Legislature(2017 - 2018)ADAMS ROOM 519

02/21/2018 01:30 PM House FINANCE

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                   HOUSE FINANCE COMMITTEE                                                                                      
                      February 21, 2018                                                                                         
                          1:34 p.m.                                                                                             
1:34:36 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Seaton  called the House Finance  Committee meeting                                                                    
to order at 1:34 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Joan Brown,  Staff, Representative Paul Seaton;  David Teal,                                                                    
Director, Legislative Finance  Division; Representative Adam                                                                    
Wool, Sponsor;  Rob Earl,  Staff, Representative  Adam Wool;                                                                    
Representative  Steve  Thompson,   Sponsor;  Forrest  Wolfe,                                                                    
Staff,  Representative Steve  Thompson; Ghert  Abbott, Self,                                                                    
PRESENT VIA TELECONFERENCE                                                                                                    
Margaret   Brodie,  Director,   Division   of  Health   Care                                                                    
Services, Department of Health and Social Services.                                                                             
HB 96     TAXES;DEDUCTIONS;FEES;TAX STAMP DISCOUNT                                                                              
          HB 96 was HEARD and HELD in committee for further                                                                     
HB 176    GROUND EMER. MEDICAL TRANSPORT PAYMENTS                                                                               
          HB 176 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HB 321    APPROP: SUPPLEMENTAL OP.; FUND; AMENDING                                                                              
          HB 321 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
Co-Chair Seaton reviewed the meeting agenda.                                                                                    
HOUSE BILL NO. 321                                                                                                            
     "An  Act making  supplemental appropriations  and other                                                                    
     appropriations; making  an appropriation  to capitalize                                                                    
     a fund;  amending appropriations; and providing  for an                                                                    
     effective date."                                                                                                           
1:35:38 PM                                                                                                                    
Co-Chair Foster MOVED to ADOPT the proposed committee                                                                           
substitute    for   HB    321,   Work    Draft   30-GH2781\O                                                                    
(Wallace/Martin, 2/20/18).                                                                                                      
Representative Wilson OBJECTED for discussion.                                                                                  
JOAN BROWN, STAFF, REPRESENTATIVE PAUL SEATON, explained                                                                        
the changes in the work draft. She read from a prepared                                                                         
     The  Administration included  supplemental requests  in                                                                    
     the  operating and  capital  budget  bills released  on                                                                    
     December   15th.   The   Administration's   stand-alone                                                                    
     supplemental bill  was introduced as HB  321 on January                                                                    
     31st.  OMB described  the  December 15th  supplementals                                                                    
     when they  presented their  budget overview  on January                                                                    
     18th, the  supplemental bill  requests on  February 1st                                                                    
     and then went through  the supplemental amendments last                                                                    
     Friday, February 16th.                                                                                                     
     The four finance co-chairs, with  the assistance of the                                                                    
     Legislative Finance  Division, have been  analyzing the                                                                    
     supplemental requests  with the goal of  having a "fast                                                                    
     track"  supplemental  bill.  It's  been  several  years                                                                    
     since a  separate supplemental  bill has  been adopted,                                                                    
     but  it used  to be  the norm.  There are  a couple  of                                                                    
     reasons why  earlier passage  of at  least some  of the                                                                    
     supplemental requests is a good idea:                                                                                      
          1.   Agencies  that  are requesting  supplementals                                                                    
          know their  final current fiscal year  budget more                                                                    
          timely,  alleviating uncertainty  for the  program                                                                    
          managers  and  for  those that  benefit  from  the                                                                    
          2.   Shortening  the  list of  supplementals  that                                                                    
          get added to the capital  budget at the end of the                                                                    
          legislative session  (or special  session) reduces                                                                    
          the size of the  actual capital budget bill making                                                                    
          it easier  to track  the items  that should  be in                                                                    
          the  bill.   When many  items are  being added  or                                                                    
          deleted in  various bills and between  the bodies,                                                                    
          items can be  inadvertently dropped. That happened                                                                    
          last year.  Line 21 adds  a supplemental  that was                                                                    
          inadvertently dropped  last year. This  Fast Track                                                                    
          eliminates  9  pages  out of  the  capital  budget                                                                    
          bill.  This allows  Legal Services  to get  a bill                                                                    
          out more quickly.                                                                                                     
     Requests  that didn't  make it  into  the "fast  track"                                                                    
     just  mean that  at least  one finance  co-chair had  a                                                                    
     concern  or question  that was  not answered  timely or                                                                    
     satisfactorily.   Any  remaining supplemental  requests                                                                    
     will be considered for inclusion  in the capital budget                                                                    
     bill.  Tomorrow the  other  finance  committee is  also                                                                    
     introducing an  identical version  of the  "Fast Track"                                                                    
1:39:36 PM                                                                                                                    
Ms. Brown continued to read from her prepared introductory                                                                      
     In  addition to  the  O  version of  HB  321, you  have                                                                    
     before you:                                                                                                                
          1.   The  legal-sized   spreadsheet  of   all  the                                                                    
          supplemental requests.                                                                                                
          a.   The lines that are  shaded green in the first                                                                    
          column means those items are  included in the Fast                                                                    
          Track supplemental.  So all  of the items on pages                                                                    
          1  through 7  ?  are included.    You'll find  the                                                                    
          Supplemental  Bill   total  on   page  6   of  the                                                                    
          spreadsheet:   $49.5   million   of   Unrestricted                                                                    
          General Fund,  $5.1 million of  Designated General                                                                    
          Funds,  and $13.1  million of  Other  Funds for  a                                                                    
          total of $67.7 million.                                                                                               
          b.   The  remaining  page  and   a  half  are  the                                                                    
          accounting system  ratifications for  prior years,                                                                    
          which don't add to  the bill total. (Ratifications                                                                    
          are  entries  adding  authorization  to  zero  out                                                                    
          accounting system errors.   The funds were already                                                                    
          spent in the prior years.)                                                                                            
          c.   The second  "Bill" column indicates  in which                                                                    
          bill the supplemental was requested.                                                                                  
          d.   The  middle   columns  of   the  spreadsheet:                                                                    
          Department through Fund  Source are unchanged from                                                                    
          the OMB version of the spreadsheet.                                                                                   
          e.   On  the right  side of  the spreadsheet,  the                                                                    
          yellow   highlighted  Modification   column  notes                                                                    
          what,  if  any,   changes  the  Finance  Committee                                                                    
        chairs have made to the original requests.                                                                              
          i.   For example,  on lines  2-4, these  items are                                                                    
          now in the numbers section instead of language.                                                                       
          ii.  On line 8 there's  a new supplemental request                                                                    
          from   the   legislature    for   $121.3   General                                                                    
          Fund/Program Receipts related  to the extension of                                                                    
          the  Anchorage Wells  Fargo  lease  in the  Benson                                                                    
          iii. There are  a variety  of other  changes noted                                                                    
          in this column as well.                                                                                               
          f.   On  the far  right side  of the  spreadsheet,                                                                    
          the   yellow   highlighted   Legislative   Finance                                                                    
          Division or LFD  Notes column includes explanatory                                                                    
     2.   You  also   have  a  3-page   Legislative  Finance                                                                    
     operating  supplemental report  with red  boxes on  it.                                                                    
     The  numbers  in  the  boxes  correspond  to  the  line                                                                    
     numbers on the legal-sized spreadsheet.                                                                                    
     3.   A Multi-year Agency Summary report that shows the                                                                     
     Fast Track supplementals by agency and whether they                                                                        
     are operating or capital.                                                                                                  
          a.   There's only  one capital item  included: the                                                                    
          $8,125.0  Statutory  Designated  Program  Receipts                                                                    
          Volkswagen settlement.  It is described on line                                                                       
          14 of the legal-sized spreadsheet.                                                                                    
          b.   You may notice that  the total on this report                                                                    
          is less  than the $67.7 million  I just mentioned.                                                                    
          That's because  on the Agency Summary  Report, the                                                                    
          Fund Transfers  are not included in  the Statewide                                                                    
          Total.   However, the Fund Transfers  are shown on                                                                    
          the report  and if one  does the math,  the totals                                                                    
          do match.                                                                                                             
     [Secretary Note: All the documents Ms. Brown referred                                                                      
     to are on file.]                                                                                                           
1:42:44 PM                                                                                                                    
Co-Chair Seaton recognized  that Representative Kawasaki and                                                                    
Representative Guttenberg had joined the meeting.                                                                               
Representative  Pruitt asked  if the  $30 million  increment                                                                    
was  switching   the  fund  source   from  the   Power  Cost                                                                    
Equalization   (PCE)   Endowment    Fund   to   the   Alaska                                                                    
Comprehensive Health Insurance Fund (ACHI).                                                                                     
DAVID TEAL, DIRECTOR,  LEGISLATIVE FINANCE DIVISION, replied                                                                    
in  the   affirmative.  He  detailed  that   the  governor's                                                                    
original budget  funded the  Community Assistance  Fund (CA)                                                                    
from  PCE in  FY  2018, which  informed  communities of  the                                                                    
amount of  their FY 2019  distribution but left the  FY 2020                                                                    
amounts  unknown. The  supplemental CS  proposed to  use the                                                                    
reinsurance refund  from Premera to  ACHI on line 13  of the                                                                    
spreadsheet ["FY2018  Supplemental Bill"] (copy on  file) in                                                                    
the amount of $25 million. The  balance of the ACHI fund was                                                                    
somewhere between  $80 million and $90  million. The purpose                                                                    
was  to allow  the PCE  earnings to  be used  in FY  19; the                                                                    
transaction   occurred   in   the  operating   budget.   The                                                                    
transaction  put   the  PCE  earnings  used   for  community                                                                    
assistance  back  on  the  original  track  the  legislature                                                                    
intended; prefunding  CA rather than using  the supplemental                                                                    
process.  The  governor's   budget  disregarded  one  year's                                                                    
deposit  therefore, in  order to  save the  $30 million  PCE                                                                    
withdraw for FY  19, the ACHI fund source was  chosen for FY                                                                    
18.  One-time  funding  was chosen  for  the  one-time  fund                                                                    
source,   which   was   a  reimbursement   for   reinsurance                                                                    
1:46:35 PM                                                                                                                    
Representative  Pruitt recalled  that  the  PCE fund  earned                                                                    
$112  million the  past year  and a  formula determined  the                                                                    
amount available  to spin  off for  PCE. Legislation  in the                                                                    
prior  year  allowed  an  amount of  money  above  what  was                                                                    
necessary to  fund PCE to be  used for CA. He  asked how the                                                                    
change impacted  the overall value  of the fund and  the two                                                                    
distribution  calculations.   Mr.  Teal  replied   that  the                                                                    
purpose  of funding  from the  ACHI  fund was  to leave  the                                                                    
value of  the PCE  fund unaffected. Funding  both the  FY 18                                                                    
and FY 19 CA expenditures  from the PCE was possible because                                                                    
the PCE earnings  were so high. However,  the option reduced                                                                    
the value  of the fund  and jeopardized future  earnings and                                                                    
was not favored by the co-chairs.                                                                                               
Representative Wilson  pointed to  lines 3 and  4 of  the FY                                                                    
2018  Supplemental   Bill  spreadsheet  pertaining   to  the                                                                    
Department  of  Corrections  (DOC).  She  offered  that  the                                                                    
offender  population trend  was  leveling. She  asked for  a                                                                    
breakdown  of  SB  91  -   Omnibus  Crim  Law  &  Procedure;                                                                    
Corrections  [ CHAPTER  1 SLA  17  -03/21/2017] funding  for                                                                    
population  management  based  on how  the  legislature  was                                                                    
going   to   "re-disperse   moneys   into   those   specific                                                                    
institutions." Ms. Brown did not  have the breakdown on hand                                                                    
but would  follow up. Representative Wilson  pointed to line                                                                    
4 of the spreadsheet  [inmate healthcare]. She reported that                                                                    
she had  been unable  to determine  in subcommittee  how the                                                                    
health  needs  were  being  met.  The  department  had  sent                                                                    
several  inmates out  of state  because healthcare  was more                                                                    
affordable. She  had received information  from DOC  but the                                                                    
breakdown of  the $10  million supplemental  expenditure was                                                                    
incomplete. She noted an additional  $10 million increase in                                                                    
the FY  19 budget. She requested  more information regarding                                                                    
the increases in inmate health care.                                                                                            
1:50:00 PM                                                                                                                    
Representative   Wilson  WITHDREW   her  OBJECTION   to  the                                                                    
adoption of the work draft.                                                                                                     
Co-Chair Seaton OBJECTED for further discussion.                                                                                
Representative Ortiz  pointed to page  5, line 20  and asked                                                                    
why the  transaction was necessary.  He was in favor  of the                                                                    
appropriation. Mr.  Teal asked for confirmation  that he was                                                                    
referencing the  $23.9 million appropriation for  the Alaska                                                                    
Marine Highway  System (AMHS). Representative  Ortiz replied                                                                    
in the  affirmative. Mr.  Teal responded  that in  the prior                                                                    
session general  fund (GF) money  was reduced and  offset by                                                                    
additional spending  from the AMHS fund  that was authorized                                                                    
due to  a supplemental deposit  from a prior  year. However,                                                                    
the   deposit  occurred   at  a   much  lower   amount  than                                                                    
anticipated.  The AMHS  fund ended  up short  by almost  $24                                                                    
million. The system could not  schedule without the funding.                                                                    
The appropriation  was a primary  reason for the  fast track                                                                    
supplemental; to  ensure the AMHS could  maintain operations                                                                    
and schedules.                                                                                                                  
1:52:02 PM                                                                                                                    
Representative Guttenberg pointed to page  5, line 22 of the                                                                    
spreadsheet   [University   of    Alaska   Bargaining   Unit                                                                    
Agreements].  He  asked  if the  legislature  still  had  to                                                                    
ratify  the  contract  even  though  the  contracts  had  no                                                                    
monetary  terms  requiring supplemental  appropriation.  Ms.                                                                    
Brown replied in  the affirmative. Representative Guttenberg                                                                    
pointed  to line  37,  page  8 item  for  the Department  of                                                                    
Commerce,   Community  and   Economic  Development   (DCCED)                                                                    
[Financial   Examiner   I/II   for  Alaska   Native   Claims                                                                    
Settlement Act Filings  and Support]. He asked  if there was                                                                    
a reason why  the second position had not been  added to the                                                                    
original  budget. Ms.  Brown could  not recall  the original                                                                    
issue.  Representative Guttenberg  pointed  to  page 13  and                                                                    
spoke  about changing  the  appropriation  and transfers  of                                                                    
funding between  the Alaska Gasline  Development Corporation                                                                    
(AGDC) and  Alaska LNG  Project Fund.  He asked  whether the                                                                    
transaction was  the authorization. Ms. Brown  answered that                                                                    
if the  item was not shaded  green in column one  it was not                                                                    
in  the supplemental  CS. The  supplemental  items he  noted                                                                    
were presented for a decision in the future.                                                                                    
Co-Chair  Seaton  WITHDREW  his OBJECTION.  There  being  NO                                                                    
further OBJECTION, Work Draft 30-GH2781\O was ADOPTED.                                                                          
HB  321  was  HEARD  and   HELD  in  committee  for  further                                                                    
Co-Chair Seaton handed the gavel to Co-Chair Foster'                                                                            
Co-Chair Foster  indicated that HB 176  was previously heard                                                                    
in committee on February 16, 2018.                                                                                              
HOUSE BILL NO. 176                                                                                                            
     "An Act relating to medical assistance reimbursement                                                                       
     for ground emergency medical transportation services;                                                                      
     and providing for an effective date."                                                                                      
1:54:34 PM                                                                                                                    
ROB EARL,  STAFF, REPRESENTATIVE ADAM WOOL,  reviewed a flow                                                                    
chart titled  "HB 176;  IGT Flow Chart"  (copy on  file). He                                                                    
noted  that  the  providers  signified   as  a  blue  circle                                                                    
encompassed  municipalities,  fire departments,  and  tribal                                                                    
organizations.  He  exemplified  a  scenario  of  a  patient                                                                    
transport cost of $1 thousand  that was reimbursed via state                                                                    
Medicaid for  $400 leaving $600  in uncompensated  costs. He                                                                    
indicated   that  the   scenario  represented   the  current                                                                    
reimbursement schedule. The blue circle  to the right of the                                                                    
provider's  circle represented  state  Department of  Health                                                                    
and  Social   Services  (DHSS)   supplemental  reimbursement                                                                    
proposed in HB  176. He expounded that the  provider [in the                                                                    
scenario] would  submit a total  of $300,  which represented                                                                    
half of the  uncompensated cost or non-federal  share plus a                                                                    
20  percent  administrative  fee charged  by  DHSS  totaling                                                                    
$360. He remarked that the  CS language specified "up to" 20                                                                    
percent   for  the   administrative   fee.  The   department                                                                    
submitted  a bill  to federal  Medicaid who  would reimburse                                                                    
the  department for  $360.  He referenced  page  2, lines  3                                                                    
through  7  of the  legislation  that  delineated that  "the                                                                    
provider  may not   exceed  the provider's  actual cost  for                                                                    
providing emergency medical  transportation?." He noted that                                                                    
the reimbursement  provision was explained  in a box  on the                                                                    
lower right of  flow chart. He pointed to  what the provider                                                                    
would  recoup under  the scenario.  The department  kept the                                                                    
$120 in  administrative fees and the  provider recouped $640                                                                    
out of $1,000 total cost.                                                                                                       
1:58:46 PM                                                                                                                    
Representative  Kawasaki asked  how  the administrative  fee                                                                    
was calculated and who received  the fee. He believed the 20                                                                    
percent fee  was high.  Mr. Earl answered  that the  fee was                                                                    
higher  than the  actual administrative  cost. He  explained                                                                    
that  federal rules  allowed the  embellished administrative                                                                    
fee.   He  pointed   out  that   under   the  scenario   the                                                                    
administrative fee  was matched  by the  federal government.                                                                    
Representative  Kawasaki  wondered  why the  state  did  not                                                                    
charge  an   even  higher   administrative  fee.   Mr.  Earl                                                                    
responded that the  amount was determined by  the amount the                                                                    
Centers for Medicare & Medicaid  Services (CMS) would likely                                                                    
allow   under  the   state   plan  amendment   negotiations.                                                                    
Representative  Kawasaki asked  for the  reason the  fee was                                                                    
set  at 20  percent. He  wondered if  it was  linked to  the                                                                    
ambulance fee.  He asked whether  there was a  nexus between                                                                    
the  administrative  fee  and the  total  amount.  Mr.  Earl                                                                    
replied in  the negative and  added that the 20  percent was                                                                    
predicated on  a guess regarding a  likely allowable amount.                                                                    
The  actual administrative  cost  was  roughly 2.6  percent.                                                                    
Representative   Kawasaki  surmised   that  the   state  was                                                                    
"getting  more  money from  the  federal  government" at  20                                                                    
2:02:00 PM                                                                                                                    
REPRESENTATIVE  ADAM  WOOL,   SPONSOR,  concurred  that  the                                                                    
actual  administrative cost  was quite  a bit  less than  20                                                                    
percent. He elaborated that consultants  in other states had                                                                    
relayed  that  20  percent  was  common,  with  some  states                                                                    
charging 27  percent. He presumed  that 20 percent  would be                                                                    
approved by CMS.  The extra money would  help the department                                                                    
and "relieve  pressure on  the UGF  the state  was currently                                                                    
providing." The  idea was to not  "look a gift horse  in the                                                                    
Representative Kawasaki asked how  much of the reimbursement                                                                    
funding would  go to the provider  doing the transportation.                                                                    
Mr.  Earl  answered that  under  the  scenario none  of  the                                                                    
administrative fee reimbursement was  given to the provider.                                                                    
Representative Kawasaki surmised that even  if a cost of the                                                                    
ambulance  run  was  more  expensive   than  the  amount  of                                                                    
reimbursement  the state  would  not distribute  any of  the                                                                    
administrative reimbursement money to the providers.                                                                            
2:04:04 PM                                                                                                                    
Representative   Wool  answered   that  the   administrative                                                                    
reimbursement did  not go back  to the provider, it  went to                                                                    
the  state.   He  mentioned  that  one   of  the  amendments                                                                    
addressed the issue  and allowed the provider to  add the 20                                                                    
percent  administrative fee  to  the overall  bill and  then                                                                    
would be reimbursed.                                                                                                            
Representative   Tilton  was   concerned  about   setting  a                                                                    
precedent for  a 20 percent  administrative fee  that seemed                                                                    
arbitrary.  She had  previously  been involved  in DHSS  and                                                                    
recounted  discussions  regarding administrative  fees.  She                                                                    
supported getting  as much money  back as possible,  but she                                                                    
was  concerned  over setting  a  20  percent precedent  that                                                                    
could apply  to other grants and  items. Representative Wool                                                                    
understood the  point. He reiterated that  the precedent had                                                                    
already been set  in other states and the  bill mirrored the                                                                    
amount.  He   mentioned  the   state's  obligation   to  pay                                                                    
according to Title 19 of  the Social Security Act. He agreed                                                                    
that  he would  not favor  a 20  percent administrative  fee                                                                    
charged  "across  the  board"  for  every  state  department                                                                    
including DHSS. He thought the  department could address the                                                                    
issue.  He  clarified that  the  bill  proposed "up  to"  20                                                                    
percent.  Representative  Tilton  requested an  answer  from                                                                    
2:07:23 PM                                                                                                                    
MARGARET   BRODIE,  DIRECTOR,   DIVISION   OF  HEALTH   CARE                                                                    
SERVICES,  DEPARTMENT OF  HEALTH  AND  SOCIAL SERVICES  (via                                                                    
teleconference),  replied that  she  had conversations  with                                                                    
the  Centers   for  Medicare   and  Medicaid   recently  and                                                                    
discovered that the administrative  fee could only cover the                                                                    
cost of the administrative position.                                                                                            
Representative Tilton wondered  about the state's obligation                                                                    
to continue the program if  the federal government ended its                                                                    
funding. Mr.  Earl referred  to page 1,  lines 9  through 11                                                                    
and  read: "  the amount  of the  supplemental reimbursement                                                                    
paid to  a provider must be  equal to the amount  of federal                                                                    
financial participation?"  He declared  that if  the federal                                                                    
financial participation went away the program would end.                                                                        
2:08:44 PM                                                                                                                    
Co-Chair Foster  MOVED to  ADOPT Amendment  1, 30-LS0705\O.7                                                                    
(Glover, 2/20/18) (copy on file):                                                                                               
     Page 1, line 13:                                                                                                           
          Delete "expenses"                                                                                                     
          Insert "fee described in (d) or (e) of this                                                                           
     Page 2, lines 19-22:                                                                                                       
          Delete oil material and insert:                                                                                       
     "(d)   If  the   department  authorizes   the  use   of                                                                    
     intergovernmental transfers under  the   program,   the                                                                    
     deportment  shall charge  on  administrative  fee to  a                                                                    
     provider  to cover  the    deportment's     costs    of                                                                    
     administering the program.  The administrative fee must                                                                    
     be to equal  up to 20 percent of  the non-federal share                                                                    
     the provider  pays to   the department. A  provider may                                                                    
     include the   administrative   fee  in   the provider's                                                                    
     cost for providing  an emergency medical transportation                                                                    
     service to a medical assistance recipient.                                                                                 
     (e) If  the department authorizes the  use of certified                                                                    
     public expenditures  under the program,  the department                                                                    
     may establish an administrative  fee for a provider. If                                                                    
     the department establishes  an administrative fee under                                                                    
     this subsection,  the department  may allow  a provider                                                                    
     to include   the  administrative fee in  the provider's                                                                    
     cost    for    providing     an    emergency    medical                                                                    
     transportation   service   to  a   medical   assistance                                                                    
     Reletter the following subsections accordingly.                                                                            
Representative Wilson OBJECTED for discussion.                                                                                  
Mr. Earl  explained the amendment.  The amendment  did three                                                                    
things. First,  the fee was  changed to equal to  20 percent                                                                    
versus "up  to." Second, the amendment  allowed the provider                                                                    
to add  the administrative  fee to the  cost of  the medical                                                                    
transport.     Thirdly,  amendment   1  separated   out  the                                                                    
Intergovernmental Transfers  (IGT) method and  the Certified                                                                    
Public  Expenditure   (CPE)  methodology  and   allowed  the                                                                    
department to choose the methodology  and not the providers.                                                                    
He  pointed  to  the  flow  chart  and  furthered  that  the                                                                    
amendment allowed  the providers  to add  the administrative                                                                    
fee to  the total  cost of  transport. Therefore,  under the                                                                    
scenario the provider would receive  a reimbursement of $660                                                                    
from  the   department,  of  which  $330   was  the  federal                                                                    
supplemental  reimbursement.  He  cited   page  2,  lines  3                                                                    
through 7  of the bill  that delineated that the  amount the                                                                    
provider received may not exceed actual costs.                                                                                  
2:11:25 PM                                                                                                                    
Representative Wilson  asked who  was charging the  fee. She                                                                    
wondered why  the bill  specified what  the provider  had to                                                                    
charge. Mr.  Earl answered that  the department  charged the                                                                    
provider the fee.                                                                                                               
Representative Wool  elaborated that he wanted  an amendment                                                                    
to Amendment 1  that would revert to "up to  20 percent." He                                                                    
confirmed that the charge was from the department to CMS.                                                                       
Representative  Wilson  stated that  she  did  not have  the                                                                    
2:12:48 PM                                                                                                                    
Co-Chair  Seaton MOVED  to ADOPT  Conceptual Amendment  1 to                                                                    
Amendment 1:                                                                                                                    
     Lines 9 and 10, delete "must be equal to" and insert                                                                       
     "may not exceed."                                                                                                          
There being NO OBJECTION, it was so ordered.                                                                                    
Representative Wilson asked Ms.  Brodie to add clarification                                                                    
to the administrative  fee and what amount  was allowable to                                                                    
charge.  Ms.  Brodie  replied that  the  federal  government                                                                    
would only allow to charge  for actual costs. The department                                                                    
would estimate the total costs and  divide it by the cost of                                                                    
the administrative  position divided  by 2 to  calculate the                                                                    
percentage the  department would charge at  the beginning of                                                                    
the fiscal  year. The calculation  would monitor  and likely                                                                    
amend  the   percentage  as  the  fiscal   year  progressed.                                                                    
Representative  Wilson  asked  if the  provider  could  only                                                                    
charge   their  actual   administrative  fees.   Ms.  Brodie                                                                    
answered that they  could only charge the  actual costs that                                                                    
may include administrative fees.                                                                                                
2:15:16 PM                                                                                                                    
Representative  Wilson surmised  that the  amendment allowed                                                                    
providers to recoup their  actual administrative and service                                                                    
costs. Ms. Brodie answered in  the affirmative and qualified                                                                    
that  it was  permissible as  long as  the provider  did not                                                                    
charge the administrative fees to another program.                                                                              
Representative Wilson WITHDREW her OBJECTION.                                                                                   
There being NO OBJECTION, it was so ordered.                                                                                    
2:16:07 PM                                                                                                                    
Co-Chair Foster  MOVED to  ADOPT Amendment  2, 30-LS0705\O.5                                                                    
(Glover, 2/19/18) (copy on file).                                                                                               
     Page 2, following line 22:                                                                                                 
     Insert a new subsection to read :                                                                                          
          "(e) This  section  authorizes  the  department                                                                       
          to     provide  supplemental   reimbursements  for                                                                    
          ground,   water,   or    air   emergency   medical                                                                    
          transportation  service   provider  only   if  the                                                                    
          United  States  Department  of  Health  and  Human                                                                    
          Services  approves   payments  to  that   type  of                                                                    
          emergency    medical     transportation    service                                                                    
     Re-letter the following subsections accordingly.                                                                           
     Page 2, line 30, through page 3, line I:                                                                                   
     Delete all material.                                                                                                       
     Renumber the following paragraphs accordingly.                                                                             
     Page 3, lines 8 ? 25:                                                                                                      
     Delete all material and insert:                                                                                            
     "*See. 2.This Act takes effect immediately under AS                                                                        
Representative Wilson OBJECTED for discussion.                                                                                  
Mr. Earl explained the amendment.  He reminded the committee                                                                    
of the  concern that  adding air transport  might jeopardize                                                                    
the entire  program through rejection by  CMS. The amendment                                                                    
separated  ground, water,  and  air transport  to allow  the                                                                    
program  to continue  if federal  Medicaid rejected  the air                                                                    
portion. In addition, the  amendment deleted the conditional                                                                    
effective date language  on page 2 of the  prior version and                                                                    
added an immediate effective date.                                                                                              
Representative  Wilson   asked  Mr.  Earl  to   restate  his                                                                    
Mr.  Earl replied  that the  CS included  air transport.  He                                                                    
reiterated  that   concerns  were  expressed   that  federal                                                                    
Medicaid may deny coverage for  air transport. He pointed to                                                                    
subsection  (f)  on page  3  of  the  CS and  restated  that                                                                    
ground,  water, and  air transport  were separated  and read                                                                    
the following:                                                                                                                  
     ?reimbursements to a ground,  1 water, or air emergency                                                                    
     medical  transportation service  provider  only if  the                                                                    
     United States  Department of Health and  Human Services                                                                    
     approves   payments to that  type of  emergency medical                                                                    
     transportation service provider.                                                                                           
Mr. Earl outlined that if  CMS approved any specific type of                                                                    
emergency transport the program  could move forward with the                                                                    
approved methods of transport.                                                                                                  
Representative Wilson WITHDREW her OBJECTION.                                                                                   
There being NO OBJECTION, it was so ordered.                                                                                    
2:18:56 PM                                                                                                                    
Co-Chair  Foster reported  that the  bill would  be held  in                                                                    
committee for an updated fiscal note.                                                                                           
Co-Chair Seaton requested  more analysis on how  the law was                                                                    
applied in  other states. He  noted the  earlier discussions                                                                    
regarding  the  state's  ability  to charge  more  and  were                                                                    
currently not  accepting federal  dollars that  other states                                                                    
were collecting.                                                                                                                
Representative Wool agreed with  Co-Chair Seaton. He relayed                                                                    
that  he  had been  assured  by  his consultant  that  other                                                                    
states were  charging a  fee of 20  percent and  27 percent.                                                                    
The  department was  using the  ITE  and CPE  methodologies,                                                                    
which might be the source  of the discrepancy between Alaska                                                                    
and the other states. He would follow-up with answers.                                                                          
Representative  Guttenberg  asked  for  clarification  about                                                                    
whether it  was a new  administrative charge on top  of what                                                                    
was currently being done. He  wondered whether the state was                                                                    
receiving  reimbursement  differently  under  the  bill.  He                                                                    
asked  whether  the  prior  method   charged  less  than  20                                                                    
percent. He asked  if the program was displacing  one set of                                                                    
money for another.                                                                                                              
2:21:44 PM                                                                                                                    
Ms. Brodie  replied that there were  two different payments:                                                                    
the  initial billing  went through  the Medicaid  Management                                                                    
Information  System   with  all  other  weekly   bills.  She                                                                    
delineated  that  subsequently,  the department  billed  the                                                                    
provider the  difference between what they  claimed in total                                                                    
cost  and the  amount the  provider initially  received from                                                                    
DHSS plus  the administrative  fee. The department  made two                                                                    
payments  to  the  providers.  The  first  payment  was  the                                                                    
initial  allowable amount.  The  second  payment included  a                                                                    
manual  process where  the state  calculated the  amount the                                                                    
provider  owed the  department. Once  the provider  paid the                                                                    
department it  would release the  supplemental reimbursement                                                                    
and the providers own funds.                                                                                                    
Co-Chair Seaton  asked whether  the department  employed the                                                                    
IGT  methodology  or  the current  method  of  payment.  Ms.                                                                    
Brodie answered  that the current  methodology was  used for                                                                    
the  initial payment  and the  second payment  used the  new                                                                    
Co-Chair  Seaton  requested  the   sponsor  speak  with  the                                                                    
state's CMS to fully understand what the bill would do.                                                                         
Representative Wool reminded the  committee that the goal of                                                                    
HB 176  was to obtain  more medical  transport reimbursement                                                                    
regardless of the administrative fee.                                                                                           
HB  176  was  HEARD  and   HELD  in  committee  for  further                                                                    
HOUSE BILL NO. 96                                                                                                             
     "An  Act amending  the  calculation  of adjusted  gross                                                                    
     income for  purposes of the tax  on gambling activities                                                                    
     aboard large  passenger vessels; repealing  a provision                                                                    
     allowing  an  investigation  expense under  the  Alaska                                                                    
     Small Loans Act to be in  place of a fee required under                                                                    
     the Alaska  Business License Act; repealing  the amount                                                                    
     that may  be deducted  from the  tobacco excise  tax to                                                                    
     cover  the expense  of accounting  and  filing for  the                                                                    
     monthly   tax  return;   repealing   the  discount   on                                                                    
     cigarette  tax  stamps  provided  as  compensation  for                                                                    
     affixing the  stamps to packages; and  providing for an                                                                    
     effective date."                                                                                                           
2:24:20 PM                                                                                                                    
REPRESENTATIVE   STEVE   THOMPSON,  SPONSOR,   thanked   the                                                                    
committee  for  hearing  the  bill.   He  detailed  that  an                                                                    
indirect  expenditure was  a state  discount  or tax  credit                                                                    
that was  never tracked and did  not show up in  the budget.                                                                    
During a prior session the  legislature established a way to                                                                    
track  indirect  expenditures.  The  Department  of  Revenue                                                                    
(DOR)  must provide  a report  every  two years  on all  the                                                                    
state's foregone  revenue. The information  was subsequently                                                                    
turned over  to the  Legislative Finance Division  (LFD) who                                                                    
examined the data  and published a printed  report for every                                                                    
legislator. He noted that some  of the indirect expenditures                                                                    
had sunsets.  The items  in HB 96  did not  contain sunsets.                                                                    
He indicated  that there  were four  items that  amounted to                                                                    
over $350,000 in lost revenue to the state.                                                                                     
FORREST   WOLFE,  STAFF,   REPRESENTATIVE  STEVE   THOMPSON,                                                                    
provided  further  detail  about  the  bill.  He  read  from                                                                    
prepared remarks as follows:                                                                                                    
     House Bill  96 repeals  or removes four  minor indirect                                                                    
     expenditures  from  state  law,  all  of  which  should                                                                    
     provide more income for the  state of Alaska. First, HB
     96  removes   the  deduction  of  federal   taxes  from                                                                    
     adjusted gross  income when  calculating the  state tax                                                                    
     collected on gambling aboard large cruise ships.                                                                           
     Next,   HB  96   repeals   a   provision  allowing   an                                                                    
     investigation expense under the  Alaska Small Loans Act                                                                    
     to  replace a  fee required  under the  Alaska Business                                                                    
     License Act.                                                                                                               
     Finally,   HB  96   repeals  allowing   the  costs   of                                                                    
     accounting  and  filing  monthly   tax  returns  to  be                                                                    
     deducted from  the tobacco excise  tax, as well  as the                                                                    
     $50  discount on  cigarette tax  stamps intended  to be                                                                    
     compensation for affixing the stamps to packages.                                                                          
Mr.  Wolfe  reiterated  that  the   bill  was  estimated  to                                                                    
increase revenue in  FY 19 by at least  $339,500 thousand of                                                                    
which  $219.1  thousand  would   be  appropriated  into  the                                                                    
general fund.                                                                                                                   
2:29:12 PM                                                                                                                    
Co-Chair Seaton  pointed to a  handout that  contained three                                                                    
components  to  the bill  and  not  four as  stated  earlier                                                                    
[titled  "Bills  Related  to  Indirect  Expenditures"  dated                                                                    
February 3,  2017 (copy  on file)].  Mr. Wolfe  replied that                                                                    
the document had  been compiled the past  year that included                                                                    
three  of  the  four  items  in the  bill.  The  third  item                                                                    
contained two indirect expenditures.                                                                                            
2:30:20 PM                                                                                                                    
Co-Chair Foster OPENED public testimony.                                                                                        
GHERT  ABBOTT,  SELF, KETCHIKAN,  spoke  in  support of  the                                                                    
tobacco tax  portions of the bill.  Eliminating the indirect                                                                    
expenditure  saved the  state a  small amount  of money  and                                                                    
slightly increased  the price of  a pack of  cigarettes. She                                                                    
pointed   out  that   foregone  revenue   only  provided   a                                                                    
"miniscule" amount of revenue  relative to the entire budget                                                                    
and was no  substitute for what she deemed  was necessary; a                                                                    
broad  based progressive  tax on  income and  capital gains.                                                                    
She  hoped  the  committee  would not  spend  much  time  on                                                                    
indirect expenditure legislation.                                                                                               
Co-Chair Foster CLOSED public testimony.                                                                                        
Co-Chair Foster relayed the amendment deadline.                                                                                 
HB  96  was   HEARD  and  HELD  in   committee  for  further                                                                    
Co-Chair Foster reviewed the agenda for the following day.                                                                      
Representative  Wilson hoped  to  receive answers  regarding                                                                    
the  supplemental   bill  prior  to  reporting   it  out  of                                                                    
Co-Chair Foster agreed.                                                                                                         
Co-Chair Seaton  noted that some  of the questions  may have                                                                    
been more policy related than numerical.                                                                                        
2:34:08 PM                                                                                                                    
The meeting was adjourned at 2:34 p.m.                                                                                          

Document Name Date/Time Subjects
HB096 Supporting Documents Statutes Repealed by HB 96 2.20.18.pdf HFIN 2/21/2018 1:30:00 PM
HB 96
HB096 Sponsor Statement ver A 2.12.18.pdf HFIN 2/21/2018 1:30:00 PM
HB 96
HB096 Supporting Documents - Indirect Expenditure Report 2.22.17.pdf HFIN 2/21/2018 1:30:00 PM
HB 96
HB096 Supporting Documents IE HFIN DOR Subcommitee Report 2.12.18.pdf HFIN 2/21/2018 1:30:00 PM
HB 96
HB 321 2 19 18 FY18 Supplemental Summary and Detail with LFD Notes.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 321 CS Workdraft O version 2-20-18.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 321 Fast Track Agency Summary-Op & Cap.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 321 Fast Track Supp TransDetail.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 321 Fast Track StatewideTotals-Op & Cap.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 176 - Amendments 1 & 2.pdf HFIN 2/21/2018 1:30:00 PM
HB 176
HB 176 - Supporting Documents - IGT Flow Chart - 2.20.18 FINAL.pdf HFIN 2/21/2018 1:30:00 PM
HB 176
HB 176 aml comment hb 176 2.20.18.pdf HFIN 2/21/2018 1:30:00 PM
HB 176