                                                   
children and  in January 2010,  there were over  70,000. This                                                                   
translates  into  11,000  additional   children  in  eighteen                                                                   
2:06:11 PM                                                                                                                    
Co-Chair  Hawker commented  on the  acceleration of  Medicaid                                                                   
starting in  FY2009. When working  on the budget there  was a                                                                   
stable trend  line, but  the point of  inflection hit  as the                                                                   
budget was being closed out.                                                                                                    
Ms. Clarke said  it was interesting that there  was a decline                                                                   
in the number of children then  a big surge occurred in March                                                                   
2009. She  continued to page  8, showing Medicaid  Recipients                                                                   
Total  back to  July  2008. This  covers  the adults  (blue),                                                                   
children (red),  disabled adults  (green), disabled  children                                                                   
(purple) and the  elderly (aqua). She noted  the volatile ups                                                                   
and  downs  of  the  red (children)  line.  On  page  9,  the                                                                   
Medicaid  Children Monthly  Recipients showed  in the  bottom                                                                   
chart  that one  year  ago the  trend  in recipients  was  in                                                                   
decline as the  wave had not yet hit. She emphasized  that it                                                                   
is the children in Medicaid that  have help trend the rise in                                                                   
Ms. Clarke moved to the Cost per  Medicaid Enrollee, page 10.                                                                   
This chart  looks at the  cost from  2006 to 2010  looking at                                                                   
three different forecasts models:  High, Low, and Checkwrite.                                                                   
High uses a  statistical model based on enrollment  that is a                                                                   
higher forecast.  In this  chart the  High forecast  would be                                                                   
$9,000.  The Low  forecast  is a  hybrid  of the  statistical                                                                   
model which is $8,662. There is  also a Checkwrite projection                                                                   
that reflects the  average weekly checks written.  This is at                                                                   
$8,334, the lowest projection.                                                                                                  
2:13:53 PM                                                                                                                    
Representative  Austerman  asked  if the  numbers  for  2006,                                                                   
2007, and 2008 are actual numbers.  Ms. Clarke responded that                                                                   
they were.  He asked  if the  numbers for  2010 are  known so                                                                   
far. Ms. Clarke  replied that $680 million has  been spent in                                                                   
the past seven months through January.                                                                                          
Representative Austerman  asked how this equates  to a dollar                                                                   
figure  on the  graph. Ms.  Clarke answered  that it  figures                                                                   
between    the   Low   and    the   Checkwrite    projection.                                                                   
Representative  Austerman  inquired if  this  is following  a                                                                   
trend.   Ms.  Clarke   contended  that   spending  tends   to                                                                   
accelerate  faster in  the spring.  Representative  Austerman                                                                   
asked if he  can interpret that payments will  continue to go                                                                   
up through the year. Ms. Clarke responded yes.                                                                                  
2:16:12 PM                                                                                                                    
Ms.  Clarke   continued  to  the  Alaska   Public  Assistance                                                                   
Caseload  Trends,  page 11.  This  chart shows  caseloads  in                                                                   
Medicaid  (green), Food  Stamp  Program  (red), Adult  Public                                                                   
assistance  (purple), Alaska  Temporary  Assistance &  Tribal                                                                   
(yellow) and Unemployment rate  (blue). The Unemployment line                                                                   
shows a lot of  similarity to the Food Stamp  program and the                                                                   
Medicaid  growth line.  Unemployment in  December was  at 8.8                                                                   
percent, the highest  in ten years. The economy  in Alaska is                                                                   
having an impact  on the caseloads of public  assistance. She                                                                   
indicated that  the growth between unemployment  and Medicaid                                                                   
was almost the same.                                                                                                            
Representative  Gara   asked  if  the  qualifier   for  basic                                                                   
Medicaid  and food  stamps  was 150  percent  of the  poverty                                                                   
level.  Ms. Clarke  said she  would get  that information  to                                                                   
Representative Gara.                                                                                                            
Representative  Salmon  asked what  the  yellow line  letters                                                                   
refer  to. Ms.  Clark replied  that  the yellow  line is  the                                                                   
Alaska Temporary  Assistance and  Tribal Assistance  program.                                                                   
She elaborated that this program  has been a great success in                                                                   
Alaska  with the  Department of  Health  and Social  Services                                                                   
(DHSS),  the Division  of Public Assistance,  and the  Tribal                                                                   
partners. The program  has a five year life-time  limit where                                                                   
people are  encouraged to go  to work. Representative  Salmon                                                                   
asked if  this trend  was higher five  years ago.  Ms. Clarke                                                                   
responded that there  is a chart that shows  the program back                                                                   
to 1997 reflecting a decline in caseloads.                                                                                      
2:21:21 PM                                                                                                                    
Ms.  Clarke continued  that  in addition  to  looking at  the                                                                   
unemployment rate, it was noted  that the population increase                                                                   
in 2009  grew at its  highest rate in  years. The  birth rate                                                                   
was also  higher than  it had  been since  1992 and  previous                                                                   
studies  have shown  Medicaid pays  for 40  to 50 percent  of                                                                   
births in Alaska.  There could also be a delayed  impact from                                                                   
SB27, the  Denali KidCare program  which in 2003  was changed                                                                   
from  200  percent  to  175 percent  poverty  level.  In  the                                                                   
statute it  was changed to a  fixed rate, tagged  to whatever                                                                   
the income  standard was in 2003  at 175 percent, so  by 2007                                                                   
it equated to  154 percent of the Federal Poverty  Level. The                                                                   
legislature  made a  change  and put  in  statute the  income                                                                   
level  at 175 percent.  In the  fiscal note  it was  believed                                                                   
that  half  the children,  who  had  dropped off  the  Denali                                                                   
KidCare, about 2500,  would return by FY2008.  There has been                                                                   
a delayed  impact on  the children's  return to the  program.                                                                   
She  remarked  that another  contributor  has  been the  H1N1                                                                   
virus  inoculations  and  the  talk of  federal  health  care                                                                   
reform. Studies have shown that  when the talk of health care                                                                   
reform occurs, there is an increase in Medicaid.                                                                                
2:24:58 PM                                                                                                                    
Ms. Clarke referred  to page 14 in the Report  and page 11 on                                                                   
the  PowerPoint   presentation,   Alaska  Public   Assistance                                                                   
Caseloads Trends.                                                                                                               
Representative Salmon noted that  the Adult Public Assistance                                                                   
(purple) line  is straight  and asked why  it did  not follow                                                                   
the Unemployment Rate (blue) line.  Ms. Clarke responded that                                                                   
Adult  Public  Assistance  provides   cash  payments  to  the                                                                   
elderly and disabled who qualify.                                                                                               
Representative Foster requested  that for the future it would                                                                   
be interesting  to see  the correlation  between the  cost of                                                                   
energy and the  public assistance programs and if  there is a                                                                   
greater  impact  in the  rural  or  urban areas.  Ms.  Clarke                                                                   
responded  that  the  Medicaid program  could  provide  these                                                                   
2:27:16 PM                                                                                                                    
Co-Chair  Hawker asked  for the primary  focus and  interplay                                                                   
between rural and  urban when it comes to Medicaid  and other                                                                   
public assistance services. Ms.  Clarke replied that Medicaid                                                                   
demographics  follow Alaska demographics.  In rural  areas if                                                                   
someone qualifies  for tribal health then the  state will see                                                                   
100 percent coverage from the  federal government. This helps                                                                   
support Alaska's infrastructure  and afford better health for                                                                   
the entire state.                                                                                                               
Co-Chair   Hawker  speculated   that   in   looking  at   the                                                                   
significant  growth  of  total  funds, in  the  federal  more                                                                   
rapidly than the general funds,  there may be a higher demand                                                                   
in the rural areas where they  are receiving 100 percent from                                                                   
the federal government.                                                                                                         
2:30:08 PM                                                                                                                    
Ms. Clarke turned  to page 12 in the PowerPoint  presentation                                                                   
that looks at  the three different forecasts  in the Medicaid                                                                   
enrollment  program issued  every  month. In  April 2008  the                                                                   
High forecast  (red line)  number was  $1.13 billion  and the                                                                   
Low  forecast   (green  line)  was  $1.04  billion   and  the                                                                   
Checkwrite  forecast  (blue  line) was  $984  million.  These                                                                   
forecasts  converge  when  the actual  spending  numbers  are                                                                   
listed in  June. In  FY2009 the  forecast converged  again at                                                                   
$1.07  billion in  spending.  She indicated  that  this is  a                                                                   
billion dollar program and growing.  The Medicaid projections                                                                   
for  January  FY2010  are  for the  High  forecast  at  $1.26                                                                   
billion,  the   Low  forecast   is  $1.21  billion   and  the                                                                   
Checkwrite at  $1.16 billion. There  is a difference  of $100                                                                   
million between  the forecasts. Ms. Clarke continued  to page                                                                   
17 in the Report and page 13 in  the PowerPoint presentation,                                                                   
the  FY2010 Monthly  Medicaid  Spending.  She  noted that  in                                                                   
FY2010 there are 53 weeks of Checkwrite spending.                                                                               
2:34:08 PM                                                                                                                    
Representative Fairclough  noted on page 15,  paragraph 5, of                                                                   
the Report  that the state  lost three different  court cases                                                                   
that  restored access  and services  restricted  by the  2006                                                                   
legislative intent.  She inquired if Ms. Clarke  was going to                                                                   
address if something  could be done legislatively  to control                                                                   
cost. Ms. Clarke  recommended talking with the  Department of                                                                   
Law about  what might  be done  in that  area. She  furthered                                                                   
that  when the  legislative  intent was  put  into place  the                                                                   
spending  for the  program dropped  from $90  million to  $70                                                                   
million. Ms. Clarke urged the  legislature to think about the                                                                   
stimulus  FMAP  in  terms  that  if  the  money  is  accepted                                                                   
eligible groups  and services cannot be cut,  therefore there                                                                   
is  a built  in  restraint  to  do anything  regarding  these                                                                   
services. She believed that in  the future if the legislature                                                                   
needs to  contain the costs  in Medicaid  it needs to  be put                                                                   
into  legislation  not  just   legislative  intent,  but  she                                                                   
emphasized  that  there will  be  challenges  if services  or                                                                   
eligibility  is changed  making  it difficult  for anyone  to                                                                   
make changes.                                                                                                                   
Co-Chair Hawker  suggested that  the Department of  Law might                                                                   
have some thoughts on ways to  deal with situations presented                                                                   
in the lawsuit.                                                                                                                 
Representative Fairclough  indicated her interest  in knowing                                                                   
what was  reinstated by the court  cases and, if  the changes                                                                   
were not  the intent of legislature,  then what would  be the                                                                   
best way to talk to the courts.                                                                                                 
2:37:46 PM                                                                                                                    
Ms.  Clarke  reiterated  that  $680 million  has  been  spent                                                                   
through January 2010 which equates  to $97.3 million a month.                                                                   
If  the monthly  spending for  the next  five months  reaches                                                                   
$105  million,  then  the  year-long   budget  will  be  $1.2                                                                   
Representative  Gara contended  that  people  with no  health                                                                   
insurance  who often go  to the  emergency room for  services                                                                   
are probably not  people covered by Medicaid,  so he believed                                                                   
adjusting that  population would  not affect the  budget. Ms.                                                                   
Clarke  responded  if  they  go   into  a  hospital  and  are                                                                   
qualified for Medicaid then they  are probably already signed                                                                   
up.  Representative  Austerman  asked  for a  repeat  of  the                                                                   
numbers projected  Medicaid numbers. Ms. Clarke  repeated the                                                                   
figures and indicated that the  numbers were getting close to                                                                   
the $1.2 billion she earlier indicated.                                                                                         
2:40:12 PM                                                                                                                    
Ms. Clarke pointed  out the charts on page 16  of the Report,                                                                   
FY2010  Medicaid  Supplemental  Requests. The  $88.4  million                                                                   
supplemental   request  reflects   the  High  forecast.   She                                                                   
suggested  that  spending  is trending  toward  $1.2  billion                                                                   
which is  $60 million  less than  being requested.  She cited                                                                   
that there  can be  unexpected costs  and unforeseen  efforts                                                                   
that  happen at  end of  year.  She recommended  a 2  percent                                                                   
cushion  for   the  department,  funding  the   Medicaid  Low                                                                   
forecast. This would save $7 million in general funds.                                                                          
Co-Chair Hawker  reiterated that the $7  million differential                                                                   
is  between  Ms.  Clarke's  analysis   and  the  department's                                                                   
supplemental  request. He  believed this  speaks well  to how                                                                   
the two groups  have worked together. Ms. Clarke  agreed that                                                                   
judgment calls were being made around the margins.                                                                              
Representative Gara responded  that these will not impact the                                                                   
costs in the department only if  they need a supplemental for                                                                   
the future. Ms.  Clarke interjected that the  supplemental is                                                                   
for current year spending through the end of FY2010.                                                                            
Representative  Gara asked  if Ms. Clarke  is projecting  the                                                                   
need for an estimated $7 million  less this year. He restated                                                                   
that this  will not affect the  amount being spent,  but what                                                                   
is put  into this budget. Ms.  Clarke responded that  she had                                                                   
been  asked to  give her  best recommendation  of what  would                                                                   
happen.  She agreed  that  Medicaid spending  is  what it  is                                                                   
because as  an entitlement program,  if a person  is eligible                                                                   
then they must receive it.                                                                                                      
2:45:13 PM                                                                                                                    
Representative  Gara reaffirmed that  if the extra  money was                                                                   
overestimated then the department  could not spend that extra                                                                   
money.  Ms.   Clarke  responded  that  typically   there  are                                                                   
controls on supplemental spending,  but it could not be spent                                                                   
in other areas.                                                                                                                 
Co-Chair Hawker interjected that  there is the ability of the                                                                   
agency to  use that extra  money, but historically  they have                                                                   
Representative  Austerman commented  that  the department  is                                                                   
guessing  the  need  for  $88   million  and  Ms.  Clarke  is                                                                   
estimating $74 million. Ms. Clarke  clarified that her belief                                                                   
is  that Medicaid  spending  would be  at  the Low  forecast.                                                                   
Representative  Austerman restated  that  this increases  the                                                                   
base  for  FY2011.  Ms.  Clarke believed  this  would  be  an                                                                   
independent  decision  for FY2010.  Representative  Austerman                                                                   
maintained  that the  decision  made for  FY2010 affects  the                                                                   
base for FY2011. Ms. Clarke answered  that it does not affect                                                                   
the  base.  Co-Chair  Hawker  interjected  that  supplemental                                                                   
appropriations  are   not  rolled  into  the   base  for  the                                                                   
following year budget.                                                                                                          
2:47:39 PM                                                                                                                    
Representative  Foster mentioned that  an area of  control in                                                                   
Medicaid could  be if there  were more IHS facilities  around                                                                   
the state then  the state could be paying less  than the FMAP                                                                   
50 percent. Ms. Clarke agreed  that was correct on individual                                                                   
2:48:55 PM                                                                                                                    
Ms. Clarke  returned to the  PowerPoint presentation  on page                                                                   
15,  FY2011 Medicaid  Budget  Amendments.  The Department  of                                                                   
Health  and Social Services  presented  a $95 million  budget                                                                   
and  Ms. Clarke  declared  her  review  at $78  million.  She                                                                   
referred to  page 21 in  the Report, FY2011 Medicaid  Budget:                                                                   
DHSS  &  Consultant  Comparison.  The  blue  line  shows  the                                                                   
department requests  for FY2010 and  FY2011. The red  line is                                                                   
Ms. Clarke's  analysis. She noted the interesting  conclusion                                                                   
is that  in FY2011  they both  reached the  same place.  This                                                                   
verifies  that the budget  amendment from  the department  is                                                                   
reasonable and  fairly accurate.  The only difference  is the                                                                   
path getting  there; she  did not  believe that the  increase                                                                   
would be 17 percent, but more like 12 percent.                                                                                  
Representative  Austerman requested a  return to look  at the                                                                   
containment issues  in 2006-2008  and how they  were handled.                                                                   
Co-Chair    Hawker    interjected   that    William    Hogan,                                                                   
Commissioner, Department of Health  and Social Services could                                                                   
probably offer  some help  in that direction.  Representative                                                                   
Austerman   requested  that   information   in  writing.   He                                                                   
suggested  looking  back  at the  FMAP  stimulus  money,  the                                                                   
timeframe, and what  changes that will take place  at end. He                                                                   
related his  desire to  explore the  issue of legislation  to                                                                   
control the costs.                                                                                                              
Representative Gara  remarked that for those  individuals who                                                                   
qualify for Indian Health Service  funding, the payment would                                                                   
be at  100 percent federal, which  helps the state.  He asked                                                                   
for  clarification  if  an  individual   goes  to  a  regular                                                                   
hospital who  qualifies for IHS  program if they  would still                                                                   
qualify  to  receive  the 100  percent  payment.  Ms.  Clarke                                                                   
replied  no.  The services  must  be  in a  qualified  Indian                                                                   
Health Service  facility. Representative Gara asked  if there                                                                   
would be a savings  if there were more Indian  Health Service                                                                   
facilities. Ms.  Clarke responded  that an opportunity  is to                                                                   
look  at more  long  term care  and  nursing  homes in  rural                                                                   
Representative  Doogan asserted  that he  did not  understand                                                                   
the big spike in Medicaid costs  starting in the beginning of                                                                   
FY2009. He reiterated  all the before mentioned  information,                                                                   
but his only  assumption was that more people  were using the                                                                   
Ms. Clarke  replied that not all  the tables and  charts were                                                                   
in the PowerPoint  presentation. She indicated on  page 10 of                                                                   
the Report  covering Recipient  Trends  that it compared  the                                                                   
enrollment and recipient growth  rates. Enrollment growth for                                                                   
FY2010  is  7 percent,  recipient  growth  is 5  percent  and                                                                   
utilization   is  about   3  percent.   She  suggested   that                                                                   
enrollment  growth  is still  growing  and spending  will  be                                                                   
about 12 percent  above FY2009. The Department  of Health and                                                                   
Social Services requested 17 percent.                                                                                           
Representative  Fairclough  elaborated  that  Denali  KidCare                                                                   
implemented in at the High 175  percent and new enrollees are                                                                   
in the back half of the year.  Ms. Clarke agreed that was the                                                                   
case.  She  believed  there  was  a  delay  in  the  children                                                                   
returning to the program.                                                                                                       
2:59:20 PM                                                                                                                    
WILLIAM HOGAN, COMMISSIONER, DEPARTMENT  OF HEALTH AND SOCIAL                                                                   
SERVICES, responded  to Ms. Clarke's  report. He  referred to                                                                   
the Report  on page 13 which  covers a more  concise analysis                                                                   
of  the  various  factors  that  led  to  the  increases.  He                                                                   
emphasized  that  the  growth  in Medicaid  is  to  be  taken                                                                   
seriously.  The  governor  has  committed to  work  with  the                                                                   
legislature to develop a process  that can be used to look at                                                                   
the Medicaid  budget in preparing  for the budget  in FY2012.                                                                   
The enhanced FMAP  rate is available through  January 2011 as                                                                   
a result of the economic stimulus  money. There are about six                                                                   
different vehicles at the federal  level that will extend the                                                                   
FMAP  rate through  June 30,  2011. There  are concerns  that                                                                   
beginning in  FY2012, the department  will need  $120 million                                                                   
in general  funds to sustain  the Medicaid program.  Although                                                                   
he emphasized  that  he did not  like coming  forward with  a                                                                   
supplemental budget, there have  been occurring circumstances                                                                   
that has  driven much  of this.  He thought  the best  way to                                                                   
deal  with  the  growth  in  Medicaid   is  through  economic                                                                   
development and creating jobs.                                                                                                  
Co-Chair Hawker  interjected that  during the budget  process                                                                   
last year Mr. Streur  had a clearer picture that  there was a                                                                   
change in the state's economy on the horizon.                                                                                   
Representative  Fairclough asked if  it would it  be possible                                                                   
to look  at the industries  where unemployment  is happening.                                                                   
Commissioner  Hogan responded  that  there is  data on  where                                                                   
people go  when they leave  the public assistance  rolls. Co-                                                                   
Chair Hawker agreed  following up on this data made  a lot of                                                                   
Representative  Austerman  requested  an analysis  of  people                                                                   
moving  to  Alaska  for work.  Co-Chair  Hawker  stated  that                                                                   
applications  for   the  Permanent  Fund  Dividend   were  up                                                                   
astronomically this year.                                                                                                       
3:10:20 PM                                                                                                                    
Commissioner Hogan  answered Representative  Salmon's earlier                                                                   
question that the  department provides grants to  a number of                                                                   
native  health organizations  and  two primary  partners  are                                                                   
Southcentral Foundation and Cook  Inlet Tribal council. These                                                                   
services are for things that are not Medicaid reimbursable.                                                                     
Commissioner  Hogan referred to  the Personal Care  Attendant                                                                   
lawsuits  with  regulations  made on  some  cost  containment                                                                   
measures.  The intent was  make sure  that only those  people                                                                   
who were  eligible for the  program were getting  the program                                                                   
and they were  only getting the right amount  of service. Co-                                                                   
Chair Hawker interjected there  were documented abuses of the                                                                   
system.  Commissioner  Hogan stated  that  one  reform was  a                                                                   
reduction  of  hours  that  people   were  eligible  for  the                                                                   
services. One of  the lawsuits came about because  many legal                                                                   
entities did  not believe that  there were adequate  criteria                                                                   
or objective criteria for showing  that the person's physical                                                                   
status  was  being  fairly  determined.   Commissioner  Hogan                                                                   
referred to it  as "material improvement" and  the department                                                                   
was not  able to show that  they reduced the number  of hours                                                                   
based on the assessment tool.  The department since adopted a                                                                   
more objective tool for assessment.                                                                                             
3:14:03 PM                                                                                                                    
Commissioner  Hogan answered  Representative Gara's  question                                                                   
regarding  people coming  to  emergency  rooms. When  someone                                                                   
goes   to   an  emergency   room   without   insurance,   the                                                                   
department's  providers, in conjunction  with staff,  work to                                                                   
sign  the  person up  for  Medicaid,  if they  are  eligible.                                                                   
However,  many  individuals  in  Alaska do  not  qualify  for                                                                   
Medicaid and  do not have insurance.  This is referred  to by                                                                   
the  hospital  as  uncompensated  care;  care  given  without                                                                   
compensation from any third party payer.                                                                                        
Representative  Gara queried  if  it was  an  expense to  the                                                                   
department  when someone  uses  the emergency  room for  non-                                                                   
emergency  care and  if  it was  possible  to redirect  these                                                                   
people to an urgent care facility.                                                                                              
WILLIAM STREUR,  DEPUTY COMMISSIONER, MEDICAID  & HEALTH CARE                                                                   
POLICY, DEPARTMENT  OF HEALTH AND SOCIAL  SERVICES, MEDICAID,                                                                   
addressed frequent  users of emergency rooms.  The system has                                                                   
been increasingly able to identify  these people and there is                                                                   
an attempt to contact and direct  them towards a primary care                                                                   
practice  to  manage their  care.  He  acknowledged  it is  a                                                                   
constant problem and thought the new system would help.                                                                         
Mr.  Streur continued  that  a focus  will  be with  "medical                                                                   
home" to assign  a person to work with a  particular provider                                                                   
to get the entire individual's care through this provider.                                                                      
3:18:08 PM                                                                                                                    
Representative  Gara asked  if there  were any federal  funds                                                                   
that could  be captured, such  as through more  Indian Health                                                                   
Care services. Mr.  Streur remarked that there  is a constant                                                                   
focus to encourage  more recipients to use the  Indian Health                                                                   
Services programs.  Representative Gara suggested  better use                                                                   
of the neighborhood health centers.                                                                                             
Representative  Doogan wanted  an answer  as to  why in  2000                                                                   
Medicaid  was at $600  million  a year program  and over  the                                                                   
following ten years it tripled to $1.8 billion.                                                                                 
Co-Chair  Hawker  noted that  over  the years  Medicaid  kept                                                                   
growing  and when  asked, the  department was  not sure  why.                                                                   
There was a  funded study to focus and understand  the growth                                                                   
patterns.  The report showed  that in  20 years the  Medicaid                                                                   
program  would be  at $3  billion.  After that  there was  an                                                                   
attempt to  stabilize the program.  Now outside  factors such                                                                   
as population  growth and economic  factors are  starting the                                                                   
rise again.                                                                                                                     
ALISON ELGEE, ASSISTANT COMMISSIONER,  FINANCE AND MANAGEMENT                                                                   
SERVICES, DEPARTMENT  OF HEALTH  AND SOCIAL SERVICES,  agreed                                                                   
that the  department had  developed a  model to project  long                                                                   
term expenses  in the  Medicaid program.  There is  an annual                                                                   
report  giving  a  ten year  projected  Medicaid  costs.  She                                                                   
acknowledged  that today  the  program costing  $1.2  billion                                                                   
will in  twenty years cost  $3.5 billion. She  contended that                                                                   
there was  no plan  to reduce the  services of Medicaid  only                                                                   
"bending  the curve,"  so costs  do  not grow  as steeply  as                                                                   
projected. The  need to replace  stimulus funds  with general                                                                   
funds will be larger in the future.                                                                                             
3:26:12 PM                                                                                                                    
Representative   Foster   asked   how  many   IHS   qualified                                                                   
individuals there  were under  the Medicaid program  and what                                                                   
would  the dollar  amount translate  to. He  inquired if  the                                                                   
state could  help fund  building more  IHS facilities  and if                                                                   
this would save the state money in the long run.                                                                                
Commissioner   Hogan   replied   there  was   very   specific                                                                   
information available  on IHS  beneficiaries. He  spoke about                                                                   
the long  term care  facilities being  planned in  Anchorage,                                                                   
Kotzebue,  and  Bethel. All  of  these facilities  have  been                                                                   
given  initial  state  capital  dollars  to  begin  planning,                                                                   
design and construction.                                                                                                        
Representative  Austerman noted  that the population  portion                                                                   
is  partially   dictated  on  how  eligibility   is  set.  He                                                                   
indicated  that if the  poverty level  was fixed the  numbers                                                                   
could be changed to keep costs  down. He encouraged that this                                                                   
conversation needs to occur.                                                                                                    
3:31:00 PM                                                                                                                    
Co-Chair Hawker stressed  that this has been  a recurring and                                                                   
constant  theme   within  this  committee.  In   this  year's                                                                   
legislative   cycle,  Co-Chair   Hawker  believed   that  the                                                                   
university  had  the  most  difficult   financial  decisions;                                                                   
therefore the  subcommittee was  restructured to  include the                                                                   
entire   finance   committee.   He  contemplated   taking   a                                                                   
department  each  year  that   has  economic  challenges  and                                                                   
instead of  assigning a  subcommittee, the finance  committee                                                                   
would deal with the issue as a whole.                                                                                           
Commissioner Hogan  responded that  one of the  advantages is                                                                   
that Co-Chair  Hawker  understands the  budget. He had  great                                                                   
confidence  that solutions  could  be met.  He believed  that                                                                   
there  were things  that could  be done  to contain  Medicaid                                                                   
costs and  bring it under  control. He emphasized  that there                                                                   
will be  difficult decisions to  make and encouraged  working                                                                   
together.  He  stated  that  the  governor  is  committed  to                                                                   
working with the legislature to arrive at good solutions.                                                                       
3:34:16 PM                                                                                                                    
Representative  Fairclough   stressed  that   prevention  and                                                                   
healthy people in Alaska would  be a better way for the state                                                                   
to  invest  its  money.  She noted  that  some  services  are                                                                   
duplicated  and  emphasized  that  rather  than  bending  the                                                                   
curve,  the  committee  needs  to  research  new  methods  of                                                                   
serving  the  people of  Alaska  for  the state's  long  term                                                                   
Commissioner Hogan agreed that  prevention is important and a                                                                   
challenge, but Medicaid does not pay for prevention.                                                                            

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