Legislature(2015 - 2016)HOUSE FINANCE 519

04/07/2015 09:00 AM House FINANCE

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09:03:02 AM Start
09:03:20 AM HB148
10:23:33 AM Adjourn
* first hearing in first committee of referral
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Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 148                                                                                                            
     "An   Act  relating   to   medical  assistance   reform                                                                    
     measures;   relating   to   eligibility   for   medical                                                                    
     assistance  coverage;  relating to  medical  assistance                                                                    
     cost containment  measures by the Department  of Health                                                                    
     and  Social Services;  and providing  for an  effective                                                                    
9:04:08 AM                                                                                                                    
VALERIE  DAVIDSON, COMMISSIONER,  DEPARTMENT  OF HEALTH  AND                                                                    
SOCIAL  SERVICES,  shared  that the  bill  would  accomplish                                                                    
Medicaid  reform   and  expansion.  She  relayed   that  the                                                                    
original  legislation had  been based  on Governor  Walker's                                                                    
Healthy   Alaska  Plan,   which  could   be  found   on  the                                                                    
department's   website    at   dhss.alaska.gov.   Additional                                                                    
information on  Medicaid expansion and reform  could also be                                                                    
located  on Governor  Walker's  homepage at  gov.alaska.gov.                                                                    
She stressed  that the legislation  would be  beneficial for                                                                    
Alaskans, for the  economy, for the state  general fund, and                                                                    
would be a  catalyst for reform. She  detailed that Medicaid                                                                    
expansion would  extend healthcare  to an  additional 42,000                                                                    
Alaskans  including low  income  Alaskans, Alaskans  without                                                                    
dependent children between  the ages of 19-64,  who were not                                                                    
otherwise eligible for Medicaid  or Medicare. She added that                                                                    
these individuals  had incomes of  up to 138 percent  of the                                                                    
federal  poverty  level: $20,314,  for  a  single adult  and                                                                    
$27,500,  combined income  for  a married  couple. The  bill                                                                    
would  extend coverage  to adults  that were  in the  "donut                                                                    
hole" that was  created when the U.S.  Supreme Court decided                                                                    
that  Medicaid expansion  for states  would be  optional and                                                                    
not mandatory; these  Alaskans did not earn  enough money to                                                                    
qualify  for a  Marketplace Plan,  did not  qualify for  the                                                                    
regular Medicaid program,  and earned approximately $14,720,                                                                    
single  income,  per  year.   She  relayed  that  under  the                                                                    
legislation more Alaskans would  receive preventive, as well                                                                    
as  primary  care,  and   behavioral  health  services.  She                                                                    
revealed the  5 most  common causes of  death in  the state:                                                                    
cancer,  heart disease,  unintentional  injury, stroke,  and                                                                    
chronic lower  respiratory disease; four of  the causes were                                                                    
preventable  if  caught  early  enough.  She  stressed  that                                                                    
people could not  work, hunt, or fish if they  were not well                                                                    
enough to do so, and the  bill would provide a mechanism for                                                                    
them to access healthcare services.                                                                                             
9:09:03 AM                                                                                                                    
Commissioner  Davidson   discussed  the   possible  positive                                                                    
impacts  on the  economy.  She stated  that  the bill  would                                                                    
bring in $146 million in new  federal dollars for FY 16, and                                                                    
over  $1 billion  by  2021.  She said  that  the bill  would                                                                    
provide  for the  expansion group  a  higher federal  match,                                                                    
which would  result in  an immediate  economic boost  to the                                                                    
state.  In the  first  calendar year  of  2016, the  federal                                                                    
match would be  100 percent. In transitions over  the next 3                                                                    
years, from 95, to 94, to  93 percent federal match, then to                                                                    
90  percent from  2002,  and beyond.  She  offered that  the                                                                    
current  match for  Medicaid was  50/50. She  said that  the                                                                    
department had already indicated  to the centers of Medicare                                                                    
and Medicaid  services, who administered and  authorized the                                                                    
program,   in  addition   to   the   state,  that   Alaska's                                                                    
participation was  conditioned upon a 90  percent match. She                                                                    
stressed  that  the  new  federal  dollars  in  the  economy                                                                    
offered  an opportunity  for the  state  in the  form of  $1                                                                    
billion pumped into  the economy over the next  6 years. She                                                                    
believed  that  the legislation  would  be  healthy for  the                                                                    
state's general fund budget.  She explained that, currently,                                                                    
the  state paid  for  healthcare services  with 100  percent                                                                    
state  general  fund   dollars;  transitioning  the  state's                                                                    
healthcare  costs to  Medicaid through  the expansion  would                                                                    
save the state  approximately $6 million in  the first year:                                                                    
$4  million  in  corrections  spending; $1  million  in  the                                                                    
Chronic  and  Acute  Medical Assistance  Program;  and  $1.5                                                                    
million  in behavioral  health grants.  She shared  that the                                                                    
general fund off-sets would  cumulatively total $108 million                                                                    
in the first 6 years. She  spoke to potential savings in the                                                                    
area of  recidivism. She opined  that the  projected numbers                                                                    
for  the  state inmate  population  predicted  the need  for                                                                    
another prison, similar to  Goose Creek Correctional Center,                                                                    
using resources  that the  state did  not have.  She offered                                                                    
that  the  state  could  either  invest  in  the  health  of                                                                    
Alaskans  through  Medicaid  expansion,  or  invest  in  the                                                                    
construction of  a new  prison. She  said that  other states                                                                    
had  shown  that investing  state  general  fund dollars  in                                                                    
behavioral  health services  had  resulted in  significantly                                                                    
reduced recidivism rates.                                                                                                       
9:12:44 AM                                                                                                                    
Commissioner Davidson asserted that  the best opportunity to                                                                    
finance an effort  to reduce recidivism rates  was to expand                                                                    
Medicaid.  She  revealed that  the  majority  of the  prison                                                                    
population  would be  eligible for  Medicaid. She  said that                                                                    
when individuals currently in  prison received care, medical                                                                    
or behavioral, continuing care once  the inmate was released                                                                    
was a challenge.                                                                                                                
Representative  Wilson  wondered  whether  the  commissioner                                                                    
would take questions during the introduction.                                                                                   
Commissioner Davidson  replied that she was  nearly finished                                                                    
with  her   presentation.  She   explained  that   the  bill                                                                    
contained  reform  opportunities;  the  department  believed                                                                    
that  expansion  would be  a  catalyst  to reform  and  were                                                                    
building on  reforms that were already  underway. She stated                                                                    
that the legislation would direct  the department to examine                                                                    
all available  options for  improving the  Medicaid program,                                                                    
and  to  limit  costs.  She  asserted  that  the  department                                                                    
recognized  that  the  existing  Medicaid  program  was  not                                                                    
sustainable given  the current budget  constraints; Medicaid                                                                    
reform was necessary not only  for the expansion population,                                                                    
but for  the entire  population of the  state. She  spoke to                                                                    
reforms  found within  the legislation  and  noted that  the                                                                    
bill  would provide  broad demonstration  authority for  the                                                                    
examination  of payment  reform, care  management, workforce                                                                    
development,  innovation,  and innovative  service  delivery                                                                    
9:16:16 AM                                                                                                                    
JON SHERWOOD, DEPUTY COMMISSIONER,  MEDICAID AND HEALTH CARE                                                                    
POLICY, DEPARTMENT  OF HEALTH AND SOCIAL  SERVICES, provided                                                                    
a sectional analysis:                                                                                                           
     Section  1  Adopts   intent  language  and  legislative                                                                  
     findings related to Medicaid  expansion and the need to                                                                    
     reform   the  existing   Medicaid  program,   including                                                                    
     instructing  the   Department  of  Health   and  Social                                                                    
     Services (DHSS)  to propose legislation to  implement a                                                                    
     provider tax in  January 2016, to help  offset the cost                                                                    
     of the Medicaid program.                                                                                                   
     Section 2 Amends AS 44.23.075  to exclude the expansion                                                                  
     population  from   the  current  Permanent   Fund  Hold                                                                    
     Harmless program.                                                                                                          
He added  that with  the advent of  the Affordable  Care Act                                                                    
states  were required  to  use a  new  methodology to  count                                                                    
income  for certain  eligibility groups:  children, pregnant                                                                    
women, parents  and caretaker  relatives, and  the expansion                                                                    
population.  The methodology  was  referred  to as  modified                                                                    
adjusted  gross income  (MAGI), a  tax based  methodology of                                                                    
counting  income  that  was used  by  the  Internal  Revenue                                                                    
Service (IRS). He explained  that the methodology eliminated                                                                    
the disregards that states had  previously applied to income                                                                    
before  making  an   eligibility  determination.  Section  2                                                                    
amended the  statute for the  Permanent Fund  Dividend (PFD)                                                                    
Hold  Harmless Program,  which was  a program  working under                                                                    
the  premise that  the  state should  not  count the  yearly                                                                    
dividend  as income  when making  determinations for  people                                                                    
applying for  public assistance, including  Medicaid, unless                                                                    
required by federal law. If  required by federal law, a Hold                                                                    
Harmless benefit  would be provided  for up to  four months.                                                                    
He  reiterated  that the  program  was  intended to  protect                                                                    
individuals from loss  of a benefit for one  time income and                                                                    
provided up to  four months of benefits. He  said that under                                                                    
the MAGI rules,  the department was forced to  count the PFD                                                                    
as income.  He stated that  the department had  struggled to                                                                    
reconcile the  different pertinent  statutes. He  added that                                                                    
individuals  that  might  be   ineligible  as  a  result  of                                                                    
receiving  the  PFD  would be  eligible  to  receive  health                                                                    
insurance  through  the federally  facilitated  marketplace,                                                                    
the insurance would be  significantly subsidized through the                                                                    
income  tax  credits  provided   by  the  market  place.  He                                                                    
explained  that unlike  the situation  where  a person  lost                                                                    
their benefits as a result  of receiving the PFD, the person                                                                    
would  be ineligible  for the  Medicaid expansion  group but                                                                    
eligible  for health  insurance coverage  subsidized through                                                                    
the exchange.                                                                                                                   
9:21:34 AM                                                                                                                    
Mr.  Sherwood  relayed that  the  expansion  group would  be                                                                    
exempt  from the  Hold Harmless  Program. He  continued with                                                                    
the sectional analysis:                                                                                                         
     Section 3 Amends the duties  of the department under AS                                                                  
     47.05.010 to include a requirement  that DHSS develop a                                                                    
     health  care   delivery  model  that   encourages  good                                                                    
     nutrition and disease prevention.                                                                                          
     Section  4  Amends  AS   47.05.200(a)  to  clarify  the                                                                  
     minimum number of audits that  DHSS should conduct each                                                                    
     year, along  with instructions that DHSS  should to the                                                                    
     extent   possible,  minimize   duplicative  state   and                                                                    
     federal audits for Medicaid providers.                                                                                     
     Section  5  Amends AS  47.05.200(b)  to  allow DHSS  to                                                                  
     impose  interest penalties  on identified  overpayments                                                                    
     using the post-judgment statutory rate.                                                                                    
     Section 6  Adopts AS 47.05.250 that  authorizes DHSS to                                                                  
     develop   provider   fines   through   regulation   for                                                                    
     violations  of  AS  47.05,   AS  47.07  or  regulations                                                                    
     adopted under those chapters.                                                                                              
9:26:14 AM                                                                                                                    
Mr. Sherwood addressed Section 7:                                                                                               
     Section  7 Amends  AS 47.07.020(b)  including technical                                                                  
     corrections   related  to   eligibility  for   Medicaid                                                                    
     authorized under the Affordable  Care Act. This section                                                                    
     also  provides   the  authority  for  DHSS   to  expand                                                                    
     Medicaid to  adults aged 19-64  who are not  caring for                                                                    
     dependent children,  are not disabled or  pregnant, and                                                                    
     who  earn  at  or  below 138  percent  of  the  federal                                                                    
     poverty  guidelines  for   Alaska  including  the  five                                                                    
     percent income disregard.                                                                                                  
Mr.  Sherwood  explained that  by  converting  to MAGI,  the                                                                    
federal  government  had  collapsed  several  categories  of                                                                    
coverage,  including   many  categories  for   children;  AS                                                                    
47.07.020(b) would  be amended  in order to  better describe                                                                    
the group  of children that  would be covered.  He furthered                                                                    
that existing categories of Medicaid  that were converted to                                                                    
the   MAGI  methodology   were  required   by  the   federal                                                                    
government  to  convert  the old  income  standards  to  new                                                                    
standards in order  to reflect the fact  the disregards were                                                                    
no longer  being used. The federal  government would perform                                                                    
a  calculation  to  determine  the  change  of  income  that                                                                    
prompted the loss of the disregards.                                                                                            
9:29:54 AM                                                                                                                    
Mr. Sherwood moved to Sections 8 and 9 of the bill:                                                                             
     Section  8  This  section  amends  AS  47.07.020(g)  to                                                                  
     clarify that,  for a person whose  Medicaid eligibility                                                                    
     is  not calculated  using the  modified adjusted  gross                                                                    
     income  standard  established in  federal  regulations,                                                                    
     DHSS  may not  deny or  delay the  person's eligibility                                                                    
     for medical  assistance on the  basis of a  transfer of                                                                    
     assets for  less than fair  market value if  the person                                                                    
     establishes to the satisfaction  of the department that                                                                    
     the denial  or delay would  work an undue  hardship. It                                                                    
     further   requires   that   DHSS  may   only   consider                                                                    
     information  provided   by  a  person   claiming  undue                                                                    
     hardship  that the  department has  verified through  a                                                                    
     source other than the person's own statement.                                                                              
     Section 9 Amends AS 47.07.020  (m) to clarify that, for                                                                  
     persons  whose Medicaid  eligibility is  not calculated                                                                    
     using  the  modified  adjusted  gross  income  standard                                                                    
     established  in federal  standards and  as provided  in                                                                    
     Section  8  (above),  the  department  shall  impose  a                                                                    
     penalty period of ineligibility  for the transfer of an                                                                    
     asset for less  than fair market value  by an applicant                                                                    
     or applicant's spouse consistent with federal rules.                                                                       
Mr. Sherwood related that the sections provided the                                                                             
technical adjustments necessary to reflect that Alaska was                                                                      
compliant with federal requirements.                                                                                            
     Section  10  Amends  AS  47.07.030(d)  to  require  the                                                                  
     department to  develop a  primary care  case management                                                                    
     system or managed  care organization contract including                                                                    
     super-utilizers,  who must  enroll in  the program  and                                                                    
     seek  approval from  a  case  manager before  receiving                                                                    
     certain services.                                                                                                          
Mr. Sherwood noted that the section had been added by the                                                                       
House Health and Social Services Committee. The previously                                                                      
discretionary provision would be mandatory.                                                                                     
     Section 11 Amends  AS 47.07.030 to require  a report to                                                                  
     the legislature describing the  costs for mandatory and                                                                    
     optional Medicaid services.                                                                                                
     Section 12  Amends AS  47.07.036(b) to  make conforming                                                                  
     edits  so this  section  of the  statute is  consistent                                                                    
     with Section 13 of the bill.                                                                                               
     Section  13  Amends  AS 47.07.036(d)  to  outline  cost                                                                  
     containment   and  reform   measures  that   DHSS  must                                                                    
     undertake,  including   seeking  demonstration  waivers                                                                    
     related to  innovative service delivery models,  and to                                                                    
     include applying  for other options under  the Medicaid                                                                    
     Act   and    improving   telemedicine    for   Medicaid                                                                    
     recipients. This  section also  requires DHSS  to apply                                                                    
     for an 1115 waiver for  a demonstration project for one                                                                    
     or more  groups of Medicaid  recipients in one  or more                                                                    
     geographic area. The  demonstration project may include                                                                    
     managed    care     organizations,    community    care                                                                    
     organizations, or  patient-centered medical  homes, but                                                                    
     at  least  one  project  will  be  a  coordinated  care                                                                    
     project that  operates within a fixed  budget to reduce                                                                    
     medical cost  inflation, improve the quality  of health                                                                    
     care  for   recipients,  and  result  in   a  healthier                                                                    
     population. DHSS  shall design the managed  care system                                                                    
     to   reduce   the    growth   in   medical   assistance                                                                    
     expenditures  by at  least two  percentage points,  and                                                                    
     the   system   must   implement   alternative   payment                                                                    
     methodologies and create  a network of patient-centered                                                                    
     primary  care homes.  The  department  shall prepare  a                                                                    
     report  regarding the  progress  of this  demonstration                                                                    
     project  and shall  deliver it  to  the legislature  by                                                                    
     February 1, 2019.                                                                                                          
9:34:21 AM                                                                                                                    
Mr. Sherwood addressed Sections 14 and 15:                                                                                      
     Section 14  and 15 Amends  AS 47.07.900(4) and  (17) to                                                                  
     remove   the   requirement   that   behavioral   health                                                                    
     providers be a grantee of  the State of Alaska in order                                                                    
     to bill Medicaid.                                                                                                          
Mr. Sherwood explained that the amendment would expand the                                                                      
base of providers for behavioral health services for                                                                            
Medicaid and align the state with federal law.                                                                                  
     Section 16  Authorizes DHSS  to investigate  the design                                                                  
     of  a demonstration  project  to  help reduce  pre-term                                                                    
     births    to    include   voluntary    enrollment    of                                                                    
     approximately  500  recipients   eligible  for  medical                                                                    
     assistance.  DHSS  shall  offer  pregnancy  counseling,                                                                    
     nutritional  counseling, and,  as necessary,  vitamin D                                                                    
     supplementation.  The project  can be  modeled after  a                                                                    
     project implemented in South Carolina.                                                                                     
Mr. Sherwood  said that  the amendment,  added by  the House                                                                    
Health and  Social Services  Committee, instructs  the state                                                                    
to develop a proposal to  improve the pre-term birth rate in                                                                    
the  state through  the use  of nutritional  counselling and                                                                    
vitamin supplements.                                                                                                            
9:36:01 AM                                                                                                                    
Mr. Sherwood continued with the sectional analysis:                                                                             
     Section   17   Authorizes   DHSS   to   engage   in   a                                                                  
     demonstration project  for super-utilizers  as outlined                                                                    
     in section  13, and  report to  the legislature  on the                                                                    
Mr. Sherwood said that the amendment was added in the CS                                                                        
consistent with the changes in Section 13. He continued                                                                         
with the analysis:                                                                                                              
     Section 18 Outlines a series  of records that DHSS must                                                                  
     provide  to the  legislature relating  efficacy of  the                                                                    
     reform measures taken by  the Department, including any                                                                    
     cost savings.                                                                                                              
     Section  19 Authorizes  DHSS to  immediately amend  its                                                                  
     state plan and seek  all necessary approvals consistent                                                                    
     with this Act.                                                                                                             
     Section 20 Authorizes DHSS to  engage in emergency rule                                                                  
     making   under  the   Alaska  Administrative   Code  to                                                                    
     implement Medicaid  reform measures and  the provisions                                                                    
     of this Act.                                                                                                               
     Section  21 Provides  that  Section 20  of  the Act  is                                                                  
     repealed on June 30, 2017.                                                                                                 
     Section  22 Provides  instructions to  the revisors  of                                                                  
     the  statutes to  amend the  title of  AS 47.07.036  to                                                                    
     include Medicaid Reform.                                                                                                   
     Section  23  Provides  that  Section   19  and  20  are                                                                  
     effective immediately.                                                                                                     
     Section 24 Provides that all  other sections of the Act                                                                  
     are effective on August 1, 2015.                                                                                           
Co-Chair Thompson provided members with a list of                                                                               
department staff available for questions. He reminded                                                                           
members that the meeting would end at 10:20 a.m.                                                                                
9:39:55 AM                                                                                                                    
Vice-Chair  Saddler  asked  about   Section  17  of  the  CS                                                                    
regarding managed  care for  super-utilizers. He  pointed to                                                                    
Page 13, lines 21 through 26 of the bill:                                                                                       
     (1) establish a primary  care case management system or                                                                    
     a   managed  care   organization   contract  under   AS                                                                    
     47.07.030(d), as  amended by sec.  10 of this  Act, for                                                                    
     super- utilizers, as identified by the department; and                                                                     
     (2) deliver a  report on the system or  contract to the                                                                    
     senate secretary  and the chief  clerk of the  house of                                                                    
     representatives  and notify  the  legislature that  the                                                                    
     report is available.                                                                                                       
Vice-Chair  Saddler queried  the expected  timeline for  the                                                                    
reports  to  be completed  and  the  systems  to be  up  and                                                                    
Mr. Sherwood replied that the  program would be an extension                                                                    
of a  program already in  operation for the managed  care of                                                                    
super-utilizers,  and that  the department  hoped to  expand                                                                    
the program further.                                                                                                            
Vice-Chair  Saddler asked  if the  program  was for  primary                                                                    
care  management system  or a  management care  organization                                                                    
Mr.  Sherwood  answered  that the  primary  care  management                                                                    
model would be used.                                                                                                            
Vice-Chair Saddler reiterated his  question about the report                                                                    
Mr. Sherwood responded that the  report would be due January                                                                    
Vice-Chair  Saddler asked  when  the super-utilizer  program                                                                    
had begun.                                                                                                                      
Mr. Sherwood replied that the  program had begun in December                                                                    
Representative Wilson asked about  the make-up of the 40,000                                                                    
additional   individuals  that   would  be   added  due   to                                                                    
9:42:31 AM                                                                                                                    
Commissioner Davidson  replied that  the nearly  42,000 that                                                                    
would  be eligible  under expansion  were people  who earned                                                                    
$9.52  per  hour,  based  upon  a 40  hour  work  week.  She                                                                    
elaborated that 44  percent of the majority  of the eligible                                                                    
population  were Alaskans  who  were  actively employed,  29                                                                    
percent  of  the  population  were  collecting  unemployment                                                                    
insurance, which  required them to be  recently employed and                                                                    
actively seeking work;  over 70 percent of  people who would                                                                    
benefit  from  the  expansion   were  employed  or  actively                                                                    
seeking  employment.  She  said   that  54  percent  of  the                                                                    
eligible  population were  male,  20 percent  of that  group                                                                    
were 19-34  years old.  She said  that experience  had shown                                                                    
that this  population was cheaper  to cover because  men did                                                                    
not  get  pregnant  and  generally  did  not  actively  seek                                                                    
healthcare coverage.                                                                                                            
9:44:48 AM                                                                                                                    
Representative Wilson understood that  the majority of those                                                                    
covered by  expansion were employed, but  questioned why the                                                                    
employers were not covering healthcare costs.                                                                                   
Commissioner Davidson  replied that the number  of employers                                                                    
offering  health  care  to   their  employees  had  declined                                                                    
steadily over  the past 20  years. She related that  many of                                                                    
the employers  in the  state were  small businesses  who had                                                                    
not  been able  to  afford to  provide  healthcare to  their                                                                    
Representative   Wilson  asked   whether   the  option   for                                                                    
providing healthcare  at a discount  had been  explored. She                                                                    
expressed concern  as to how the  state providing healthcare                                                                    
would   affect   employers   who  were   already   providing                                                                    
healthcare.  She  wondered  whether those  small  businesses                                                                    
could be added  to the state healthcare  system, rather than                                                                    
creating a new program.                                                                                                         
Commissioner  Davidson  replied  that  the  option  was  not                                                                    
included  in  the  legislation. She  said  that  some  might                                                                    
already  have  access  to  healthcare  service  through  the                                                                    
Tribal Health  System, Indian  Health Service,  330 Clinics,                                                                    
or Community  Health Centers, but  that those  programs were                                                                    
not health  insurance -  not a  portable benefit,  they were                                                                    
limited health coverage. She  added that specialist services                                                                    
were  not typically  available  through  those centers,  and                                                                    
without healthcare  insurance people  would not  have access                                                                    
to those  services. She  said that  20 percent  of Alaskan's                                                                    
did  not have  healthcare  coverage, the  bill reduced  that                                                                    
number by  10 percent, and  90 percent of the  expense would                                                                    
be covered by the federal government.                                                                                           
Representative  Wilson did  not understand  exactly who  the                                                                    
bill was  aiming to cover.  She mentioned  Texas corrections                                                                    
healthcare  reform.  She  understood  that  there  had  been                                                                    
positive change in the Texas  corrections system as a result                                                                    
of solely expansion.                                                                                                            
9:49:48 AM                                                                                                                    
Commissioner   Davidson  replied   in   the  negative.   She                                                                    
explained  that she  had  chosen Texas  as  a comparison  to                                                                    
Alaska due  to a similar  "tough on crime"  mentality, which                                                                    
had  failed to  reduce recidivism  rates. She  detailed that                                                                    
Texas had invested with 100  percent general fund dollars in                                                                    
behavioral health services to  reduce recidivism; Alaska now                                                                    
had the  opportunity to  achieve the  same outcome  using 90                                                                    
percent federal dollars.                                                                                                        
Representative  Wilson  asserted   that  Medicaid  expansion                                                                    
would not result in less people in jail.                                                                                        
Representative   Gara  discussed   savings  listed   by  the                                                                    
administration   that  would   occur  under   expansion.  He                                                                    
believed the state was facing  what could be a recession. He                                                                    
pointed  to  the  department's claim  that  expansion  would                                                                    
generate 4,000 jobs.  He asked what the  department could do                                                                    
to convince the committee that the numbers were real.                                                                           
9:53:46 AM                                                                                                                    
Commissioner  Davidson  explained  that while  inmates  were                                                                    
incarcerated  they were  not eligible  for Medicaid  and had                                                                    
not been included as a  part of the anticipated savings. She                                                                    
shared that the Department  of Corrections (DOC) had deduced                                                                    
that the services for which  inmates were eligible, or could                                                                    
be  eligible,  under  expansion   would  be  for  contracted                                                                    
services not provided  by the DOC. She  explained that under                                                                    
federal law  if the  inmate required  an overnight  stay for                                                                    
their procedure  they would be  eligible for  Medicaid under                                                                    
the expanded  group. She said  that the expected  savings by                                                                    
DOC were  reflected on the  fiscal note. She noted  that the                                                                    
first year of savings were  targeted to be conservative, but                                                                    
would  increase as  the program  gained inertia.  The second                                                                    
area of  savings was  anticipated in  the Chronic  and Acute                                                                    
Medical Assistance  (CAMA) program. Individuals in  the CAMA                                                                    
program were  typically high-dollar beneficiaries,  paid for                                                                    
with 100  percent general  fund dollars.  She said  that the                                                                    
savings  numbers  had  been built  on  what  the  department                                                                    
expected to  save based  upon what  was currently  paid. She                                                                    
explained  that  behavioral  health providers  who  received                                                                    
grants were going  to have populations who  would be covered                                                                    
under  Medicaid  expansion.  She  relayed  that  the  dollar                                                                    
amounts in  the fiscal notes  had been based on  trends over                                                                    
the past few years. She  asserted that there were other ways                                                                    
to diversify the state's revenue,  but that those would take                                                                    
time  to  provide  financial  results.  She  contended  that                                                                    
Medicaid   expansion  was   an   immediate  opportunity   to                                                                    
diversify  the  state's  portfolio,  with  $145  million  in                                                                    
savings projected in the first  year, and a cumulative total                                                                    
of over  $1 billion.  She spoke to  the 4,000  projected new                                                                    
jobs. She  said that  the numbers  came from  an independent                                                                    
analysis,  performed by  Northern  Economics. She  clarified                                                                    
that  the 4,000  jobs were  not expected  in the  healthcare                                                                    
industry  alone, but  from other  multiplier effects  in the                                                                    
9:59:47 AM                                                                                                                    
Mr.  Sherwood  informed  the  committee  that  the  cost  of                                                                    
expansion included one waiver  and two new Medicaid options.                                                                    
The  1115  waiver  was a  demonstration  waiver  that  would                                                                    
provide  an  innovative  service  delivery  model  with  the                                                                    
tribal health system.  He said that services  provided to an                                                                    
Indian Health  Services (IHS)  beneficiary through  a tribal                                                                    
health  facility  were  reimbursed  at 100  percent  by  the                                                                    
federal government. He stated  that the demonstration waiver                                                                    
would focus  on travel  and accommodations. He  relayed that                                                                    
the waiver  would broaden its  scope to treat  tribal health                                                                    
organizations  as  accountable   care,  or  community  care,                                                                    
organizations.  The department  anticipated  savings due  to                                                                    
the change  in funds, from  50 percent federal funds  to 100                                                                    
percent general  funds, by  bringing more  services directly                                                                    
under  the umbrella  of tribal  health  facilities. He  said                                                                    
that a  reduction in overall  spending was  expected through                                                                    
better  management of  services. He  continued to  the 1915i                                                                    
option, which  was a  home and  community based  option that                                                                    
would provide  coverage for services similar  to the current                                                                    
waivers.  The current  waivers required  that an  individual                                                                    
meet  a  certain  institutional  level  of  care,  primarily                                                                    
nursing   home   or   intermediate   care   facilities   for                                                                    
individuals  with intellectual  disabilities.  He said  that                                                                    
the  1915i would  provide coverage  to people  that did  not                                                                    
meet the current criteria.                                                                                                      
10:04:27 AM                                                                                                                   
Mr.  Sherwood stated  that the  1915k option  would cover  a                                                                    
variety  of  services  that provided  a  level  of  personal                                                                    
assistance to an individual, and  was limited to people that                                                                    
met an  institutional level of  care. He said that  when the                                                                    
federal government passed the  option, a provision was added                                                                    
that services  under the option would  receive an additional                                                                    
6 percent  in federal funds, for  a total of 56  percent. He                                                                    
believed that a  substantial amount of the  state's home and                                                                    
community  based waivered  services,  and a  portion of  the                                                                    
personal   care  services   provided   to  waiver   eligible                                                                    
individuals, could  be converted  to this option  to receive                                                                    
the enhanced federal match.                                                                                                     
10:05:48 AM                                                                                                                   
Co-Chair Thompson noted that Co-Chair  Neuman had joined the                                                                    
Co-Chair Thompson asked about  the administration's plan for                                                                    
managed care.                                                                                                                   
Commissioner Davidson pointed out  to the committee that the                                                                    
language in  the bill was  necessarily broad and  included a                                                                    
host of  payment reform. She  explained that  "managed care"                                                                    
was a  defined legal  term. She  said that  the rest  of the                                                                    
country  had  moved  away  from  managed  care  as  a  legal                                                                    
structure because  it was outdated.  She relayed  that other                                                                    
states had looked  into different models that  were a hybrid                                                                    
of options, and could be  more efficient and provided better                                                                    
value. She  felt that  managed care  would limit  the state;                                                                    
there  was  a difference  between  managing  the care  of  a                                                                    
population, and  a managed care organization.  She mentioned                                                                    
that in  Wyoming, managed  care had not  proven to  work for                                                                    
that  state  prompting  them to  choose  the  super-utilizer                                                                    
program  and  to explore  the  patient  center medical  home                                                                    
model.  She said  that there  were  three demonstrations  in                                                                    
Alaska  that were  testing patient  centered medical  homes.                                                                    
She  shared that  the department  had issued  a request  for                                                                    
proposal  (RFP) to  would  allow then  to  study what  other                                                                    
states  were doing  on  the issue  of  Medicaid reform.  She                                                                    
relayed that Alaska  was one of the last states  using a fee                                                                    
for service system, which was an unsustainable model.                                                                           
10:09:41 AM                                                                                                                   
Co-Chair  Neuman asked  whether managed  care could  include                                                                    
private insurance companies.                                                                                                    
Commissioner  Davidson replied  that managed  care in  other                                                                    
states  were often  insurance companies  but sometimes  went                                                                    
through a  broker. She related  that the kind  of innovation                                                                    
that  the bill  discussed could  be accomplished  through an                                                                    
insurance company.                                                                                                              
Co-Chair Neuman  asked whether the  state could  buy private                                                                    
insurance,   through  managed   care,   for  all   uninsured                                                                    
Commissioner  Davidson replied  that  the  bill would  begin                                                                    
expansion  as  soon  as possible  in  order  to  immediately                                                                    
benefit from  the federal dollars.  The department  hoped to                                                                    
look at additional models as  the process moved forward. The                                                                    
expansion program  written in  the legislation  mirrored the                                                                    
Medicaid  program;  as  reforms   were  implemented  in  the                                                                    
Medicaid  program, the  expansion group  would follow  those                                                                    
10:12:03 AM                                                                                                                   
Co-Chair Neuman  stated that  the question was  a yes  or no                                                                    
Commissioner Davidson replied in the affirmative.                                                                               
Vice-Chair Saddler asked about  the 1915 waivers and whether                                                                    
the  state  was  required  to  consult  with  tribes  before                                                                    
submitting a waiver request.                                                                                                    
Commissioner Davidson replied in the affirmative.                                                                               
Vice-Chair  Saddler  queried  whether tribes  had  any  veto                                                                    
power over the waiver requests.                                                                                                 
Mr. Sherwood  replied that under  the terms  of consultation                                                                    
tribal  communities  did not  have  the  ability to  veto  a                                                                    
proposal; however, the state would  not force cooperation if                                                                    
tribal providers  did not  want to work  with the  state. He                                                                    
stated that  the effort would  have to be  collaborative. He                                                                    
clarified  that  the  state was  required  to  consult  with                                                                    
tribal entities on any changes  to the Medicaid program that                                                                    
could potentially impact tribal beneficiaries.                                                                                  
10:15:25 AM                                                                                                                   
Vice-Chair  Saddler whether  the  state would  not pursue  a                                                                    
waiver over an objection from tribal entities.                                                                                  
Mr. Sherwood answered  that the state would have  to come to                                                                    
an  understanding  agreement  with tribal  organizations  in                                                                    
order to carry out the waiver.                                                                                                  
Commissioner   Davidson   elaborated  that   tribal   health                                                                    
organizations  in  Alaska had  been  trying  to pursue  1915                                                                    
waivers with the state for the  last 10 years. She said that                                                                    
three things  were needed  in order for  the requests  to be                                                                    
successful: tribal organizations needed  to be willing, have                                                                    
a strong partnership with the  state, and have approval from                                                                    
the Centers  for Medicare and  Medicaid Services  (CMS). She                                                                    
stated that  over the past  few years CMS had  approved 1915                                                                    
waivers  with  tribes  and  tribal  organizations  in  other                                                                    
Vice-Chair Saddler asked  if the state had  sought 1915i and                                                                    
1915k waivers in the past.                                                                                                      
Mr.  Sherwood replied  in the  negative. He  elaborated that                                                                    
there had been  past work done developing  proposals for the                                                                    
use of  1915k waivers, but  it had  not been pursued  by the                                                                    
prior administration.                                                                                                           
Vice-Chair  Saddler understood  that  there  had been  prior                                                                    
consideration but not been a formal request.                                                                                    
Mr.  Sherwood replied  in the  affirmative. He  said that  a                                                                    
number  of  initiatives had  been  put  on hold  during  the                                                                    
transition to the new claims payment system.                                                                                    
Vice-Chair   Saddler  assumed   that  challenges   with  the                                                                    
computer  system had  precluded  the  department from  going                                                                    
forward with the 1915i and 1915k waivers.                                                                                       
Mr. Sherwood  responded that  the primary  consideration had                                                                    
been  the  timing of  making  a  substantial change  in  the                                                                    
waiver system,  while simultaneously making a  change in the                                                                    
new claims payment system.                                                                                                      
Commissioner Davidson  interjected that the 1915i  and 1915k                                                                    
options  had been  available under  the Affordable  Care Act                                                                    
since  October   2010.  She  furthered  that   this  was  an                                                                    
opportunity  to  refinance   programs  that  were  currently                                                                    
provided,  in  order  to  benefit  from  the  additional  50                                                                    
percent  federal  match  under  the  1915i  option,  and  an                                                                    
additional 6 percent match under  the 1915k option. She gave                                                                    
that 6  percent might  not seem  like a  lot, but  given the                                                                    
state's fiscal climate it would be significant.                                                                                 
Vice-Chair Saddler understood that  there had been a decline                                                                    
in  Medicaid providers  in the  state, and  wondered whether                                                                    
that would affect the delivery  of services to the expansion                                                                    
Mr. Sherwood did not believe  the decline was continuing. He                                                                    
asserted that  a significant part  of past decline  had been                                                                    
due  to  the  fact  that,  historically,  Medicaid  had  not                                                                    
required  periodic program  reenrollment. He  explained that                                                                    
the  department  had  a process  of  dis-enrolling  inactive                                                                    
providers.  He offered  to provide  more information  on the                                                                    
matter at a later date.                                                                                                         
Vice-Chair  Saddler  asked whether  dis-enrolling  providers                                                                    
would  affect   the  expanded   number  of   people  seeking                                                                    
Commissioner  Davidson  replied  that  approximately  40,000                                                                    
people would be  eligible - and 20,000 would sign  up in the                                                                    
first year,  with 26,000  signing up in  the out  years. She                                                                    
said that concerns existed as  to whether providers would be                                                                    
able  to  deliver  services, particularly  in  the  area  of                                                                    
behavioral  health, which  was why  the prerequisite  that a                                                                    
behavioral health providers  had to be a  grant recipient in                                                                    
order to  bill Medicaid  would be  removed. She  stated that                                                                    
the demand for behavioral health  services in the state were                                                                    
significant  and  that  the  department  looked  forward  to                                                                    
providing those services to Alaskans in need.                                                                                   
Vice-Chair  Saddler  queried  whether  the  removal  of  the                                                                    
behavioral  health  grantee   status  requirement  would  be                                                                    
sufficient  to  address  the  impact  of  20,000  additional                                                                    
Commissioner  Davidson believed  it  would be  a start.  She                                                                    
furthered that  one of the reform  opportunities included in                                                                    
the bill  would pursue alternative provider  types. She said                                                                    
that there were providers in the state that currently                                                                           
provided services, but at a limited capacity, and                                                                               
additional work could be done on the issue.                                                                                     
Co-Chair Thompson discussed housekeeping.                                                                                       
HB 148 was HEARD and HELD in committee for further                                                                              

Document Name Date/Time Subjects
Expansion Reform Timeline.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
HB 148 NEW DHSS Fiscal Notes PKT.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
HB148 Corrections White Paper.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
HB148 Summary of Changes ver A to ver H.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
HB148 Supporters of Medicaid Reform.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
HB 148 Medicaid Support letter.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
HB 148_Medicaid_Board-11.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
HB 148 Evergreen Response to Report Differences 033115.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
HB 148 Support Packet Gov Walker 4-6-15 for House Finance - opt.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
CS HB 148 (HSS) sectional.pdf HFIN 4/7/2015 9:00:00 AM
HB 148
HB 148 Sponsor Statement - Transmittal Letter.pdf HFIN 4/7/2015 9:00:00 AM
HB 148