Legislature(2015 - 2016)ANCH LIO BUILDING

05/12/2015 01:00 PM House FINANCE

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Audio Topic
01:11:30 PM Start
01:11:50 PM HB148
04:13:58 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Location: 1st Floor Auditorium
Heard & Held
Discussion: Response to Finance Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
**Streaming available to public in Juneau
Capitol Rm 120**
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                                                                    
1:11:50 PM                                                                                                                    
Co-Chair Thompson  discussed the  meeting agenda.  He shared                                                                    
that the  committee would continue  to address  the Medicaid                                                                    
Management   Information  System   (MMIS).  He   noted  that                                                                    
committee members  had been provided  with the  Affidavit of                                                                    
Margaret   Brodie  [Director,   Division   of  Health   Care                                                                    
Services, Department  of Health  and Social  Services] dated                                                                    
February  2,   2015  (copy  on  file).   He  listed  various                                                                    
department staff  available for  questions. He  had reviewed                                                                    
the PowerPoint from the prior  day and was concerned that it                                                                    
did not consistently match the affidavit.                                                                                       
1:13:59 PM                                                                                                                    
Representative  Wilson  pointed to  pages  2  and 3  of  the                                                                    
affidavit  related  to  the delay  in  providing  acceptable                                                                    
design, development, and  implementation (DDI) deliverables.                                                                    
She  asked if  deliverables 6  through 8  had been  paid and                                                                    
accepted by the department.                                                                                                     
MARGARET   BRODIE,  DIRECTOR,   DIVISION   OF  HEALTH   CARE                                                                    
SERVICES, DEPARTMENT OF HEALTH  AND SOCIAL SERVICES, replied                                                                    
that  the  DDI   deliverables  mentioned  by  Representative                                                                    
Wilson had not been paid for.                                                                                                   
Representative Wilson asked what  the acronym DDI stood for.                                                                    
Ms. Brodie  replied that DDI stood  for design, development,                                                                    
and implementation.                                                                                                             
Representative  Wilson   asked  about  the  status   of  the                                                                    
specific deliverables  and why they  had not yet  been paid.                                                                    
Ms. Brodie answered  that DDI deliverables 6  through 8 were                                                                    
testing  packages for  the different  types  of claims.  The                                                                    
state had determined that if  adequate testing had been done                                                                    
for the deliverables, claims would  have been paid correctly                                                                    
from the beginning.                                                                                                             
Representative Wilson wondered if the  state did not plan on                                                                    
paying for the  items. Ms. Brodie answered  that the testing                                                                    
had  been done  with the  defect fixes  and change  requests                                                                    
that had been  underway for past 19 months  (since "go live"                                                                    
on October 1, 2013).                                                                                                            
Representative  Wilson  understood  that  the  division  was                                                                    
still working  on the testing.  She was trying  to determine                                                                    
if  the deliverables  were out  of the  contract or  whether                                                                    
there was  still more work that  had to be done.  Ms. Brodie                                                                    
replied that  it was the  state's contention that  the Xerox                                                                    
contract was still in the DDI phase.                                                                                            
Representative   Wilson  asked   if  the   items  would   be                                                                    
determined  later down  the road.  Ms.  Brodie replied  that                                                                    
Xerox   had  submitted   its  testing   documents  for   the                                                                    
division's approval; it had not yet given the approval.                                                                         
Representative Wilson  pointed to a  list of defects  in the                                                                    
MMIS on pages  4 and 5 of the affidavit.  She wondered about                                                                    
the status of the items on the list.                                                                                            
Ms. Brodie answered that the  list included defects for item                                                                    
7, which  had been mentioned  on slide 13 of  the division's                                                                    
PowerPoint from  the previous day ["Medicaid  Payment System                                                                    
Status  Update" dated  May  11, 2015  (copy  on file)].  The                                                                    
first two items of the list had been corrected:                                                                                 
   1. System is unable to accurately balance claims as a                                                                        
     result of a rounding error imbedded within the system                                                                      
   2. Extreme slow system performance surrounding medical                                                                       
     service authorization functionality                                                                                        
Ms.  Brodie elaborated  that the  time it  took to  submit a                                                                    
service authorization had decreased  from 30 minutes down to                                                                    
5 to 10 minutes. Item 3  had been corrected; item 4 had been                                                                    
corrected  by  about 97  percent.  There  were a  few  minor                                                                    
claims that  still did not  pay including TEFRA  [Tax Equity                                                                    
and  Fiscal  Responsibility  Act];  the  division  was  also                                                                    
working  on  an  issue  with  hospital  stays  for  cesarean                                                                    
sections exceeding three days.                                                                                                  
   3. System does not price  claims correctly  (12.4 percent                                                                    
     of all claims are not priced correctly)                                                                                    
   4. System fails to pay certain categories of claims (e.g.                                                                    
     hospital stays longer than three days)                                                                                     
Ms. Brodie continued addressing  the defects listed on pages                                                                    
4  and 5  of  the  affidavit. Items  5  through  8 had  been                                                                    
   5. System inappropriately  denies   claims  (many  remain                                                                    
     wrongly denied and outstanding for over a year)                                                                            
   6. System is unable to process  many claims,  causing the                                                                    
     claims to suspend                                                                                                          
   7. System lists  claims  as  being  paid,  but  links  no                                                                    
     provider to the claim, so checks can't issue and the                                                                       
     claims aren't paid                                                                                                         
   8. System pays wrong provider; (also  problematic because                                                                    
     the checks go to the wrong provider with an EOB -this                                                                      
     is protected health information)                                                                                           
Ms. Brodie relayed  that item 9 had not  yet been corrected.                                                                    
Item 10 had been corrected:                                                                                                     
   9. System is not able to  produce the cost  based reports                                                                    
     needed to change the provider rates;                                                                                       
   10.    System is unable to  correctly process third party                                                                    
     liability    insurance   (situations    where   private                                                                    
     insurance pays share of claim prior to Medicare).                                                                          
1:19:18 PM                                                                                                                    
Co-Chair Thompson  wondered if the corrected  items had been                                                                    
corrected  100 percent  and why  they had  not been  paid if                                                                    
they  were  complete.  He  had asked  the  division  in  the                                                                    
previous meeting if  there were items the state  had not yet                                                                    
paid. He recalled that the  division had responded that many                                                                    
things had  not yet been  paid. He remarked that  Ms. Brodie                                                                    
had  just reported  that all  but one  of the  items on  the                                                                    
defects list had been corrected;  therefore, he wondered why                                                                    
deliverables 6 through 8 were still open.                                                                                       
Ms.  Brodie  replied that  the  division  had identified  38                                                                    
items  for Xerox  to  fix in  order for  all  claims to  pay                                                                    
Co-Chair  Neuman asked  for verification  that the  division                                                                    
was  able  to  pay  90  percent  of  all  claims  submitted.                                                                    
Additionally, he asked if the  defects listed on page 4 were                                                                    
all corrected  by 97 to  100 percent. Ms. Brodie  replied in                                                                    
the  affirmative  related to  new  claims.  There was  still                                                                    
cleanup work underway for claims  that had been suspended or                                                                    
denied  inappropriately  in  the   past.  The  division  was                                                                    
currently  working  on  reprocessing   the  claims;  it  was                                                                    
prioritizing by dollar amount and provider type.                                                                                
Co-Chair  Neuman  asked how  many  claims  the division  was                                                                    
reprocessing  and  what the  total  dollar  amount was.  Ms.                                                                    
Brodie  did not  have a  dollar amount  associated with  the                                                                    
230,371 claims that  would result in a  payout to providers.                                                                    
The majority would be a  fraction of one cent. She explained                                                                    
that when  the system had  first gone live  for professional                                                                    
providers, the  payment rate went  out four  decimal places;                                                                    
however, the system  had been built with  only three decimal                                                                    
places. She  elaborated that there  were 226,000  claims for                                                                    
reprocessing that would result in  a recoupment by the state                                                                    
from  providers.  By regulation  the  division  had to  give                                                                    
providers notice  at least  60 days  in advance;  the letter                                                                    
had been  mailed to  providers on May  1 [2015].  There were                                                                    
5,436 claims for reprocessing that had no financial impact.                                                                     
Co-Chair Neuman  emphasized that  there were  228,000 claims                                                                    
the division was experiencing problems with.                                                                                    
1:22:35 PM                                                                                                                    
Representative  Gara  stated  that the  costs  and  benefits                                                                    
needed to  be weighed. He stated  that Commissioner Davidson                                                                    
had  provided a  chart in  the past  showing that  under the                                                                    
legislation the  state would save  over $250 million  in the                                                                    
following six years.                                                                                                            
VALERIE  DAVIDSON, COMMISSIONER,  DEPARTMENT  OF HEALTH  AND                                                                    
SOCIAL SERVICES, replied in the affirmative.                                                                                    
Representative Gara remarked that  the legislature had asked                                                                    
the  department   to  engage   in  reforms.  He   asked  for                                                                    
verification that  the reforms  the department  was pursuing                                                                    
without the  bill would  save the  state an  additional $300                                                                    
million  over  the  next six  years.  Commissioner  Davidson                                                                    
replied in the affirmative.                                                                                                     
Co-Chair  Thompson  asked  if the  numbers  were  estimates.                                                                    
Commissioner Davidson answered in the affirmative.                                                                              
Representative  Gara   highlighted  that  the   state  would                                                                    
receive $145 million in federal  funds the first year, which                                                                    
would grow.  He asked  for verification that  the department                                                                    
estimated  an  additional 4,000  jobs  would  be created  in                                                                    
Alaska.  Commissioner Davidson  replied  that  in the  first                                                                    
year  of  Medicaid expansion  $146  million  in new  federal                                                                    
revenue was expected.  The total new federal  revenue in the                                                                    
first  six years  would  be slightly  over  $1 billion.  She                                                                    
explained that  the 4,000 new  jobs figure had come  from an                                                                    
economic  study  conducted   by  Northern  Economics,  which                                                                    
looked at the multiplier effect  in the economy and how many                                                                    
jobs  the  new dollars  would  generate.  She detailed  that                                                                    
while  some  of the  jobs  would  be related  to  healthcare                                                                    
others  would  be  related to  items  like  food,  clothing,                                                                    
furniture,  kids' things,  and  other  that were  associated                                                                    
with increased medical personnel.                                                                                               
1:25:45 PM                                                                                                                    
Representative  Gara understood  there was  an issue  of old                                                                    
and new  claims. He addressed  the consideration  of whether                                                                    
the state  would have the ability  to pay the new  claims if                                                                    
Medicaid  expansion and  reform were  accepted. He  remarked                                                                    
that  the  department estimated  the  accuracy  rate on  new                                                                    
claims  was  somewhere  around  95  percent.  He  asked  for                                                                    
verification  that  the  remaining   5  percent  were  still                                                                    
processed within  two billing cycles.  He reasoned  that the                                                                    
money did not just disappear.                                                                                                   
Ms.  Brodie replied  that the  division worked  to determine                                                                    
why a claim  did not pay and to correct  the defect or error                                                                    
within  a couple  of billing  cycles;  if the  cause of  the                                                                    
error  could not  be determined  the division  implemented a                                                                    
workaround to allow payment of the claim.                                                                                       
Representative  Gara  asked   for  verification  that  under                                                                    
Medicaid expansion  and reform  the providers would  be paid                                                                    
either in the first billing  cycle or within several billing                                                                    
cycles. He  asked for verification that  providers would not                                                                    
be   denied  their   money.  Ms.   Brodie  replied   in  the                                                                    
affirmative;  providers would  be  paid within  the 30  days                                                                    
that the state was mandated to pay them.                                                                                        
Representative Gara  believed the department had  done great                                                                    
work  to get  the  "mess  in order"  over  the past  several                                                                    
months.  He referred  to businesses  claiming they  had gone                                                                    
out  of business  due to  a system  implemented in  2013. He                                                                    
asked for  verification that  the businesses  were referring                                                                    
to  problems  that  occurred  before  the  new  commissioner                                                                    
[Commissioner  Davidson] started  solving the  problems. Ms.                                                                    
Brodie replied in the affirmative.                                                                                              
Representative  Gattis  commented that  Representative  Gara                                                                    
had indicated  that MMIS was  a bum system. She  stated that                                                                    
in  business  when  a  new  program  was  started  (e.g.  an                                                                    
accounting program, new software,  or other) the old program                                                                    
was not discontinued until the  new program had proven to be                                                                    
successful. She opined that it  was not the wisest thing for                                                                    
the department  to discontinue  the old  system and  start a                                                                    
new  program before  its success  had  been determined.  She                                                                    
continued that the division was  currently trying to fix the                                                                    
system piece by piece. She  wondered if the system was still                                                                    
providing draws or advances to anyone.                                                                                          
Ms.  Brodie  replied  that  in  the  past  three  weeks  the                                                                    
division had  given two  advances. One had  been given  to a                                                                    
provider because  a system  error had  resulted in  an issue                                                                    
with their claims  being paid. The issue  had been corrected                                                                    
the past weekend.                                                                                                               
Representative Gattis interjected that  the system was still                                                                    
a bum  system. She continued that  it was not doing  what it                                                                    
was intended  to do. She  reiterated her prior  comment that                                                                    
the  division should  have continued  its former  accounting                                                                    
system  until  the  new program  was  working  properly.  In                                                                    
reference to the consideration of  expanding the system, she                                                                    
remarked  that  the  state  was   still  not  finished  with                                                                    
cleaning up  the old  system. She relayed  that in  the past                                                                    
her constituents  had complained  about getting  nothing and                                                                    
then  getting advances.  Some individuals  did  not want  to                                                                    
take advances. She had also  heard that some individuals did                                                                    
not want the  government to have a "stranglehold"  and to be                                                                    
subject  to the  continued  mistakes. She  had attended  her                                                                    
city  council meeting  the prior  evening  and relayed  that                                                                    
people  had asked  her  to "stop  this;  it's madness."  She                                                                    
believed  the system  continued to  have glitches  that were                                                                    
not ready to go forward.                                                                                                        
1:31:34 PM                                                                                                                    
Vice-Chair Saddler  relayed that  he had heard  from several                                                                    
providers   that   the    delays   in   providing   Medicaid                                                                    
reimbursements  had been  a  significant  hardship to  their                                                                    
businesses. He  pointed to page  8, lines  17 and 18  of the                                                                    
affidavit, which  stated that  a total  of 18  providers had                                                                    
gone  out  of business  after  taking  advance payments.  He                                                                    
asked  if  the department  was  asserting  that it  was  the                                                                    
providers'  fault for  going out  of business  and that  the                                                                    
absence of  reimbursements for  Medicaid services  played no                                                                    
Ms. Brodie  answered that  several of  the 18  providers had                                                                    
changed  their  tax  identification  (ID)  numbers  and  had                                                                    
opened  under  new  provider  ID  numbers.  She  believed  3                                                                    
providers  would  claim  that  Enterprise put  them  out  of                                                                    
business; 2 of  which had been prosecuted for  fraud and the                                                                    
other had sold their business.                                                                                                  
Vice-Chair Saddler turned to page  5, number 8 regarding the                                                                    
failure  of the  Enterprise  system  to financially  balance                                                                    
claims. He  asked how important  the financial  balancing of                                                                    
claims  was.  Ms.  Brodie replied  that  the  balancing  was                                                                    
Vice-Chair  Saddler  pointed  to  the  last  sentence  under                                                                    
number  8, page  5: "there  has not  been a  single instance                                                                    
where the claims have  balanced correctly under Enterprise."                                                                    
He  asked for  verification  that Ms.  Brodie  had made  the                                                                    
statement on  February 2, 2015.  Ms. Brodie replied  that it                                                                    
had  been  correct at  the  time.  She elaborated  that  the                                                                    
system did  not balance,  but the division  was able  to run                                                                    
reports to show what the  differences were in order to bring                                                                    
it into balance.                                                                                                                
Vice-Chair  Saddler referenced  Ms. Brodie's  statement that                                                                    
financial balancing was essential.  He noted that Ms. Brodie                                                                    
had stated that the system  did not operate properly when it                                                                    
was implemented  on October  4, 2013 and  as of  February 2,                                                                    
2015 it  did not  operate correctly.  He continued  that Ms.                                                                    
Brodie had  testified during the current  and prior meetings                                                                    
that the  system was  fixed. He  wondered when  claims began                                                                    
balancing correctly.                                                                                                            
Ms.  Brodie  answered  that  financial  balancing  had  been                                                                    
accomplished  in March  2015.  Claims  balancing, which  was                                                                    
equally  important, had  been  accomplished  in April  2015.                                                                    
Vice-Chair   Saddler  asked   for   clarification  on   what                                                                    
balancing had  occurred in March.  Ms. Brodie  answered that                                                                    
financial  balancing had  occurred in  March 2015  and claim                                                                    
balancing had occurred in April 2015.                                                                                           
Vice-Chair Saddler asked  what had occurred in  the past six                                                                    
weeks that had  caused the balancing to  work correctly. Ms.                                                                    
Brodie  answered that  the division  had  been working  with                                                                    
Xerox  on a  corrective  action plan  since October  [2014].                                                                    
Xerox had  devised a  plan on  how it would  fix all  of the                                                                    
defects and change requests that  it thought effected claims                                                                    
processing and payment; it had  worked through and corrected                                                                    
all of the defects and  had implemented the change requests.                                                                    
After the  work had  been done the  division had  found that                                                                    
there had still  been 16 items that  impacted claims payment                                                                    
(during the period of October through March).                                                                                   
Vice-Chair Saddler spoke  to delays of a couple  of years in                                                                    
terms  of  manual  workarounds  and  additional  delays.  He                                                                    
referred  to  articles  in the  Peninsula  Clarion  and  the                                                                    
Juneau  Empire  that  had  referenced  significant  overtime                                                                    
expenses. He asked what it  had cost the division to provide                                                                    
the  manual workarounds.  Ms.  Brodie  responded that  there                                                                    
were  no overtime  costs; division  staff  was not  overtime                                                                    
Vice-Chair  Saddler   asked  if  Ms.  Brodie   had  absolute                                                                    
confidence  that the  claims and  financial balancing  would                                                                    
continue  to  occur  properly   going  forward.  Ms.  Brodie                                                                    
replied in the affirmative.                                                                                                     
1:36:07 PM                                                                                                                    
Commissioner  Davidson   added  that  the   corrections  had                                                                    
occurred due  to department staff who  had worked tirelessly                                                                    
to  fix  the  problem.  She explained  that  the  department                                                                    
recognized  it had  not created  the problem,  but it  was a                                                                    
problem it  owned and was  bound and determined to  fix. She                                                                    
referenced an earlier question  by Representative Gattis and                                                                    
explained that  the advance payments  had been  made because                                                                    
the staff  in Ms.  Brodie's office had  worked very  hard to                                                                    
ensure that the  estimates could be assessed  based upon the                                                                    
former  25-year old  system to  estimate  the claim  amounts                                                                    
that could  be made. She  emphasized that the  affidavit had                                                                    
been written  at a point  in time  in order to  document the                                                                    
past damage  and harm caused by  Xerox to the state;  it did                                                                    
not reflect the current state  of the system as indicated in                                                                    
Ms. Brodie's  PowerPoint presentation  to the  committee the                                                                    
preceding day. She  emphasized that Ms. Brodie  and her team                                                                    
had worked  very hard  to bring  the system  up to  where it                                                                    
should  be. She  remarked that  where  she was  from it  was                                                                    
important to stop and say  thank you when people worked hard                                                                    
to turn  things around.  She emphasized  that "where  we are                                                                    
today is not  where we were in February;  it's certainly not                                                                    
where  we   were  in  October   of  2013."   The  department                                                                    
recognized  that  the  system   was  not  perfect,  but  she                                                                    
believed  it was  cause  for celebration  that  the new  day                                                                    
claims  were  paying  with  over  90  percent  accuracy  and                                                                    
Commissioner  Davidson completed  responding  to a  question                                                                    
asked earlier  by Representative Gattis. She  explained that                                                                    
two advance  payments had been made  [recently]. One payment                                                                    
of approximately  $16,000 had  been made  to fix  a problem.                                                                    
The other  payment had  been made  to another  provider. She                                                                    
explained  that billing  errors  happened for  a variety  of                                                                    
reasons. She  elaborated that the provider  had confused two                                                                    
different fields  and had  incorrectly entered  numbers when                                                                    
submitting the information. The  department could have asked                                                                    
the provider  to redo their  claim, but thought it  was more                                                                    
responsible  to advance  a payment;  the  provider would  be                                                                    
required to reprocess  the claim at a later  time. The state                                                                    
had always worked  to ensure advance payments  could be made                                                                    
when possible  and when justified,  including going  back to                                                                    
look at  what the former system  was able to process  and to                                                                    
make  sure   providers  could  continue  to   operate  as  a                                                                    
business.  She elaborated  that the  priority going  forward                                                                    
had been  placed on  ensuring that new  claims were  able to                                                                    
process  in  an  accurate  and   timely  manner,  which  was                                                                    
currently occurring  at a rate  of 90 percent.  She reasoned                                                                    
that medical providers  had to be able to  predict what kind                                                                    
of   revenue  they   would   have   coming  in;   therefore,                                                                    
prioritizing the new claims was  an issue the department had                                                                    
worked on with Xerox.                                                                                                           
1:40:02 PM                                                                                                                    
Vice-Chair  Saddler  thanked Ms.  Brodie  for  her work.  He                                                                    
commented that she had been  the director of the Division of                                                                    
Health Care Services  for three years and  he understood the                                                                    
system problem had  not been fun. However,  he stressed that                                                                    
the  system had  exposed the  State of  Alaska to  some very                                                                    
significant financial penalties for  years; it had also made                                                                    
the  single  largest  expenditure  of  state  government  an                                                                    
unreliable program,  which the administration  was proposing                                                                    
to expand. He found the  issue troubling. He noted there had                                                                    
been a  lack of performance  by Xerox and the  situation had                                                                    
existed  for years.  He  questioned  the department's  claim                                                                    
that most of  the problems had been fixed.  He stressed that                                                                    
the system  needed to  be trustworthy  in order  to consider                                                                    
expansion.  He stated  "thank  you for  the  hard work,  but                                                                    
there's much hard work to be done."                                                                                             
Co-Chair  Neuman  noted  that  the committee  seemed  to  be                                                                    
receiving mixed answers [from  various sources]. He referred                                                                    
to  an April  26, 2015  article  in the  Juneau Empire  that                                                                    
discussed the  MMIS and  some of  the problems.  The article                                                                    
stated that staff had logged  100,000 hours in overtime thus                                                                    
far in 2015.  He acknowledged Ms. Brodie for  her hard work,                                                                    
but he was  concerned that she was spending  the majority of                                                                    
her  time  working on  Xerox's  problem.  He continued  that                                                                    
instead of working to  supervise their employees, department                                                                    
heads were spending their time  on fixing the Xerox problem.                                                                    
He believed  things were  not adding  up and  wondered about                                                                    
the source of the confusion.                                                                                                    
Commissioner Davidson  answered that the  overtime mentioned                                                                    
in  the  [Juneau  Empire]  article   had  pertained  to  the                                                                    
Division of  Public Assistance related to  processing public                                                                    
assistance  applications  for  a variety  of  services.  She                                                                    
agreed  that  while  Ms. Brodie  had  spent  a  considerable                                                                    
amount of time  dealing with Xerox, she did  not believe Ms.                                                                    
Brodie had  done Xerox's  job for  them. She  addressed that                                                                    
providers had to  get paid for services if  the state wanted                                                                    
to continue to provide a Medicaid benefit.                                                                                      
Co-Chair  Neuman understood.  He  shared that  he had  spent                                                                    
many hours  working with  Ms. Brodie on  the issue  prior to                                                                    
Commissioner   Davidson's   tenure   as   commissioner.   He                                                                    
highlighted  the work  they had  done to  figure out  how to                                                                    
cover  costs for  all of  the personnel  time. He  countered                                                                    
that  the  overtime had  included  Ms.  Brodie as  well.  He                                                                    
believed  Vice-Chair Saddler  had  been trying  to make  the                                                                    
point as  well and he  stressed that  it was the  same point                                                                    
made in the affidavit.                                                                                                          
Representative  Gara  stated  that  if  the  state  accepted                                                                    
Medicaid expansion and reform it  was a given that the state                                                                    
would  have  to  pay  claims.   Based  on  the  department's                                                                    
testimony he  surmised that  the accuracy  rate was  over 90                                                                    
percent and  if a  mistake was  made it  was fixed  within a                                                                    
couple of billing cycles. He  wondered if the department was                                                                    
ready (given  the system improvements) to  process claims in                                                                    
a way that kept providers  in business if Medicaid expansion                                                                    
was   accepted.  Commissioner   Davidson   replied  in   the                                                                    
affirmative to each question.                                                                                                   
Representative   Gara   asked   Commissioner   Davidson   to                                                                    
elaborate on why she believed  the state was ready to accept                                                                    
Medicaid expansion under the billing system improvements.                                                                       
1:45:29 PM                                                                                                                    
Commissioner  Davidson  replied  that as  drafted  the  bill                                                                    
would have  a start date  of August  1 [2015], which  was an                                                                    
amendment  made  by the  House  Health  and Social  Services                                                                    
Committee. New claims accepted by  the department would need                                                                    
to be new  day claims, which were paying at  a minimum of 90                                                                    
percent  accuracy  for  timeliness and  dollar  amount.  She                                                                    
relayed  that   the  department  believed  the   system  was                                                                    
prepared  to  handle the  additional  volume  of new  claims                                                                    
coming in.                                                                                                                      
Representative  Gara  asked  if  the  new  system  processed                                                                    
significantly  more  claims  than  the  former  system.  Ms.                                                                    
Brodie answered that the system  was able to process 200,000                                                                    
claims per week compared to 100,000 claims.                                                                                     
Vice-Chair  Saddler  remarked   on  Commissioner  Davidson's                                                                    
statement  that  department  staff were  not  doing  Xerox's                                                                    
work.  He  pointed  to  page  6, line  23  of  Ms.  Brodie's                                                                    
affidavit  that  read:  "...the  State  began  tracking  the                                                                    
amount  of  time  its  staff  spends  performing  work  that                                                                    
belongs  to  Xerox under  the  Contract  and has  calculated                                                                    
those  costs  at  $4.5  million   to  date."  He  asked  the                                                                    
department to reconcile the discrepancy.                                                                                        
Commissioner Davidson  replied that  the statement  had been                                                                    
true at  the time the  affidavit had been  written; however,                                                                    
it  was  no  longer  the  case.  She  reiterated  her  prior                                                                    
statement  that currently  over 90  percent of  the new  day                                                                    
claims were adjudicating automatically through the system.                                                                      
Representative  Wilson wanted  to understand  how the  state                                                                    
was planning for the system to  go live on August 1. She had                                                                    
been told that  the group of individuals  [who would receive                                                                    
healthcare]  under Medicaid  expansion were  employed single                                                                    
men  and women.  She  wondered if  the  plan under  Medicaid                                                                    
expansion would be identical to the current Medicaid plan.                                                                      
Commissioner  Davidson  replied   in  the  affirmative.  She                                                                    
elaborated that the Medicaid expansion  plan included in the                                                                    
bill would mirror the current  Medicaid program. She relayed                                                                    
that  the   department  had  issued  an   RFP  [request  for                                                                    
proposal] and she believed the  contract would be awarded in                                                                    
the near  future. The RFP  had asked candidates  to identify                                                                    
Medicaid reform  opportunities existing in other  states for                                                                    
the entire  Medicaid program. The  administration recognized                                                                    
that  Medicaid  in its  current  form  was not  sustainable;                                                                    
however,  the  administration   wanted  to  accept  Medicaid                                                                    
expansion quickly in order to  take maximum advantage of the                                                                    
100  percent  federal  match including  the  additional  new                                                                    
federal revenue.                                                                                                                
Representative   Wilson   noted  that   the   administration                                                                    
acknowledged  that   the  current  Medicaid   system  needed                                                                    
reform, yet it  was willing to add additional  people to the                                                                    
system.  She referenced  that the  RFP  sought to  determine                                                                    
what  other  states were  doing,  what  managed care  looked                                                                    
like,  and other.  She asked  why the  department would  not                                                                    
wait for the  RFP to come back to get  suggestions on what a                                                                    
more efficient system would look like.                                                                                          
Commissioner  Davidson replied  that the  administration did                                                                    
not want to wait because  there were 20,000 Alaskans needing                                                                    
healthcare who would be covered under Medicaid expansion.                                                                       
Representative  Wilson interjected  that the  administration                                                                    
was  claiming that  there were  20,000 Alaskans  who had  no                                                                    
access to  healthcare. In the  past, she had been  told that                                                                    
the state  did not need  more providers because most  of the                                                                    
population was  receiving healthcare benefits.  She remarked                                                                    
that the question  was related to who was  really paying for                                                                    
the healthcare.                                                                                                                 
Commissioner  Davidson  replied  that  approximately  42,000                                                                    
Alaskans  would be  eligible under  Medicaid expansion;  the                                                                    
administration expected that  about 20,000 individuals would                                                                    
sign up  in the  first year (increasing  to 26,000  in later                                                                    
years). In terms  of access to healthcare, it  was true that                                                                    
some individuals did have access  through the emergency room                                                                    
because they  waited until they  were sick enough  that they                                                                    
were  required   to  go.   However,  individuals   were  not                                                                    
receiving   prevention   exams  including   mammograms   and                                                                    
prostate  cancer screening;  a whole  host of  services were                                                                    
not  being  provided  to  Alaskans  because  they  were  not                                                                    
emergency  room services.  She stated  that contrary  to the                                                                    
belief  that  Medicaid  was broken,  Medicaid  continued  to                                                                    
provide critical  health benefits  to Alaskan  citizens. She                                                                    
detailed  that over  11,000 children  received immunizations                                                                    
in  the  first three  months  of  2015. She  continued  that                                                                    
thousands   of   Alaskans    received   mammograms,   cancer                                                                    
screenings,  and  other.  She stressed  that  Alaskans  were                                                                    
receiving healthcare access through Medicaid.                                                                                   
Representative   Wilson   countered   that   it   had   been                                                                    
Commissioner  Davidson  who  had   said  the  system  needed                                                                    
reform. She  stressed that she had  not been the one  to say                                                                    
the system  was broken. She  remarked that the  final report                                                                    
resulting  from the  RFP was  not  scheduled for  completion                                                                    
until May  16, 2016.  She wondered why  the state  would not                                                                    
implement  reforms  and  look  at  managed  care  [prior  to                                                                    
accepting  expansion].  She  detailed that  state  employees                                                                    
with  insurance  were  under  managed  care  with  preferred                                                                    
providers and  other. She wondered  why the state  would not                                                                    
wait for the  RFP results prior to  accepting expansion. She                                                                    
pointed to  studying what other  states were doing  in order                                                                    
to avoid mistakes  that had already been  made. She believed                                                                    
everyone wanted  to ensure that  Alaskans were  healthy. She                                                                    
discussed  that  there  were  behavioral  grants  that  were                                                                    
issued to  care for  people without  insurance. Additionally                                                                    
there  were  sliding  payment  scales  to  help  individuals                                                                    
without  much money.  She wondered  why  expansion would  be                                                                    
accepted  to  cover  a  large  group  of  individuals  (i.e.                                                                    
working  men and  women)  before the  RFP  results had  been                                                                    
received. She  did not  believe it made  sense to  start the                                                                    
individuals under  a program that  may be  shifted depending                                                                    
on reforms that were recommended by the RFP.                                                                                    
1:54:46 PM                                                                                                                    
Representative  Wilson continued.  She asked  if the  system                                                                    
could handle  paying groups differently given  that employed                                                                    
individuals with income may have deductibles.                                                                                   
Commissioner  Davidson replied  that she  had not  heard the                                                                    
first question.                                                                                                                 
Representative  Wilson wondered  why the  administration had                                                                    
issued an  RFP that was  not due until  May if it  wanted to                                                                    
start  Medicaid  expansion at  present.  Second,  if it  was                                                                    
better to put  the new registrants into a  managed care unit                                                                    
with  co-pays, deductibles,  and caps,  she wondered  if the                                                                    
Xerox system could handle it.                                                                                                   
Commissioner  Davidson clarified  that  the preliminary  RFP                                                                    
results were due  in January; the date had been  moved up in                                                                    
order for  the administration to provide  information to the                                                                    
legislature (the  legislature had communicated that  a March                                                                    
due date would  be too late) and to get  feedback on reform.                                                                    
The administration did  not want to wait  to expand Medicaid                                                                    
given  that individuals  in the  expansion category  did not                                                                    
have  access to  healthcare. She  elaborated that  the state                                                                    
had the opportunity to make  Alaskans as healthy as possible                                                                    
with 100  percent federal funds,  but the  opportunity would                                                                    
end in  December 2016. She  added that reform was  a process                                                                    
that happened  over time;  it was not  like switching  on or                                                                    
off  a  light switch.  She  further  explained that  as  the                                                                    
administration  envisioned reform  in Medicaid,  individuals                                                                    
in  the expansion  category would  be in  a similar  benefit                                                                    
package to  existing beneficiaries and therefore  would move                                                                    
along with existing recipients as reforms took place.                                                                           
Representative   Wilson   stated  that   individuals   under                                                                    
expansion  were  not  in  the  same  situation  as  existing                                                                    
recipients. She  elaborated that current recipients  did not                                                                    
have  jobs,  were  disabled,  elderly,   and  would  not  be                                                                    
working. She  opined that it not  make sense to put  the two                                                                    
groups together.  She asked whether  the Xerox  system could                                                                    
handle it  if the  new registrants were  put into  a managed                                                                    
care unit with co-pays, deductibles, and caps.                                                                                  
Commissioner  Davidson replied  that  the existing  Medicaid                                                                    
system  did have  cost sharing  and co-payments  for certain                                                                    
kinds of  medical procedures. She  detailed that  the system                                                                    
included   co-payments   for  out-patient   and   in-patient                                                                    
services  and for  pharmaceuticals. She  confirmed that  the                                                                    
system was capable of addressing the situation.                                                                                 
Representative  Wilson emphasized  that there  was currently                                                                    
access  to healthcare.  She  stated that  there  may not  be                                                                    
coverage for everything (she noted  that she and other state                                                                    
employees had to pay for  certain things out-of-pocket). She                                                                    
commented  that the  state had  spent over  $30 million  per                                                                    
year for  women's healthcare. She  did not want to  send the                                                                    
message that there was no  healthcare. She stated that there                                                                    
was healthcare  available, but it  may not be to  the extent                                                                    
allowed under expansion.                                                                                                        
1:59:29 PM                                                                                                                    
Commissioner  Davidson answered  yes,  there were  currently                                                                    
people without health  coverage accessing healthcare through                                                                    
the emergency room, which was  the most expensive healthcare                                                                    
delivery system.                                                                                                                
Representative  Wilson  stated  that individuals  were  also                                                                    
using a sliding  payment scale. She opined that  part of the                                                                    
problem was that the state  had not helped people understand                                                                    
other  ways of  getting  care. She  was  concerned that  the                                                                    
state was not "going to do  the managed care before, so that                                                                    
we help those understand the process."                                                                                          
Representative Pruitt referred to  the discussion on whether                                                                    
the  system could  handle additional  people. He  recalled a                                                                    
recent statement related to how  changes to the system would                                                                    
impact  other areas  in  the system.  He  asked what  effect                                                                    
change had  on the system  overall. Ms. Brodie  replied that                                                                    
it depended  on the scope  of the change. Some  changes were                                                                    
very  easy,  such as  updating  a  provider rate.  Likewise,                                                                    
there were  difficult changes such  as building  an entirely                                                                    
new benefit package. She elaborated  that part of the reason                                                                    
the state  was putting  forth the  same benefit  package was                                                                    
due to  the difficulty building  a new package  would entail                                                                    
and to  save the  state millions  of dollars  in development                                                                    
Representative Pruitt  discussed his understanding  that the                                                                    
current system  handled 14,000 medical codes.  He believed a                                                                    
substantial amount  of new  codes would  be utilized  due to                                                                    
the Affordable  Care Act (ACA).  He remarked that  there had                                                                    
been  challenges  with  the   14,000  codes;  therefore,  he                                                                    
wondered  how  the  system  would  react  to  a  substantial                                                                    
increase in codes.                                                                                                              
Ms. Brodie replied that the  ICD-10 had approximately 77,000                                                                    
diagnostic  codes.  The  division  had  already  mapped  the                                                                    
current  codes to  the  future codes;  it  was currently  in                                                                    
testing in  the Enterprise  system. She elaborated  that the                                                                    
state  was   currently  in  the  process   of  testing  with                                                                    
providers;  the work  was not  complete, but  the department                                                                    
was anticipating it would be ready on October 1 [2015].                                                                         
2:03:03 PM                                                                                                                    
Representative  Pruitt referred  to  Ms. Brodie's  testimony                                                                    
that changing  the benefit package could  have a substantial                                                                    
impact  on  the system,  which  was  why the  administration                                                                    
proposed that  the expansion  population would  look similar                                                                    
to  the current  system.  He believed  reform  would mean  a                                                                    
substantial  change  to  the  overall  benefit  package.  He                                                                    
observed that  reform implemented by the  legislature or the                                                                    
department would mean a change  to the benefits. He surmised                                                                    
there  would be  challenges with  the implementation  if the                                                                    
state moved forward  with one package and  decided to change                                                                    
it later on.                                                                                                                    
Ms.  Brodie  agreed  that  making   changes  in  the  system                                                                    
required development  work, but  the department  believed it                                                                    
was possible  through the process defined  in the corrective                                                                    
action plan.  Additionally, the  department had  the ability                                                                    
to  conduct  the  proper testing  to  ensure  that  anything                                                                    
deployed  into the  system  would not  break  the system  or                                                                    
impact  any claims  payment. She  added that  the department                                                                    
had  a very  good process  in  place due  to the  corrective                                                                    
action plan.                                                                                                                    
Representative Pruitt  wondered if it would  be more prudent                                                                    
to begin  with a system  that was ready  than to add  or fix                                                                    
something  later  on.  He wondered  about  costs  and  other                                                                    
challenges associated with making changes later on.                                                                             
Ms. Brodie  responded that the department  currently had the                                                                    
processes  in place,  including scoping  of work  needed and                                                                    
development time. Additionally, the  proper testing time was                                                                    
in place for  the state and Xerox to ensure  the accuracy of                                                                    
anything deployed into the system.                                                                                              
2:06:01 PM                                                                                                                    
Representative  Gattis asked  about what  had "bogged  down"                                                                    
the  system  in the  past.  She  believed that  whoever  had                                                                    
started the system had probably  thought they had everything                                                                    
in place.  She wondered  if the  high number  of codes  or a                                                                    
particular number  of providers or beneficiaries  had bogged                                                                    
the system down.                                                                                                                
Ms. Brodie  stated that  it was  a host  of issues  that had                                                                    
bogged  the system  down. She  explained that  when the  new                                                                    
system went live,  the department had been told  that it had                                                                    
the  legacy  system  as  a backup.  She  detailed  that  the                                                                    
department had been  told that if something did  not work in                                                                    
the new system,  claims could be loaded into  and paid under                                                                    
the legacy system.  However, it turned out  that because the                                                                    
claims  were so  different  in the  Enterprise system,  they                                                                    
could not  be loaded into  the legacy system.  She addressed                                                                    
what had  bogged the  system down  and detailed  that claims                                                                    
had not been paying correctly.                                                                                                  
Representative Gattis  interjected that she  understood what                                                                    
the  problem  had been.  She  questioned  what had  put  the                                                                    
initial  kink in  the system.  She wondered  how not  to bog                                                                    
down  the  system  moving forward.  She  remarked  that  the                                                                    
department was  currently saying that things  were in place,                                                                    
but things were  thought to have been in place  when the old                                                                    
system  had  been   implemented.  Separately,  she  believed                                                                    
reform  could be  a light  switch  that was  turned on.  She                                                                    
reasoned  that it  was a  "huge  light switch  that we  know                                                                    
there  are   areas  that   we  have   to  do   better."  She                                                                    
acknowledged   that   the   possibility   of   getting   the                                                                    
information  working correctly  in  the  system was  another                                                                    
part of the equation. She  reiterated that she knew that "we                                                                    
can do  our job  and do  it better" in  Medicaid and  in how                                                                    
business was done in the state.                                                                                                 
2:09:07 PM                                                                                                                    
Commissioner  Davidson believed  that states  doing Medicaid                                                                    
reform  well  and  delivering good  healthcare  systems  saw                                                                    
reform as  a constant  process. The  administration believed                                                                    
that  reform  and  expansion  could go  hand  in  hand;  the                                                                    
department  was  building  on reform  that  it  had  already                                                                    
undertaken.   She   expounded   that  the   department   had                                                                    
identified a  number of reforms  through the  budget process                                                                    
and in the current legislation.                                                                                                 
Representative  Gattis  opined   that  reforms  should  have                                                                    
occurred already.  She was  exasperated by  the "slow  go of                                                                    
government." She stated that there  was no reason for a hold                                                                    
up  on implementing  reforms. She  expounded that  it should                                                                    
have been possible  to get the reforms  done already through                                                                    
regulations, not legislation.                                                                                                   
Representative  Pruitt   addressed  that  there   were  many                                                                    
reforms  needed.  He  spoke  to  the  issue  from  a  policy                                                                    
perspective.  He pointed  to  the  implementation of  reform                                                                    
including  pro-pay discussions  and  an insurance  exchange-                                                                    
type scenario.  He wondered whether  it would be  complex to                                                                    
enforce  the changes  impacting  individuals. He  elaborated                                                                    
that recipients would become used  to the program, but would                                                                    
be  asked to  shift in  some  capacity later  on (e.g.  more                                                                    
money  out  of   pocket  or  other).  He   wondered  if  the                                                                    
department saw  the issue as  a complex series of  events or                                                                    
as a switch that could just be flipped.                                                                                         
Commissioner Davidson  replied that  it was  a bit  of both.                                                                    
She agreed that everyone,  including legislators and Alaskan                                                                    
citizens, had their  own idea about what  reform should look                                                                    
like. Consequently,  the department  had created the  RFP to                                                                    
look at  what other  states were  doing and  at some  of the                                                                    
best practices.  Additionally, the  goal was to  engage with                                                                    
stakeholders  (members of  the public  etcetera) to  look at                                                                    
which healthcare delivery models  would work for Alaska. She                                                                    
elaborated that  what may  work in one  region of  the state                                                                    
may not work  in another region (e.g. what  worked in Mat-Su                                                                    
may not work in Bethel).                                                                                                        
Commissioner  Davidson addressed  educating people  in terms                                                                    
of how  they received  healthcare. She found  it frustrating                                                                    
when she saw a medical provider  for an ailment and they did                                                                    
not also ask  what about her health she  would like improved                                                                    
over the next year and how  they could work together to help                                                                    
improve her health. She explained  that one reason providers                                                                    
did not  ask the  question, was because  they were  paid per                                                                    
incident, not to address overall  health. Related to payment                                                                    
reform  opportunities  identified  in the  legislation,  the                                                                    
department wanted  to look at  innovations other  states had                                                                    
undertaken.  She elaborated  that  the  committee had  heard                                                                    
from PeaceHealth  in Ketchikan about an  innovation grant it                                                                    
had  received from  the Centers  for  Medicare and  Medicaid                                                                    
Services. She detailed  that it had cost  the entities about                                                                    
$700,000 to lose $1.5  million in reimbursement opportunity.                                                                    
Additionally,   the  committee   had   heard  from   Central                                                                    
Peninsula  Hospital, which  had  been  interested in  reform                                                                    
efforts,  but needed  the resources  from expansion  to fund                                                                    
the  reform effort.  She furthered  that many  hospitals had                                                                    
uncompensated care and were not  able to spend money to lose                                                                    
2:16:58 PM                                                                                                                    
Representative Pruitt  appreciated the  conversation related                                                                    
to  providers, but  wondered about  the public.  He remarked                                                                    
that there  could be pushback on  making changes, especially                                                                    
ones  that  have an  impact  financially.  He noted  that  a                                                                    
recent legislative vote  to add one penny to a  fuel tax had                                                                    
been  very close.  He  continued  that it  had  been a  very                                                                    
contentious issue. He asked  whether the department believed                                                                    
that  starting off  with one  system and  potentially making                                                                    
changes  later  would  be  acceptable   to  the  public.  He                                                                    
remarked  that  it was  possible  to  incentivize or  almost                                                                    
force  some of  the discussions  with providers,  whereas it                                                                    
was a different conversation related to the public.                                                                             
Commissioner Davidson replied that  engaging with the public                                                                    
and  having a  conversation about  how the  transition would                                                                    
occur would  be critical  to success. From  her perspective,                                                                    
they were  talking about individuals  who did  not currently                                                                    
have health coverage. She believed  the individuals would be                                                                    
open to  recognizing that to  receive healthcare  they would                                                                    
have  to  pay  copay  (already existing  under  the  current                                                                    
Medicaid  program) for  pharmaceuticals, hospital  inpatient                                                                    
and   outpatient   treatment,   and  other   services.   She                                                                    
elaborated that  copay was not allowed  for certain Medicaid                                                                    
beneficiaries. She discussed that  the department planned to                                                                    
work with  the public  to ensure  that they  understood that                                                                    
health coverage was a benefit  they would have that they did                                                                    
not previously have. She detailed  that the department would                                                                    
work  to  educate recipients  that  the  new coverage  would                                                                    
enable individuals to  receive care in a  more efficient and                                                                    
patient  friendly   way.  She  believed   individuals  would                                                                    
welcome the idea,  which was why 65 percent  of Alaskans had                                                                    
voiced support for Medicaid expansion and reform.                                                                               
Vice-Chair   Saddler   addressed   Commissioner   Davidson's                                                                    
testimony  about  individuals  without health  coverage.  He                                                                    
noted that she  had implied that the emergency  room was the                                                                    
only  alternative to  receive healthcare.  He  pointed to  a                                                                    
distinction  between health  coverage and  health insurance.                                                                    
He  referred   to  the  distinction  made   by  Commissioner                                                                    
Davidson that  individuals qualifying for  treatment through                                                                    
the  Indian Health  Service (IHS)  had  healthcare, but  not                                                                    
health coverage (defining coverage as insurance).                                                                               
Commissioner  Davidson  replied   in  the  affirmative.  She                                                                    
elaborated that  it did not  qualify as health  insurance if                                                                    
an IHS beneficiary had access  to an IHS facility because it                                                                    
was not a portable health benefit.                                                                                              
Vice-Chair Saddler made the  distinction that healthcare was                                                                    
not the  same as health  insurance. He explained  that maybe                                                                    
half of  the 43,000 people  who had been represented  as not                                                                    
getting  healthcare actually  did have  healthcare, but  not                                                                    
health insurance or coverage.                                                                                                   
JON SHERWOOD, DEPUTY COMMISSIONER,  MEDICAID AND HEALTH CARE                                                                    
POLICY, DEPARTMENT  OF HEALTH  AND SOCIAL  SERVICES, replied                                                                    
that individuals who did not  have health insurance may have                                                                    
access to some  degree of healthcare. For  example, they may                                                                    
be  able  to  access  healthcare in  an  emergency  room  or                                                                    
through a  community health center,  which may  provide some                                                                    
level of care,  but did not necessarily  adequately meet all                                                                    
levels of  need. For instance rehabilitative  services for a                                                                    
traumatic  brain  injury  would probably  not  be  available                                                                    
through  emergency  rooms,  a community  health  center,  or                                                                    
another  provider. He  noted that  a person  may be  able to                                                                    
make  some  type of  payment  arrangements  or charity  care                                                                    
eventually.  Additionally,  people  with  cancer  frequently                                                                    
could  not  receive  treatment through  the  emergency  room                                                                    
until they were  very ill; at which time  treatment would be                                                                    
much   more  substantial   and  could   include  heroic   or                                                                    
palliative  care.  He  explained that  the  situations  were                                                                    
examples of incidents where individuals  may not have access                                                                    
to  adequate treatment  if they  lacked health  insurance or                                                                    
some means of paying for care.                                                                                                  
2:22:20 PM                                                                                                                    
Vice-Chair Saddler  explained that maybe half  of the 43,000                                                                    
people who  had been  represented as not  getting healthcare                                                                    
actually did have access to  health coverage through IHS. He                                                                    
asked for verification that the  care may not be adequate in                                                                    
the department's  terms or provide for  every specialty, but                                                                    
there was access to healthcare.                                                                                                 
Commissioner Davidson  replied that more than  70 percent of                                                                    
the  individuals   eligible  for  expansion  did   not  have                                                                    
portable healthcare coverage. She  relayed that 43.3 percent                                                                    
had no coverage at all.                                                                                                         
Vice-Chair Saddler  asked if coverage was  defined as access                                                                    
to health  insurance or  access to  healthcare. Commissioner                                                                    
Davidson   replied  that   29.3   percent   of  the   42,000                                                                    
individuals had  partial access, which included  IHS limited                                                                    
benefits, veterans' benefits, or  access to community health                                                                    
2:23:28 PM                                                                                                                    
Representative Gara provided a  scenario about a person with                                                                    
prostate  cancer  earning  less  than  100  percent  of  the                                                                    
poverty level who had no  health coverage. He wondered where                                                                    
the individual would go for cancer treatment.                                                                                   
Mr. Sherwood replied that there  may be some limited options                                                                    
for people with an extremely  low income; individuals may be                                                                    
able  to receive  some care  through the  chronic and  acute                                                                    
medical  assistance  program.  However,   a  person  in  the                                                                    
situation may  be in  something of a  "no man's  land" where                                                                    
they had to find providers  willing to provide charity care.                                                                    
Additionally,   the   individual   would   be   faced   with                                                                    
identifying  the various  providers needed,  with lining  up                                                                    
the  care, and  with getting  agreements to  accept deferred                                                                    
payment in place.  He stated that the person may  or may not                                                                    
be successful.                                                                                                                  
Representative  Gara  stated  that   as  a  prostate  cancer                                                                    
survivor  he  did not  believe  he  was entitled  to  better                                                                    
treatment  than  someone else.  He  addressed  the issue  of                                                                    
copays. He  relayed that the previous  DHSS commissioner had                                                                    
been  hesitant on  the  copay issue  because  in many  cases                                                                    
copays  cost more  to administer;  therefore, some  had been                                                                    
excluded  from the  system. He  asked for  verification that                                                                    
sometimes  copays cost  more to  administer than  money they                                                                    
brought in.                                                                                                                     
Mr.   Sherwood  responded   that   there  was   a  cost   to                                                                    
administering  copays in  Medicaid that  was different  than                                                                    
conventional insurance given the  specific federal limits on                                                                    
what could be  charged. He elaborated that  it was necessary                                                                    
to  monitor  the  copays  to ensure  that  limits  were  not                                                                    
exceeded.   There  were   situations  where   the  cost   of                                                                    
monitoring and adjustments would  exceed the money coming in                                                                    
from copays.                                                                                                                    
Representative  Gara thanked  Commissioner Davidson  for all                                                                    
of her  hard work.  He pointed out  that she  had identified                                                                    
over $500  million in reform  savings. He discussed  that he                                                                    
had served  on the House  Finance Committee for a  number of                                                                    
years. He continued that there  had been six years where the                                                                    
Parnell  Administration did  not adopt  the reforms  and now                                                                    
Commissioner Davidson  was being  asked why the  reforms had                                                                    
not yet been  adopted. He remarked that  the legislature had                                                                    
not adopted  the reforms and  was asking the  department why                                                                    
the reforms had not been  adopted. He believed the situation                                                                    
was   a  double   standard.  He   was  impressed   that  the                                                                    
commissioner  had identified  over $500  million in  reforms                                                                    
over  a  six-year period.  He  did  not understand  why  the                                                                    
legislature would not want to save  the money and why it was                                                                    
accusing the  current administration  of not doing  what the                                                                    
prior administration  never did.  He did not  understand the                                                                    
sudden  outrage of  the  lack  of reforms  that  no one  had                                                                    
adopted before.                                                                                                                 
2:27:59 PM                                                                                                                    
Vice-Chair  Saddler  commented  that Mr.  Sherwood  and  Ms.                                                                    
Brodie  had both  been  in their  current  positions for  at                                                                    
least three or more years.                                                                                                      
Mr. Sherwood  replied that he  had been  deputy commissioner                                                                    
for the past 6 months; prior  to that he had been the deputy                                                                    
director of  the Division of Senior  and Disability Services                                                                    
for 1.5 years  and a senior policy manager  for the Division                                                                    
of Healthcare  Services and its predecessor  the Division of                                                                    
Medical Assistance.                                                                                                             
Vice-Chair Saddler asked about  Ms. Brodie's history working                                                                    
for the  department. Ms.  Brodie replied  that she  had been                                                                    
deputy director  of the Division of  Healthcare Services for                                                                    
a 3-month  period; prior to  that she  had been the  head of                                                                    
the finance  and recovery  section for 2.5  to 3  years. She                                                                    
shared that prior to her work  at DHSS she had been chief of                                                                    
administration  in  grants  for the  Department  of  Natural                                                                    
Vice-Chair  Saddler   thought  that   there  was   not  much                                                                    
justification in  adding to  the system  until a  switch was                                                                    
flipped  and   the  Enterprise  system  was   successful  in                                                                    
qualifying people  for Medicaid and  processing applications                                                                    
for payment. He pointed to page  13, item 20 of Ms. Brodie's                                                                    
affidavit.  He stated  that the  document read  that because                                                                    
the department  had been  unable to  rely on  the Enterprise                                                                    
system  it had  forgone  the opportunity  for several  other                                                                    
reform  efforts  including  the  Medicaid  program  for  the                                                                    
Division  of Juvenile  Justice that  would  have saved  $1.5                                                                    
million, Senior and  Disabilities Services Telemedicine that                                                                    
would have  saved state  travel costs,  and the  Division of                                                                    
Behavioral  Health's Behavioral  Health  Aides. He  remarked                                                                    
that the  reforms had  not happened  because the  switch had                                                                    
not been  flipped to have  an effective Medicaid  system. He                                                                    
quoted  from  the  paragraph  "We  have  not  completed  the                                                                    
regulations  as  there is  no  specific  timeframe for  when                                                                    
Enterprise will  be able to  accommodate this  change. These                                                                    
losses in savings are very  difficult to estimate." He asked                                                                    
if his understanding was accurate.                                                                                              
Ms. Brodie  reiterated earlier testimony that  the affidavit                                                                    
reflected only a point in time.                                                                                                 
Vice-Chair Saddler asked if the  statements had been true in                                                                    
the past. Ms. Brodie replied in the affirmative.                                                                                
Co-Chair Thompson noted that the  committee was trying to do                                                                    
its due diligence  for the state. He remarked  that the bill                                                                    
reflected a huge policy change  that the committee wanted to                                                                    
make sure  was not  rushed into too  rapidly. He  stated the                                                                    
committee wanted  to make sure  Medicaid expansion  was done                                                                    
right. He  did not want to  end up in a  situation like some                                                                    
other  states that  had  accepted  Medicaid expansion;  some                                                                    
states  needed to  make changes  after accepting  expansion,                                                                    
but the federal  government would not allow  the changes. He                                                                    
opined  that  significant   due  diligence  remained  before                                                                    
Alaska accepted Medicaid expansion.                                                                                             
2:31:49 PM                                                                                                                    
Representative Guttenberg  observed that there seemed  to be                                                                    
a  situation where  the state  wanted  to look  back on  its                                                                    
computer program  that had dubious origins.  He believed the                                                                    
issue  had been  addressed considerably.  He addressed  that                                                                    
the cost  of healthcare  was one of  the largest  drivers in                                                                    
the state.  He pointed  to healthcare costs  associated with                                                                    
the  state's  unfunded  retirement liability  and  contracts                                                                    
with public  employees. He  asked about  the ability  to get                                                                    
healthcare costs  under control  if expansion was  not done.                                                                    
He wondered  about the ability  to wrangle and  take control                                                                    
of the rising healthcare  costs. He stressed that healthcare                                                                    
costs were out  of control and opined that no  one seemed to                                                                    
have a  handle on  the situation. He  wondered if  the state                                                                    
could start  to get the  rising costs under  control without                                                                    
Medicaid expansion. On the flip  side, he wondered about the                                                                    
chance of  controlling the costs  if Medicaid  expansion was                                                                    
accepted.  He asked  about  the  mechanisms under  expansion                                                                    
that would be utilized to successfully control the costs.                                                                       
Commissioner  Davidson  referenced   public  testimony  from                                                                    
Central  Peninsula Hospital  and PeaceHealth;  the hospitals                                                                    
had communicated that reform was  very challenging without a                                                                    
cash  infusion  to  offset  losses  that  would  come  while                                                                    
payment  reform  options  were  tested.  Currently,  as  the                                                                    
Alaska  State  Hospital  and Nursing  Home  Association  had                                                                    
testified,  about $100  million  in  uncompensated care  was                                                                    
provided  annually by  hospitals  in  Alaska. She  explained                                                                    
that as  a result, costs  were spread to everyone  else. One                                                                    
way to  reduce the cost was  to have revenues to  offset the                                                                    
uncompensated  cost; the  biggest opportunity  available was                                                                    
Medicaid expansion.                                                                                                             
2:34:47 PM                                                                                                                    
Co-Chair Thompson  moved to item 9  on pages 5 and  6 of the                                                                    
affidavit.  The item  identified  that  there were  problems                                                                    
with  service  authorization  functionality and  user  input                                                                    
screens. He noted that the  issues had not been addressed in                                                                    
Ms. Brodie's  PowerPoint the previous  day; he asked  if the                                                                    
issues had been corrected.                                                                                                      
Ms. Brodie  answered in the  affirmative. She  detailed that                                                                    
the time it took to  submit a service authorization had been                                                                    
reduced  from  30 minutes  down  to  5  to 10  minutes.  She                                                                    
elaborated  that   Xerox  was  working  on   increasing  the                                                                    
functionality with  the hope of reducing  the timeframe even                                                                    
Co-Chair  Thompson  opined that  the  problem  had not  been                                                                    
completely corrected given that it  had taken between 60 and                                                                    
90   seconds  under   the  legacy   system.  He   asked  for                                                                    
verification that submitting a  service authorization took 5                                                                    
to  10  minutes at  present.  Ms.  Brodie replied  that  the                                                                    
problem had  been corrected  to the  specifications outlined                                                                    
in  the  Xerox contract.  She  was  asking for  even  better                                                                    
functionality going forward.                                                                                                    
Co-Chair Thompson  asked if the  correction also  applied to                                                                    
the following language under item 9:                                                                                            
     All  travel, waiver,  hospital  stays, durable  medical                                                                    
     equipment  orthotics,  and behavioral  health  services                                                                    
     are  service authorization  dependent. This  translated                                                                    
     into   providers  being   unable   to  obtain   service                                                                    
Ms. Brodie affirmed that the item had also been corrected.                                                                      
Co-Chair   Thompson   asked   for  verification   that   the                                                                    
applications  were processed  in  an  efficient manner.  Ms.                                                                    
Brodie affirmed  that the applications  were processed  in a                                                                    
timely manner.                                                                                                                  
Representative  Gattis shared  that  she had  spoken with  a                                                                    
chiropractor  the  prior  evening  about  provider  tax  and                                                                    
Medicaid expansion; the chiropractor  had relayed that there                                                                    
had  to  be a  pediatrician  referral  in order  to  provide                                                                    
treatment  for kids.  She relayed  that chiropractors  could                                                                    
not get  approval to receive  payment for services  when the                                                                    
patient was on  Medicaid. She stated that trying  to get the                                                                    
authorization  was  near  impossible.  From  a  chiropractic                                                                    
standpoint   there    were   some   glitches    in   getting                                                                    
Ms. Brodie answered  that the specific issue  was outside of                                                                    
the  Enterprise system.  She asked  members to  refer anyone                                                                    
having a difficult time with  the issue to Cindy Christensen                                                                    
the division's chief  of operations, who would  get it taken                                                                    
care of immediately.                                                                                                            
2:38:42 PM                                                                                                                    
Representative Pruitt  needed clarification  on a  couple of                                                                    
components related to department  staff costs. He pointed to                                                                    
the  statement in  Ms. Brodie's  affidavit that  "additional                                                                    
staff to date has cost  the state $640,385 and will continue                                                                    
to cost at least an  additional $211,799 each year..." (page                                                                    
7, lines 4 and 5). He  wondered if the system would cost the                                                                    
state  more because  it switched  to Xerox,  because of  the                                                                    
problems associated  with the system,  or because  the state                                                                    
was doing some of the work Xerox should be doing.                                                                               
Ms. Brodie  answered that because testing  protocols had not                                                                    
been  followed in  the beginning  when deployments  had been                                                                    
put  into the  system, addressing  the issues  providers had                                                                    
with trying  to ensure  recipients could  continue receiving                                                                    
services  had overwhelmed  the Xerox  and staff.  Therefore,                                                                    
state  staff had  been working  directly  with providers  on                                                                    
their specific billing  issues, which was a  function of the                                                                    
[Xerox]  fiscal  agent,  not state  staff  time.  Department                                                                    
staff still  did a small  portion of  the work (a  few hours                                                                    
per  week), but  nothing like  at the  beginning. She  added                                                                    
that  some of  the providers  had  chosen to  work with  the                                                                    
department due  to the relationship  it had built  with them                                                                    
since Go Live; the providers trusted the department more.                                                                       
Representative Pruitt  wondered if challenges in  the system                                                                    
would be  on the state or  Xerox to deal with.  For example,                                                                    
related  to additional  codes or  a change  to the  benefits                                                                    
package. Ms. Brodie  answered that changes could  occur as a                                                                    
standalone  project where  the  state would  get 90  percent                                                                    
federal match.  Alternatively, the department had  a bank of                                                                    
600 hours  of work  that Xerox  was required  to do  and the                                                                    
department would  put in a  change order. She  detailed that                                                                    
if a change  order was put in, the  department would monitor                                                                    
every  step  and  would  get the  test  results.  Under  the                                                                    
standalone  project   scenario  the  department   would  use                                                                    
protocols implemented in October  2014 to conduct monitoring                                                                    
and testing.  Additionally, the  department would  watch the                                                                    
change through  three different  environments before  it got                                                                    
to the system.                                                                                                                  
2:42:35 PM                                                                                                                    
Representative  Gattis pointed  to page  7, item  12 in  the                                                                    
affidavit  related to  loss of  federal matching  funds. She                                                                    
asked when the department expected  the MMIS to be complete,                                                                    
how the  Center for  Medicaid Services (CMS)  validated that                                                                    
system  requirements  were met,  and  how  long the  process                                                                    
Ms.  Brodie replied  that  the  department was  anticipating                                                                    
notifying CMS that the division  was ready for certification                                                                    
at the  end of the  calendar year [2015]. She  detailed that                                                                    
CMS  typically came  in during  the next  quarter; it  had a                                                                    
complete certification  checklist to  ensure the  system met                                                                    
the CMS requirements. She furthered  that the department had                                                                    
a copy of the checklist  and was working the checklist prior                                                                    
to asking CMS to conduct the validation.                                                                                        
Representative  Gattis asked  if  Ms.  Brodie had  testified                                                                    
that  the process  would take  24 to  30 months.  Ms. Brodie                                                                    
affirmed that  it appeared to  be taking  Enterprise systems                                                                    
24 to 30 months to get certified.                                                                                               
Representative  Gattis  asked  how much  funding  the  state                                                                    
currently had  to make up.  Ms. Brodie would follow  up with                                                                    
the figure.  She added that  because the state had  not been                                                                    
paying Xerox the figure was 25 percent of nothing.                                                                              
Representative  Gattis wondered  how  much  state funds  had                                                                    
been  lost  due to  the  funding  crossing over  the  fiscal                                                                    
years. Ms.  Brodie replied  that the  state funding  had not                                                                    
been  lost, but  had shifted  from  one fiscal  year to  the                                                                    
next. What the department had identified  as a loss in FY 14                                                                    
would be primarily realized in  FY 15 (with the final amount                                                                    
realized in FY 16).                                                                                                             
2:45:04 PM                                                                                                                    
Representative   Gattis   referred    to   the   committee's                                                                    
discussion on  penalties the previous  day. She  wondered if                                                                    
the  state  was  exempt from  penalties.  Additionally,  she                                                                    
asked if the state had  not been subject to paying penalties                                                                    
back because it was a pilot program.                                                                                            
Ms.  Brodie answered  that the  discussion on  penalties had                                                                    
been specifically  related to the  PERM [Payment  Error Rate                                                                    
Measurement] audit. The department  had anticipated that its                                                                    
payment  error rate  would be  much worse  than the  current                                                                    
reality. The  department had  preliminary results  for three                                                                    
months,   which  included   29  claims   for  $18,000;   the                                                                    
department had expected it would be much higher.                                                                                
Representative  Gattis asked  if the  state was  exempt from                                                                    
penalties.  Mr. Sherwood  answered  that  penalties did  not                                                                    
attach  to  PERM audits.  He  detailed  that the  department                                                                    
needed  to correct  any payment  errors that  were found  in                                                                    
either  direction; the  state was  responsible for  repaying                                                                    
the federal  government if it had  claimed money improperly.                                                                    
To  date there  had been  no additional  financial sanctions                                                                    
imposed   with  the   PERM   audits.   The  department   was                                                                    
responsible   for  developing   a  corrective   action  plan                                                                    
addressing how it  intended to reduce the error  rate in the                                                                    
Representative Gattis asked for  confirmation that there had                                                                    
been no  penalties to  date. Mr.  Sherwood answered  that to                                                                    
date PERM  had not been  subject to penalties; there  was no                                                                    
federal authority to  levy a penalty around  a PERM finding.                                                                    
He  elaborated  that  the  federal  government  had  general                                                                    
authority  to impose  certain  sanctions  on state  Medicaid                                                                    
programs, but there was nothing specific to PERM.                                                                               
Ms. Brodie added  that the division had  been anticipating a                                                                    
much higher  error rate  than it  was seeing.  She expounded                                                                    
that  if an  error resulted  in  an additional  payout to  a                                                                    
provider, the  state had to  claim it with CMS  within eight                                                                    
quarters in order to receive  federal funding. The state had                                                                    
not  anticipated being  able to  claim some  of the  payouts                                                                    
within  the  eight  quarters, which  was  addressed  in  the                                                                    
Co-Chair Thompson asked if the  state was subject to another                                                                    
PERM audit  in the near  future. Mr. Sherwood  answered that                                                                    
states underwent  a PERM audit  every three  years; Alaska's                                                                    
next audit would be in FY 17.                                                                                                   
Ms. Brodie  elaborated that changes  were underway  with the                                                                    
PERM audit  process, which would  begin to take place  on an                                                                    
as needed basis instead of every three years.                                                                                   
2:48:58 PM                                                                                                                    
Vice-Chair   Saddler  referred   to   an  earlier   question                                                                    
pertaining  to  how   much  money  had  been   lost  due  to                                                                    
reimbursements  crossing  fiscal  years. He  referenced  Ms.                                                                    
Brodie's answer that  there had been no  state funding lost;                                                                    
it had  shifted to a  different fiscal year. He  referred to                                                                    
another  statement by  Ms. Brodie  that if  claims were  not                                                                    
submitted within  eight quarters  the state lost  its chance                                                                    
to receive  reimbursement. He asked if  his understanding of                                                                    
the statements was correct.                                                                                                     
Ms.  Brodie   replied  in   the  affirmative;   claims  were                                                                    
submitted well within the eight quarters.                                                                                       
Vice-Chair Saddler read from page  7, lines 16 through 22 of                                                                    
the affidavit:                                                                                                                  
     ...in  fixing  defects and  completing  implementation,                                                                    
     CMS has dropped the  State's reimbursement rate from 75                                                                    
     percent  FFP (Federal  Financial  Participation) to  50                                                                    
     percent for the administration  of the new system. (SOA                                                                    
     Bates Nos.  1163-11638] This has resulted  in the State                                                                    
     paying back $2,909,341 to the federal government.                                                                          
Vice-Chair Saddler  asked if the  state would get  the money                                                                    
back.  Ms. Brodie  affirmed  that the  state  would get  the                                                                    
money back at certification.                                                                                                    
2:52:00 PM                                                                                                                    
Vice-Chair  Saddler   voiced  his  understanding   that  the                                                                    
process for  getting a system like  Enterprise certified was                                                                    
not  instantaneous  and  took  an  application  process  and                                                                    
other.  He  asked  for   verification  that  the  department                                                                    
expected certification by CMS by  March 30, 2016. Ms. Brodie                                                                    
answered replied in the affirmative.                                                                                            
Vice-Chair Saddler  asked a question about  the department's                                                                    
confidence  related  to  the implementation  of  the  system                                                                    
[audio   indecipherable].   Ms.   Brodie  replied   in   the                                                                    
Co-Chair  Thompson  spoke  to  the  requirement  of  federal                                                                    
certification for  the state's MMIS. He  remarked that there                                                                    
had been  no discussion  on what the  certification amounted                                                                    
to and  what it would  do. He  noted that some  other states                                                                    
(e.g.  Indiana) would  not accept  Medicaid expansion  until                                                                    
they received federal certification  of the MMIS; the states                                                                    
reasoned that  they would not receive  federal funding until                                                                    
the  MMIS was  certified. Given  the expected  certification                                                                    
date  of March  30, 2016,  he  wondered if  Alaska would  be                                                                    
responsible  for paying  for Medicaid  expansion until  that                                                                    
Commissioner   Davidson  replied   in   the  negative.   She                                                                    
explained  that   the  certification  did  not   impact  the                                                                    
system's ability  to pay.  She elaborated  that the  new day                                                                    
claims were currently paying at  over 90 percent accuracy in                                                                    
terms of timely payment.  She relayed that the certification                                                                    
process  required  by  CMS  would enable  the  state  to  be                                                                    
reimbursed  at the  enhanced  match of  75  percent for  the                                                                    
Co-Chair  Thompson   asked  at  what  rate   the  state  was                                                                    
reimbursed  excluding  certification. Commissioner  Davidson                                                                    
replied  that currently  the state  was reimbursed  at a  50                                                                    
percent rate.                                                                                                                   
Co-Chair  Thompson   asked  if  the  state   would  pay  the                                                                    
remaining  50   percent  until  certification.   Ms.  Brodie                                                                    
answered  that the  state  received administrative  payments                                                                    
and  claims for  services payments  from CMS.  The expansion                                                                    
population  would fall  under the  claims  for services  and                                                                    
would be  reimbursed at 100  percent as soon as  the state's                                                                    
plan amendment was approved.                                                                                                    
Co-Chair Thompson asked  for verification that reimbursement                                                                    
would occur as  soon as it [the state's  plan amendment] was                                                                    
approved.  Ms. Brodie  affirmed. She  explained that  the 50                                                                    
percent  match was  the administrative  cost of  running the                                                                    
Enterprise system, which  was the only cost  affected by the                                                                    
reduced match.                                                                                                                  
Co-Chair   Thompson   surmised    that   the   100   percent                                                                    
reimbursement was  dependent on the MMIS  certification. Ms.                                                                    
Brodie replied in  the negative. She clarified  that the 100                                                                    
percent  reimbursement was  based on  CMS's approval  of the                                                                    
state  plan   amendment;  it  was  unrelated   to  the  MMIS                                                                    
2:55:18 PM                                                                                                                    
Co-Chair Thompson  addressed the PERM audit.  He referred to                                                                    
the  department's  PowerPoint presentation  showing  230,371                                                                    
claims  to be  processed that  would result  in payouts  and                                                                    
226,000  to be  processed that  would result  in recoupment.                                                                    
The  presentation also  indicated  that  the department  had                                                                    
mailed  letters  on May  1  requesting  the recoupment  from                                                                    
providers.  He wondered if  the 456,000-plus claims had been                                                                    
involved in  the PERM audit  and what the results  had been.                                                                    
He believed the number was high.                                                                                                
Ms. Brodie  answered that the  claims were part of  the PERM                                                                    
review, whether  the review  selected these  specific claims                                                                    
or not. She  had been surprised because when  the new system                                                                    
had  gone  live  it  had  paid  all  professional  claims  a                                                                    
fraction  of a  cent  off.  She elaborated  that  to a  PERM                                                                    
auditor a claim that was  off by 0.0001 constituted an error                                                                    
albeit financially the dollar amount was insignificant.                                                                         
Representative Wilson clarified that  an audit did not check                                                                    
everything. She remarked that the  claims the auditors chose                                                                    
could have  been more accurate  than another  random sample.                                                                    
Ms.  Brodie   replied  that  the   audit  selected   a  good                                                                    
representation  of   the  claims  for  a   period  of  time;                                                                    
therefore,  it was  a statistically  valid  sampling of  the                                                                    
Representative Wilson understood, but  stated that the audit                                                                    
had not  checked every  single claim.  She surmised  that if                                                                    
the audit  had sampled  all claims the  error rate  may have                                                                    
been  closer to  what  the department  had anticipated.  She                                                                    
stated that  the selection may  have picked the  claims that                                                                    
had  no  errors.  She  noted  that an  audit  was  a  random                                                                    
selection, but  it did not necessarily  represent the entire                                                                    
system. She pointed the issue  out because she used to think                                                                    
that an audit checked everything.                                                                                               
Mr. Sherwood  agreed that there  was a possibility  that the                                                                    
findings  of  the  audit were  not  representative  [of  the                                                                    
claims as  a whole],  but statistically the  probability was                                                                    
very  low. He  explained  that the  chosen  sample size  and                                                                    
statistical methodology went to  ensure that the probability                                                                    
of a  substantial variation between  the audit  findings and                                                                    
the entire group of claims was very low.                                                                                        
Representative Wilson  had heard  from many  small providers                                                                    
on errors that still existed.                                                                                                   
2:58:58 PM                                                                                                                    
Co-Chair   Neuman   referenced   an  earlier   question   by                                                                    
Representative  Gattis related  to  how  many providers  had                                                                    
gone  out of  business [after  taking advance  payments]. He                                                                    
pointed  to  page  8,  line   17  of  the  affidavit,  which                                                                    
specified that 18  providers had gone out  of business after                                                                    
taking advance payments. He believed  Ms. Brodie had replied                                                                    
earlier  that only  3  providers had  gone  out of  business                                                                    
[after taking  advance payments].  He addressed the  cost to                                                                    
the state.  He remarked  that the  state had  issued advance                                                                    
payments of over $164 million  to providers; however, it had                                                                    
only  recouped $60  million, which  left a  balance of  $104                                                                    
million [page  8 of  the affidavit]. He  read from  lines 12                                                                    
through 17 of the document:                                                                                                     
     This amount  will likely never  be fully  recovered due                                                                    
     to crossing  fiscal years, the inability  of Enterprise                                                                    
     to provide  accurate records,  and providers  going out                                                                    
     of business.  Even, if  we are  allowed to  claim these                                                                    
     monies in  the future,  it will  be within  a different                                                                    
     fiscal year  and the State  may not have  the authority                                                                    
     to utilize the funds.                                                                                                      
Co-Chair Neuman  highlighted the  inability to  recover $104                                                                    
million. He spoke  to losses to the general fund  due to the                                                                    
inability to draw down another  $78 million. He wondered how                                                                    
to account  for the difference between  the numbers provided                                                                    
in  the  affidavit and  the  numbers  Ms. Brodie  had  given                                                                    
earlier in the meeting.                                                                                                         
Ms. Brodie  answered that statistics  had been  updated. The                                                                    
state  had recouped  over $70  million in  advance payments;                                                                    
there  was   approximately  $95  million   outstanding.  She                                                                    
detailed   that  numerous   providers   were  on   repayment                                                                    
schedules. For example, at the  time individuals received an                                                                    
advance the state had asked how  and when they would pay the                                                                    
money back  (i.e. check  or a  certain percentage  of claims                                                                    
withheld).  Therefore,  the  department was  recouping  more                                                                    
every  week.  She  elaborated   that  the  department  would                                                                    
collect money  from the remaining providers  by December 31,                                                                    
2015. She relayed  that it would not be  possible to collect                                                                    
the entire amount given that  some providers had gone out of                                                                    
business. The state was pursuing  collection of those monies                                                                    
through other  provider IDs the individuals  had opened; the                                                                    
department  was also  looking at  garnishing Permanent  Fund                                                                    
Dividends as an option to recoup money.                                                                                         
Mr. Sherwood clarified  that the 18 providers  listed in the                                                                    
affidavit included  providers that had gone  out of business                                                                    
for  any reason  (e.g.  moving out  of  state or  retiring).                                                                    
However,  it  did make  recoupment  more  difficult for  the                                                                    
state if the  individual was no longer  an enrolled Medicaid                                                                    
Co-Chair Thompson  stated that the Office  of Management and                                                                    
Budget  had  provided the  committee  with  a recent  report                                                                    
showing  that  in  2010  there   had  been  4,500  providers                                                                    
participating in  the Medicaid  program. He relayed  that by                                                                    
2014 the number  had dropped to 3,500. He  stressed that the                                                                    
state had  lost 1,000 providers that  had been participating                                                                    
in Medicaid  program. He believed  the loss  was substantial                                                                    
and asked for the department's comment.                                                                                         
Ms. Brodie addressed  the change in the  number of providers                                                                    
and  explained   that  the  state  now   enrolled  rendering                                                                    
providers. She  detailed that whenever a  provider went from                                                                    
one agency to the next their  enrollment had to be ended and                                                                    
restarted  under the  new agency.  She  elaborated that  the                                                                    
department  had  reenrollment of  all  of  its providers  in                                                                    
anticipation  of  the  Enterprise  system;  there  had  been                                                                    
providers that  had not reenrolled  or had any  activity for                                                                    
an extended period of time.                                                                                                     
Co-Chair  Thompson  extrapolated  that in  other  words  the                                                                    
providers  [that  had  not  reenrolled]   did  not  care  to                                                                    
participate  in the  Medicaid program.  Ms. Brodie  answered                                                                    
that  there were  providers  nationwide  enrolled in  Alaska                                                                    
Medicaid  in  order  to  provide   services  to  a  specific                                                                    
recipient who may  be in their state. She  furthered that in                                                                    
the  past those  providers did  not automatically  end their                                                                    
enrollment;  however,  when  the  department  conducted  the                                                                    
reenrollment it  had automatically ended the  enrollments of                                                                    
providers that  had not participated for  an extended period                                                                    
of time.                                                                                                                        
3:04:23 PM                                                                                                                    
Vice-Chair  Saddler   asked  for  clarification   that  1000                                                                    
providers  did  not reenroll  when  all  providers had  been                                                                    
moved from  the former  system to the  new system.  He asked                                                                    
what  accounted   for  the  reduction   in  the   number  of                                                                    
Ms. Brodie  replied that providers  were not taken  from the                                                                    
old system  to the new  system; providers had the  choice to                                                                    
enroll in the new system  if they wanted to provide services                                                                    
to Medicaid  recipients. She reiterated her  prior statement                                                                    
that there  had historically been providers  from across the                                                                    
country that  had enrolled one  time to provide  services to                                                                    
one recipient  at that time;  their enrollment  had remained                                                                    
open  in  the  legacy  system.  She  elaborated  that  those                                                                    
providers had all been terminated  when reenrollment for the                                                                    
new system took place.                                                                                                          
Vice-Chair  Saddler asked  for verification  that there  had                                                                    
been 4,500 providers under the  former system, but that some                                                                    
had been  inactive and did  not reenroll in the  new system.                                                                    
Ms. Brodie replied in the affirmative.                                                                                          
Vice-Chair Saddler  asked how  confident the  department was                                                                    
that  the  3,500  providers currently  in  the  system  were                                                                    
actively providing  services in  Alaska. Ms.  Brodie replied                                                                    
that the  number of providers offering  services to Medicaid                                                                    
recipients had increased in FY 14 by 6.4 percent.                                                                               
Vice-Chair  Saddler asked  for detail  on the  increase. Ms.                                                                    
Brodie replied  that there  had been  3,356 providers  in FY                                                                    
13, which had increased to 3,572 in FY 14.                                                                                      
Vice-Chair Saddler wondered how  the department measured the                                                                    
providers   as  actively   providing  service   to  Medicaid                                                                    
recipients. Ms.  Brodie replied  that the  numbers reflected                                                                    
providers  paid by  the department  during the  fiscal year.                                                                    
Vice-Chair  Saddler asked  Ms. Brodie  to repeat  the FY  14                                                                    
number. Ms. Brodie replied that  the number was 3,572 for FY                                                                    
3:06:58 PM                                                                                                                    
Representative Gara referred to  past providers who had been                                                                    
over or under paid. He  remarked that the situation would be                                                                    
different  for   future  providers   given  the   fixes  the                                                                    
department  had made.  He asked  for  verification that  the                                                                    
department was  more accurate on  paying future  claims than                                                                    
on fixing the outstanding over or under payments.                                                                               
Ms. Brodie replied that the  department was more accurate at                                                                    
present day and going forward.                                                                                                  
Representative  Gara   spoke  to  payments  that   had  been                                                                    
withheld  by  the  federal  government  for  the  Enterprise                                                                    
system   (the   state   should  qualify   for   75   percent                                                                    
reimbursement  upon certification;  in the  meantime it  was                                                                    
reimbursed  at  a  rate  of 50  percent).  He  believed  the                                                                    
department may  have referred to another  category of claims                                                                    
that the  department would get  full reimbursement  for, but                                                                    
had not yet  received. He wondered how much  money the state                                                                    
may still be  due. He asked for verification  that the money                                                                    
did not disappear, it was just paid late.                                                                                       
Ms. Brodie  replied in the  affirmative. She added  that the                                                                    
dollar  amount  was the  amount  included  in her  affidavit                                                                    
because the state  had not been paying for  the system since                                                                    
that time.                                                                                                                      
Representative Gara  believed that  the state  was receiving                                                                    
50 percent payment reimbursement  from the Enterprise system                                                                    
that  it was  no longer  paying. He  asked for  verification                                                                    
that the  state would  receive 75  percent when  it received                                                                    
certification; however, the figure  would be zero given that                                                                    
the state  was no longer  paying for the system.  Ms. Brodie                                                                    
replied in the affirmative.                                                                                                     
Representative  Gara wondered  if the  state had  received a                                                                    
lower rate for  any claims outside of  the Enterprise system                                                                    
that it  would retroactively receive  a higher rate  for. He                                                                    
wondered  if  there was  money  due  to  the state  for  the                                                                    
claims. Ms.  Brodie replied in  the negative; the  state had                                                                    
reprocessed these claims.                                                                                                       
Representative  Gara  asked  for verification  that  if  the                                                                    
state  applied  for  certification  to  enroll  in  Medicaid                                                                    
expansion, the  expansion would not occur  until the federal                                                                    
government provided its approval.  He asked for confirmation                                                                    
that   the   state   would  receive   the   higher   federal                                                                    
reimbursement rate once approved.                                                                                               
Mr.  Sherwood answered  that Alaska  had to  submit a  state                                                                    
plan amendment to be eligible  for expansion, which could be                                                                    
done at any  point during the first quarter  the state began                                                                    
Medicaid expansion. He believed  the department would submit                                                                    
the  document  before  the  end of  the  prior  quarter.  He                                                                    
elaborated that the  state could continue to  draw money and                                                                    
would send in  its report of expenditures at the  end of the                                                                    
first  quarter. Any  settling up  was expected  to occur  at                                                                    
that point; the  state plan amendment should  be approved at                                                                    
that time and Alaska would receive full funding.                                                                                
3:10:41 PM                                                                                                                    
Representative  Gattis  asked  what the  state  expected  to                                                                    
write  off  as a  result  of  some  providers going  out  of                                                                    
business. Ms. Brodie replied that  at the time the affidavit                                                                    
had  been written  the  money  owed to  the  state had  been                                                                    
$1,425,520.  However, at  least one-third  of the  providers                                                                    
had reenrolled  under a new provider  identification number;                                                                    
therefore, the state was able to  attach any debt to the new                                                                    
ID number.                                                                                                                      
Representative Gattis asked for  verification that the rough                                                                    
figure was  over $1 million  at present. Ms.  Brodie replied                                                                    
that she would have to follow up with the information.                                                                          
Representative Gattis asked  how many out-of-state providers                                                                    
there were  compared to in-state providers.  She referred to                                                                    
Ms. Brodie's testimony  regarding out-of-state providers who                                                                    
had registered in Alaska for  one particular patient and had                                                                    
dropped off  the provider  list when  the new  system began.                                                                    
Ms. Brodie would follow up with the information.                                                                                
Vice-Chair Saddler asked  about the average time  it took to                                                                    
have a  state plan amendment  approved by CMS.  Mr. Sherwood                                                                    
responded  that the  regulatory  approval  timeframe was  90                                                                    
days;  the  timeframe could  be  extended  if CMS  requested                                                                    
additional information.  He did  not have a  precise average                                                                    
of all of the department's  state plan amendments, but based                                                                    
on  his experience  some could  be approved  in 45  days. He                                                                    
elaborated  that  a  relatively straight  forward  amendment                                                                    
could  be expected  to receive  approval  within the  90-day                                                                    
timeframe; however,  there were  some state  plan amendments                                                                    
that had  taken substantially longer. He  indicated that the                                                                    
amendment under  discussion was  a "check  the box"  type of                                                                    
amendment,  which  the  department  expected  would  receive                                                                    
approval within the 90-day timeframe.                                                                                           
Vice-Chair Saddler asked  what "substantially longer" meant.                                                                    
Research he  had done  on the issue  indicated that  a state                                                                    
plan amendment could  take 1 year to 18 months  or more. Mr.                                                                    
Sherwood  answered that  some issues  had  taken that  long;                                                                    
usually amendments of this nature  pertained to coverage and                                                                    
reimbursement rather than eligibility.                                                                                          
Vice-Chair  Saddler asked  if  it was  fair  to assume  that                                                                    
expanding  Medicaid in  Alaska may  have one  of the  longer                                                                    
approval  times.  Mr. Sherwood  responded  that  he did  not                                                                    
believe the  expansion portion of  the state  plan amendment                                                                    
would have a  longer approval time, which  would be distinct                                                                    
from most of the state plan amendments for reform.                                                                              
3:14:16 PM                                                                                                                    
Vice-Chair Saddler thought that  something as complex as the                                                                    
reform envisioned  by the state  would take longer  than the                                                                    
statutory minimum  of 90 days.  Mr. Sherwood  responded that                                                                    
the state expected  some of the other pieces in  the bill to                                                                    
take  longer. For  example, state  plan amendment  involving                                                                    
the  1115 waivers  could be  a lengthy  negotiation process.                                                                    
However, he was not aware  of an eligibility state plan that                                                                    
had taken substantially over 90 days to approve.                                                                                
Vice-Chair  Saddler  believed CMS  would  like  to see  more                                                                    
states  expand  Medicaid;  however,  he  did  not  know  how                                                                    
receptive the  federal administration would be  to reform or                                                                    
how long the  reform component process would  take. He asked                                                                    
for verification that approval  for reform and waivers could                                                                    
take 1.5 to 2 years or more.                                                                                                    
Mr.  Sherwood believed  it was  possible,  depending on  the                                                                    
specifics included  in the state's reform,  that there could                                                                    
be  a lengthy  approval  time for  one  or more  components;                                                                    
however, he did not believe it would be the average.                                                                            
3:15:54 PM                                                                                                                    
Co-Chair  Neuman noted  that part  of the  problem had  been                                                                    
trying  to get  the  certification process  done. He  stated                                                                    
that Ms.  Brodie indicated  that once  some of  the problems                                                                    
were  fixed the  reimbursement rate  would increase  from 50                                                                    
percent up  to 75  percent, but  CMS had  previously dropped                                                                    
the state's reimbursement  rate from 75 percent  as a result                                                                    
of  continued  delays  in  fixing  deficits  and  completing                                                                    
implementation. Therefore,  the state had to  pay back close                                                                    
to  $3 million  to  the federal  government.  He pointed  to                                                                    
technical   difficulties   that    had   occurred   in   the                                                                    
certification  process.  He  stated that  the  reimbursement                                                                    
rate for the state's share  of design and implementation had                                                                    
increased from 50  to 90 percent. He  reiterated his remarks                                                                    
about  the   drop  from   75  to   50  percent   related  to                                                                    
3:17:31 PM                                                                                                                    
AT EASE                                                                                                                         
3:30:12 PM                                                                                                                    
Representative  Wilson stated  that  if  the state  accepted                                                                    
Medicaid expansion  on August  1 it would  be one  plan. She                                                                    
asked for verification that the  state would have to ask the                                                                    
federal government  for approval if  it wanted to  change to                                                                    
management care or other.                                                                                                       
Mr. Sherwood replied in the  affirmative. He elaborated that                                                                    
a  state  plan  amendment  or  a  waiver  request  would  be                                                                    
required  for other  kinds of  reforms that  would implement                                                                    
managed care or substantially change the benefit package.                                                                       
Representative  Wilson  asked  for verification  that  there                                                                    
would be no guarantee the state  would be able to do all the                                                                    
reforms;  it would  be  up to  the  federal government.  She                                                                    
thought  the  state may  be  gambling  on what  the  federal                                                                    
government would or would not accept.                                                                                           
Mr.   Sherwood  answered   that   there   was  always   some                                                                    
uncertainty  about   the  exact   design  of  some   of  the                                                                    
proposals; they  may or may  not be approved. In  many cases                                                                    
there  was established  precedent  for  federal approval  of                                                                    
reforms that were  very similar to reforms  discussed by the                                                                    
Representative   Wilson  noted   that  the   state's  recent                                                                    
transition  to Aetna  [for state  employees] from  the prior                                                                    
insurance  company had  not been  smooth. She  remarked that                                                                    
the  department  had  testified  that  there  had  been  two                                                                    
glitches in the past few  months related to state payment to                                                                    
[Medicaid] providers.  She assumed one  of the cases  was in                                                                    
Fairbanks (a provider had not  been paid due to the glitch).                                                                    
She  communicated that  the provider  had  received a  draw,                                                                    
which was  supposed to take  about six weeks. She  wanted to                                                                    
verify  that there  had only  been two  glitches related  to                                                                    
provider payment in the past few months.                                                                                        
Ms. Brodie  clarified that there  had been two  requests for                                                                    
advanced  payments.   One  was  related  to   an  entity  in                                                                    
Fairbanks;  the issue  pertained  to the  need  for a  valid                                                                    
supervisor to be connected to  the claim. The issue had been                                                                    
fixed as of the prior  weekend. The other issue had resulted                                                                    
from  a  provider  entering  the  billing  provider  in  the                                                                    
rendering ID field in the claims system.                                                                                        
Representative  Wilson remarked  that maybe  other providers                                                                    
had  experienced  problems,  but  had  not  applied  for  an                                                                    
advance  payment. She  explained that  her question  was not                                                                    
limited to providers that had asked for an advance.                                                                             
3:33:45 PM                                                                                                                    
Ms.  Brodie affirmed  that since  the  implementation of  Go                                                                    
Live some providers had chosen  to just wait until the issue                                                                    
was fixed.                                                                                                                      
Representative   Wilson   clarified   that  she   was   only                                                                    
interested in  the time period  between January 1,  2015 and                                                                    
present.  She  reiterated  her prior  question.  Ms.  Brodie                                                                    
replied  that there  had  been one  payment  issue that  was                                                                    
causing claims not  to pay (of the  individuals who received                                                                    
advances).  The payment  error had  been fixed.  She relayed                                                                    
that the  department was  not aware  of any  other problems,                                                                    
but  it was  possible a  provider had  just not  submitted a                                                                    
claim yet.                                                                                                                      
Representative  Wilson addressed  a discussion  the previous                                                                    
day related  to IHS. She  noted that  IHS had been  the only                                                                    
instance discussed by the department  where Medicaid was the                                                                    
primary  payor  (IHS  was secondary).  She  elaborated  that                                                                    
Medicare,  Tricare,  Veteran,  and  private  insurance  paid                                                                    
first,  while Medicaid  acted as  the  secondary payor.  She                                                                    
cited   statistics   that   approximately  40   percent   of                                                                    
individuals eligible  for IHS utilized  the service,  but 60                                                                    
percent had elected to use  other services. She wondered why                                                                    
Medicaid  would be  the secondary  payor and  not the  first                                                                    
(unless the  federal government  was not  doing its  part to                                                                    
Commissioner Davidson  replied that  the IHS was  the "payor                                                                    
of last  resort" as required  by federal law.  She discussed                                                                    
that  by  law  Medicaid  beneficiaries  who  were  also  IHS                                                                    
beneficiaries  were allowed  to have  a choice  of provider.                                                                    
One of  the reasons the  state was pursuing the  1115 tribal                                                                    
waiver was  to work with  tribal providers to  enhance their                                                                    
ability to  provide care to  IHS beneficiaries.  She relayed                                                                    
that  IHS  did  not  historically  pay  for  long-term  care                                                                    
services. One of  the reasons for this was that  in the past                                                                    
people did  not live  long enough.  She elaborated  that IHS                                                                    
historically  provided limited  healthcare services  and did                                                                    
not  provide  long-term  care, behavioral  health,  hospice,                                                                    
disability,  or  home  and  community  based  services.  She                                                                    
continued that historically  IHS beneficiaries would receive                                                                    
the services  outside of the  IHS system. As IHS  and tribal                                                                    
health  providers in  Alaska had  enhanced their  ability to                                                                    
provide care, much of the  services had transitioned over to                                                                    
tribal  providers, which  allowed  the state  to recoup  100                                                                    
percent federal  match. She expounded  that the  state could                                                                    
claim   100   percent   federal   match   for   IHS/Medicaid                                                                    
beneficiaries  seen   in  an  IHS  facility   including  the                                                                    
tribally operated  facilities in Alaska. Over  the years the                                                                    
legislature  had worked  with tribes  and the  department on                                                                    
efforts  to  enhance the  capability  in  the tribal  health                                                                    
systems,  specifically in  long-term care  opportunities and                                                                    
on a  patient housing  facility that was  under construction                                                                    
at  the Alaska  Native  Medical Center.  The facility  would                                                                    
allow more  IHS/Medicaid beneficiaries to be  seen in Alaska                                                                    
tribal health  facilities, which  would bring the  state 100                                                                    
percent federal reimbursement.                                                                                                  
3:39:26 PM                                                                                                                    
Representative Wilson asked for  verification that the state                                                                    
would   not  receive   100  percent   reimbursement  if   an                                                                    
individual elected to  go to Medicaid provider  instead of a                                                                    
non-tribal facility.                                                                                                            
Commissioner  Davidson  answered  that  if  an  IHS/Medicaid                                                                    
beneficiary  did  not  receive  their  care  in  an  IHS  or                                                                    
tribally operated facility they  were subject to the regular                                                                    
federal match  of 50 percent.  She noted that the  match was                                                                    
higher for children and pregnant women.                                                                                         
Representative  Wilson wondered  if there  was an  incentive                                                                    
for a  single male  or female  without Medicaid  to go  to a                                                                    
tribal  health service  instead of  the emergency  room. She                                                                    
noted  that a  person without  any money  would not  pay for                                                                    
service. She  thought there  may be  no incentive  to choose                                                                    
one option over  the other because they  were not personally                                                                    
paying for the service.                                                                                                         
Commissioner Davidson asked  for clarification. She wondered                                                                    
if   Representative  Wilson   was   asking   about  an   IHS                                                                    
beneficiary using the service of a private emergency room.                                                                      
Representative Wilson  wondered what  would direct  a person                                                                    
towards receiving services  in one way or  another [from IHS                                                                    
versus the  emergency room]. She remarked  that the services                                                                    
would be  paid 100 percent  [if a person  received treatment                                                                    
at an IHS facility]  or not at all [if a  person went to the                                                                    
emergency room].                                                                                                                
3:41:31 PM                                                                                                                    
Mr.  Sherwood replied  that if  an IHS  beneficiary who  was                                                                    
ineligible for  Medicaid received  services from  a provider                                                                    
(a non-tribal facility), the  provider could charge whatever                                                                    
they  charged the  general public.  However, the  individual                                                                    
would not be charged for  care if they received treatment at                                                                    
a tribal facility.                                                                                                              
Commissioner Davidson added that  IHS did charge for certain                                                                    
services.  For example,  tribal health  facilities typically                                                                    
would  provide eye  exams, but  did not  pay for  glasses or                                                                    
contacts.  Additionally, tribal  health facilities  provided                                                                    
preventative  dental exams,  but would  not pay  for a  root                                                                    
canal, crown, or bridge.                                                                                                        
Representative  Wilson   was  interested   in  understanding                                                                    
uncompensated care.  For example, a person  may have Tricare                                                                    
coverage, but  it was not enough  to pay all the  bills. She                                                                    
elaborated  that  IHS may  pay  for  some services  but  not                                                                    
others. She had  recently heard from a couple  of people who                                                                    
had  gone to  IHS for  a  doctor appointment.  She had  been                                                                    
concerned  to  find  out  that   the  individuals  had  been                                                                    
approached with  a $25  gift card to  sign up  for Medicaid.                                                                    
She wondered why a service that  was paid 100 percent by the                                                                    
federal  government  would  be  encouraging  individuals  to                                                                    
register  for  Medicaid.  She   referred  to  beautiful  IHS                                                                    
facilities available to beneficiaries.                                                                                          
Commissioner  Davidson answered  that IHS  was the  payor of                                                                    
last resort.  She explained that  if IHS  beneficiaries were                                                                    
Alaska residents,  they could not be  categorically excluded                                                                    
as a class from enrollment in a state benefit.                                                                                  
Representative  Wilson  replied that  she  did  not want  to                                                                    
categorize anyone.  She was trying to  determine the benefit                                                                    
of  IHS. She  wondered  why IHS  providers  would start  the                                                                    
discussion   with   beneficiaries  about   registering   for                                                                    
3:45:21 PM                                                                                                                    
Commissioner  Davidson  replied   that  according  to  IHS's                                                                    
calculation  on   costs,  Alaska  tribal   health  providers                                                                    
actually received  between 50 to  60 percent of  the funding                                                                    
required to provide  the most basic care  for an individual,                                                                    
which  was  why  they  were  a payor  of  last  resort.  She                                                                    
detailed that  if a visit  cost $1,000 and the  IHS provider                                                                    
received $500  reimbursement for  the service,  the provider                                                                    
had to  make up the  difference in cost. She  furthered that                                                                    
for  this reason,  Congress  had  authorized IHS  facilities                                                                    
(including tribally  operated facilities in Alaska)  to seek                                                                    
reimbursement   from   third   parties   including   private                                                                    
insurance, Medicaid, and Medicare.                                                                                              
Representative  Wilson thought  the  federal government  was                                                                    
supposed  to  provide  100  percent  reimbursement  for  IHS                                                                    
services.  She  surmised  that the  federal  government  was                                                                    
getting  out of  making the  full payment  by requiring  the                                                                    
state  to  pay the  difference.  She  asked if  the  federal                                                                    
government had  funded IHS services  at 100 percent  at some                                                                    
point in time.                                                                                                                  
Commissioner  Davidson replied  that the  federal government                                                                    
had never paid 100 percent  of healthcare for Alaska Natives                                                                    
and American Indians.                                                                                                           
Representative  Wilson asked  if  the federal  reimbursement                                                                    
rate  had been  the  same over  time. Commissioner  Davidson                                                                    
believed  that  the  reimbursement percentage  had  actually                                                                    
increased.  She discussed  that prior  to the  Department of                                                                    
Interior  healthcare services  had been  provided to  Alaska                                                                    
Natives and  American Indians on  a very limited  basis. She                                                                    
elaborated  that when  immunizations were  first started  in                                                                    
rural communities volunteers  had traveled throughout Alaska                                                                    
by boat to  provide the service. She noted that  many of the                                                                    
individuals   had   become   community   health   aides   or                                                                    
3:49:00 PM                                                                                                                    
Representative  Wilson believed  that  about  47 states  had                                                                    
managed care. She wondered if  managed care would be done by                                                                    
Medicaid or  would the state  work on an agreement  with IHS                                                                    
to provide managed care.                                                                                                        
Commissioner  Davidson  responded  that under  the  RFP  the                                                                    
department  would look  at options.  She detailed  that some                                                                    
states had  Medicaid manage the program,  while other states                                                                    
contracted  with a  third-party  provider.  She stated  that                                                                    
Alaska  could  look at  doing  contracting  with the  tribal                                                                    
provider. She relayed  that one of the things  the state was                                                                    
doing with the  1115 waiver it was pursuing  was making sure                                                                    
it had  maximum opportunity  for 100 percent  federal match.                                                                    
She elaborated  that the  state currently  had opportunities                                                                    
it was  pursuing with long-term  care and  behavioral health                                                                    
services;  however,  it  could not  currently  waive  choice                                                                    
(waiving  choice would  require  an 1115  waiver). The  1115                                                                    
waiver would  allow the state  to require  IHS beneficiaries                                                                    
to receive their care in an IHS facility.                                                                                       
Vice-Chair  Saddler  asked if  a  person  would be  able  to                                                                    
receive  IHS  services  if   they  qualified  for  Medicaid.                                                                    
Commissioner  Davidson  replied   in  the  affirmative;  the                                                                    
services were not mutually exclusive.                                                                                           
Vice-Chair Saddler  referred to  the time  it would  take to                                                                    
approve a  waiver. He addressed the  department's assurances                                                                    
that it could  make Medicaid expansion and  reform happen by                                                                    
August 1,  2015. He  wondered about costs  the state  may be                                                                    
exposed to  if expansion occurred  on August 1, but  it took                                                                    
CMS  up to  two  years  to approve  reforms  or waivers.  He                                                                    
wondered  if the  department had  calculated  what it  would                                                                    
cost the  state to provide services  at less than 90  or 100                                                                    
percent  Federal Medical  Assistance  Percentage (FMAP)  for                                                                    
the two years it could take to receive final approval.                                                                          
Mr.   Sherwood  answered   that  the   department  had   not                                                                    
calculated  the cost  of adding  expansion  with no  federal                                                                    
reimbursement  during the  time  period because  it did  not                                                                    
anticipate  that  the  state plan  amendment  for  expansion                                                                    
would  take that  long. He  elaborated that  the legislation                                                                    
identified  various reforms  that  would be  phased in.  The                                                                    
department did  not necessarily anticipate savings  from the                                                                    
reforms to incur in year one.                                                                                                   
3:53:01 PM                                                                                                                    
Vice-Chair   Saddler  asked   for   verification  that   the                                                                    
department believed  approval for  expansion would  be close                                                                    
to instantaneous. Mr. Sherwood  answered that the department                                                                    
expected  expansion to  be approved  in a  couple of  months                                                                    
(the   approval   timeframe   of   a   typical   eligibility                                                                    
Vice-Chair Saddler  asked which  of the plan  amendments had                                                                    
been  changed in  only a  couple of  months in  the past  10                                                                    
years in  Alaska. Mr. Sherwood would  provide information on                                                                    
the department's eligibility state plan amendments.                                                                             
Vice-Chair Saddler asked about  the cost to provide services                                                                    
to  an expanded  population.  He elaborated  that the  state                                                                    
would  receive   reimbursement  at  50  percent   until  CMS                                                                    
approved the waivers or certain  reforms. He wondered if the                                                                    
department had calculated the  costs. Mr. Sherwood responded                                                                    
that the 100 percent funding  for Medicaid expansion was not                                                                    
contingent on  approval of any  reforms in the bill;  it was                                                                    
simply related to  the submission and approval  of the state                                                                    
plan to add expansion.                                                                                                          
Vice-Chair  Saddler  remarked   that  the  department's  RFP                                                                    
envisioned going  through a  thorough evaluation  process to                                                                    
consider   other   plans'   amendments,   Alaska's   special                                                                    
circumstances, and how a reform  package may be best crafted                                                                    
to make the most effective  and efficient use of the state's                                                                    
resources.  He stated  that the  results  were not  expected                                                                    
until after  the department envisioned expansion  would take                                                                    
place. He  believed the  situation was  a matter  of "ready,                                                                    
fire, aim." He did not think it sounded like good planning.                                                                     
Commissioner Davidson  answered that  the RFP would  look at                                                                    
the entire Medicaid program.                                                                                                    
Vice-Chair Saddler  restated that  the RFP results  would be                                                                    
received  after  expansion.  He  equated  the  situation  to                                                                    
putting  the cart  before the  horse. Commissioner  Davidson                                                                    
replied that since  the passage of ACA five  years back, the                                                                    
state had been  given substantial time to  look at available                                                                    
reform   options  for   Medicaid.  She   relayed  that   the                                                                    
department  had  spent a  tremendous  amount  of time  since                                                                    
December [2014]  looking at options for  accepting expansion                                                                    
as quickly  as possible  in order to  take advantage  of 100                                                                    
percent federal match, which started  in January 1, 2014 and                                                                    
would end December 2016. She  expounded that the match would                                                                    
decrease to 95  percent in 2017, 94 percent in  2018, and 93                                                                    
percent in 2019.                                                                                                                
Vice-Chair  Saddler  countered   that  the  Supreme  Court's                                                                    
decision    that    mandating   Medicaid    expansion    was                                                                    
unconstitutional had only  occurred in the past  year or so.                                                                    
He stated  that there  had not been  five years  to consider                                                                    
3:57:02 PM                                                                                                                    
Commissioner Davidson  replied that it had  been three years                                                                    
since the  Supreme Court's decision. Prior  to that Medicaid                                                                    
expansion  had  been mandatory  after  the  passage of  ACA.                                                                    
Therefore, she  would have expected more  activity to occur,                                                                    
not  less;  however,  she  could  not  speak  for  the  past                                                                    
Vice-Chair Saddler added that only  about half of the states                                                                    
had  considered accepting  Medicaid expansion.  Commissioner                                                                    
Davidson  answered  that  29 states  plus  the  District  of                                                                    
Columbia had accepted Medicaid expansion.                                                                                       
Co-Chair  Thompson  read  a   statement  from  Ms.  Brodie's                                                                    
February  2 affidavit  on  page  10, lines  4  and 5:  "harm                                                                    
caused  by Xerox  subcontracting  to Cognizant  for DDI  and                                                                    
failing to fully staff the  project." He thought it appeared                                                                    
that  Xerox  had  not  yet fully  staffed  the  project.  He                                                                    
wondered about the status.                                                                                                      
Ms.  Brodie  replied  that  Xerox still  needed  to  hire  a                                                                    
systems  manager and  a Service  Utilization Reviews  (SURS)                                                                    
Co-Chair Thompson  referred to an  article he had read  in a                                                                    
newspaper  that morning.  He reported  that  it looked  like                                                                    
Xerox  State  Health  Care LLC  was  currently  looking  for                                                                    
individuals to  provide various services such  as accounting                                                                    
assistance,  business   analysis,  surveillance  utilization                                                                    
review managers, operations manager,  and other. He wondered                                                                    
why it  appeared the company  was just starting to  staff an                                                                    
office  when  they  were  already  supposed  to  be  up  and                                                                    
running. He expressed confusion about the situation.                                                                            
3:59:28 PM                                                                                                                    
Ms. Brodie  replied that  some of  the positions  were being                                                                    
recruited to be in support  of the state system staff. Xerox                                                                    
was  hiring people  to specifically  work  with the  state's                                                                    
system unit to learn the  "ins and outs" of Alaska Medicaid,                                                                    
which would enable  the individuals to go back  to Xerox and                                                                    
Cognizant  with knowledge  of the  rules. The  process would                                                                    
help ensure  more efficiencies in the  future. She explained                                                                    
that the other positions were  actually being staffed out of                                                                    
other  offices at  present. She  furthered  that people  had                                                                    
been  placed in  acting status  in the  positions, but  they                                                                    
were not necessarily physically in Alaska.                                                                                      
Co-Chair  Thompson   asked  if   Xerox  was   utilizing  its                                                                    
employees throughout the country.  Ms. Brodie replied in the                                                                    
Vice-Chair  Saddler pointed  to  Ms.  Brodie's statement  on                                                                    
page 10, line  18 that "Xerox has left the  most critical of                                                                    
all  positions,  the  Systems   Manager,  vacant  for  seven                                                                    
months." He also noted her  statement that the SURS manager,                                                                    
another  critical  position,  had   been  vacant  since  the                                                                    
previous  May.   He  had  seen  the   advertisement  in  the                                                                    
newspaper as well. He asked  if there were currently systems                                                                    
and SURS managers in the office.                                                                                                
Ms.  Brodie  replied  that  the managers  were  not  in  the                                                                    
Anchorage office.  There was an  acting SURS manager  in the                                                                    
Anchorage   office,  whereas   an   individual  from   Xerox                                                                    
corporate was currently acting as the systems manager.                                                                          
Vice-Chair Saddler  asked which  office the  systems manager                                                                    
was  working out  of. Ms.  Brodie replied  that the  systems                                                                    
manager was working out of the corporate office in Texas.                                                                       
Representative  Gattis had  not  been impressed  at how  the                                                                    
Xerox MMIS  system had worked  in the past. She  wondered if                                                                    
people  could  operate  the program  worldwide.  Ms.  Brodie                                                                    
replied that people could work in the system anywhere.                                                                          
Representative  Gattis wondered  why  the person's  location                                                                    
mattered.  Ms. Brodie  answered that  the employees  did not                                                                    
have  to  be  face-to-face  with  the  department,  but  the                                                                    
department did  require the employees  to meet with  them in                                                                    
person every four  to six weeks to ensure  the state's needs                                                                    
were being met.                                                                                                                 
Representative  Gattis  noted  that the  great  thing  about                                                                    
technology was that  a person did not have  to be physically                                                                    
present to provide the work.                                                                                                    
4:03:17 PM                                                                                                                    
Co-Chair  Neuman  drew attention  to  the  fiscal notes.  He                                                                    
discussed that  the committee had received  some information                                                                    
on the  amount of  federal funds that  would come  back into                                                                    
the   state.  He   mentioned   to  Commissioner   Davidson's                                                                    
testimony   that  the   federal   government  would   reduce                                                                    
reimbursement  to the  state  from 100  percent  down to  90                                                                    
percent over the years. However,  the fiscal note related to                                                                    
Health Care  Medicaid services  (OMB component  2077) showed                                                                    
increasing funds  reimbursed to the state.  He observed that                                                                    
the figure was  up to $278 million in FY  20. He stated that                                                                    
the  money  was projected  at  $309  million  in FY  21.  He                                                                    
discussed that  the federal government  was $16  trillion in                                                                    
debt. He  wondered if there  was a system that  could accept                                                                    
up to  40,000 more people.  He noted that provisions  in the                                                                    
legislation would change federal  reimbursements from 175 to                                                                    
203 percent of the federal  poverty level. He expounded that                                                                    
the bill  expanded the "donut  hole" (people under  65 years                                                                    
of  age  who  were  not  pregnant).  He  stressed  that  the                                                                    
legislation would  add a tremendous number  of Alaskans into                                                                    
the program. He remarked  that according to the department's                                                                    
estimate, a  considerable number  of federal funds  would be                                                                    
added to  the reimbursement amount  coming in to  Alaska. He                                                                    
wondered  what assurances  the state  had  that the  federal                                                                    
government would  continue to provide  the increases  to the                                                                    
state.  He believed  many people  were  concerned about  the                                                                    
issue.  He  opined  that nationally  people  were  concerned                                                                    
about the  federal taxes coming  out of their  paychecks. He                                                                    
remarked  that  many  other  states  had  accepted  Medicaid                                                                    
expansion and  had populations in the  millions. He believed                                                                    
it  was a  "scary proposition"  that the  federal government                                                                    
would owe  such a  considerable sum to  states. He  spoke to                                                                    
expanding  eligibility for  up to  40,000 more  Alaskans. He                                                                    
asked how the  state would afford its portion  of the costs.                                                                    
He  wondered what  would happen  if  the federal  government                                                                    
could not uphold its reimbursement.                                                                                             
Commissioner  Davidson  replied  that  current  federal  law                                                                    
required the  federal government  to reimburse the  state at                                                                    
90 percent beginning in 2020  and beyond. She explained that                                                                    
a change to  the reimbursement rate would require  an act of                                                                    
Congress  and consent  of the  president. The  bill required                                                                    
participation to  be contingent upon the  match remaining at                                                                    
90  percent. The  department would  expect  to follow  state                                                                    
statute, which only authorized  the state's participation in                                                                    
Medicaid  expansion  as long  as  the  match remained  at  a                                                                    
minimum federal match of 90 percent.                                                                                            
Co-Chair  Neuman  discussed  that  the  state's  budget  was                                                                    
getting  tighter  every year.  He  stated  that the  federal                                                                    
government could not  continue to spend money  given its $16                                                                    
trillion in debt.  He remarked that in Alaska  alone, it was                                                                    
doubling the  amount of money  it expected from  the federal                                                                    
government in a 10-year period  in order to expand Medicaid.                                                                    
He  believed  the  issue  should  be  of  great  concern  to                                                                    
Representative  Gattis  was  concerned  about  incentivizing                                                                    
people  to   find  new  Medicaid  clients.   She  referenced                                                                    
businesses handing out $25 gift  cards to incentivize people                                                                    
to  sign  up  for  Medicaid.  She did  not  believe  it  was                                                                    
fundamentally the right  way to go. She  was concerned about                                                                    
adding individuals  to a  program that  she did  not believe                                                                    
the federal government could afford.                                                                                            
Commissioner Davidson  replied that  one of the  reasons the                                                                    
administration  was  interested  in expanding  Medicaid  was                                                                    
because it  provided the opportunity  to extend  coverage to                                                                    
Alaskans without health  insurance and to save  the state in                                                                    
what  it  currently  paid  with  100  percent  general  fund                                                                    
dollars. Savings  would be about  $6.6 million in  the first                                                                    
year;  cumulatively the  savings totaled  $107.8 million  in                                                                    
the first  six years; the  amount did not include  the other                                                                    
reform efforts identified in the bill.                                                                                          
Representative  Gattis disagreed  that it  was a  savings if                                                                    
the  money came  from the  federal government.  She did  not                                                                    
believe  a savings  took place  when the  money was  paid by                                                                    
another party.                                                                                                                  
4:11:46 PM                                                                                                                    
Representative  Pruitt remarked  that the  projected general                                                                    
fund  savings   were  based  on   the  90   percent  federal                                                                    
reimbursement. He  asked if the  department could  alter the                                                                    
projection to  illustrate state savings that  would occur if                                                                    
the  federal reimbursement  rate  was reduced  to  50 to  80                                                                    
Commissioner  Davidson   asked  for  clarification   on  the                                                                    
request.    She   restated    the   request    provided   by                                                                    
Representative Pruitt. Representative  Pruitt replied in the                                                                    
HB  148  was  HEARD  and   HELD  in  committee  for  further                                                                    
Co-Chair Thompson  discussed the schedule for  the following                                                                    

Document Name Date/Time Subjects
HB 148 Responses HFIN Packet_05122015.pdf HFIN 5/12/2015 1:00:00 PM
HB 148