Legislature(2009 - 2010)CAPITOL 106

04/01/2010 03:00 PM House HEALTH & SOCIAL SERVICES

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        SB 238-MEDICAID FOR MEDICAL & INTERMEDIATE CARE                                                                     
CO-CHAIR HERRON announced  that the next order  of business would                                                               
be  SENATE  BILL  NO.  238,  "An  Act  amending  the  eligibility                                                               
threshold  for medical  assistance for  persons in  a medical  or                                                               
intermediate care facility."                                                                                                    
3:29:07 PM                                                                                                                    
SENATOR BETTYE  DAVIS, Alaska  State Legislature,  mentioned that                                                               
the members should all be able to identify with this bill.                                                                      
3:29:36 PM                                                                                                                    
TOM OBERMEYER, Staff to Senator  Davis, Alaska State Legislature,                                                               
read  from   the  sponsor   statement:     [original  punctuation                                                               
provided] [Included in the committee packets.]                                                                                  
     This  bill  amends  and restores  the  Medicaid  income                                                                    
     eligibility threshold  for individuals who reside  in a                                                                    
     medical or intermediate care  facility from a specified                                                                    
     monthly  income limit  to 300%  of the  Social Security                                                                    
     income benefit  rate. This threshold  is also  used for                                                                    
     people  who  receive  home and  community-based  waiver                                                                    
     services. In  2003 the  Legislature froze  the Medicaid                                                                    
     long-term   services  income   eligibility  limit   for                                                                    
     persons in  medical or intermediate care  facilities at                                                                    
     $1,656 per  month which was 300%  Supplemental Security                                                                    
     Income  (SSI) at  that time.   This  change created  an                                                                    
     income  ceiling  for  waiver  eligibility,  effectively                                                                    
     freezing  the  eligibility  limit for  the  last  seven                                                                    
     years,  rather  than  allowing   the  limit  to  adjust                                                                    
     annually in tandem with the  SSI, the income equivalent                                                                    
     of  which in  2009 was  $2,022.   The  result was  that                                                                    
     small Social  Security cost of living  adjustments have                                                                    
     disqualified  many  needy   disabled  people  from  the                                                                    
     Alternatives  for preserving  eligibility, particularly                                                                    
     for  those   requiring  lifetime  or   long-term  care,                                                                    
     include  creation  of   a  Medicaid  qualifying  income                                                                    
     trust, also known as a  Miller Trust.  Trusts, however,                                                                    
     have    procedural   drawbacks,    including   numerous                                                                    
     responsibilities  and restrictions,  limited access  to                                                                    
     income,  assistance of  an attorney,  and a  trustee to                                                                    
     manage trust assets.                                                                                                       
     As background,  the Supplemental Security  Income (SSI)                                                                    
     program  is a  federal  needs-based disability  program                                                                    
     for low income adults over  age 65, blind, or disabled.                                                                    
     For an  adult, the SSI disability  requirement is based                                                                    
     on  the  ability  to  work.   An  adult  is  considered                                                                    
     disabled if the  person cannot do the  work that he/she                                                                    
     performed before  the disability occurred or  cannot do                                                                    
     alternate work  because of a severe  physical or mental                                                                    
     condition.   For a  child to  be eligible,  he/she must                                                                    
     suffer  from serious  physical and/or  mental problems.                                                                    
     For  both  adults  and children,  the  disability  must                                                                    
     last, or be expected to last for at least a year.                                                                          
     Medicaid  services are  critical to  the well-being  of                                                                    
     Alaska's most  vulnerable citizens.  Supporting  SB 238                                                                    
     will  ensure that  eligible  Alaskans  can continue  to                                                                    
     receive  nursing home  care  and  in-home services.  It                                                                    
     also will  save the Legislature from  amending statutes                                                                    
     every  year  or  two  as   the  Federal  Poverty  Level                                                                    
     guidelines  and  Supplemental  Security  Income  levels                                                                    
     increase with the cost of living.                                                                                          
3:32:44 PM                                                                                                                    
CO-CHAIR   HERRON   asked   if   research   had   reflected   the                                                               
justification for establishing the ceiling in 2003.                                                                             
3:33:14 PM                                                                                                                    
MR. OBERMEYER explained that there had been a fiscal problem at                                                                 
that time, and that both this and Denali KidCare were shifted to                                                                
fixed dollar  amounts.  He opined  that the value of  these fixed                                                               
amounts had  been diluted  as the cost  of living  had increased.                                                               
He  pointed  out  that this  affected  Alaska's  most  vulnerable                                                               
3:33:59 PM                                                                                                                    
CO-CHAIR HERRON asked why this would have happened.                                                                             
3:34:22 PM                                                                                                                    
MR. OBERMEYER said that he did not know.                                                                                        
3:34:31 PM                                                                                                                    
SENATOR  DAVIS, in  response to  Co-Chair Herron,  explained that                                                               
the administration  at that time  had cut budgets, and  that this                                                               
had not since been adjusted.                                                                                                    
3:34:58 PM                                                                                                                    
REPRESENTATIVE T. WILSON asked how  this could have a zero fiscal                                                               
3:35:15 PM                                                                                                                    
SENATOR DAVIS replied that there was not a cost to the state.                                                                   
3:35:27 PM                                                                                                                    
REPRESENTATIVE CISSNA  pointed out that the  people most affected                                                               
by SB 238 more often relied  on emergency room visits, which were                                                               
more costly to the state.                                                                                                       
3:35:47 PM                                                                                                                    
MR.  OBERMEYER agreed,  and he  added that  many of  the affected                                                               
seniors  would not  receive any  services.   He  pointed out  the                                                               
savings to the state from assistance in home care services.                                                                     
3:36:23 PM                                                                                                                    
REPRESENTATIVE CISSNA requested an  analysis of the cost benefits                                                               
for these programs.                                                                                                             
3:36:53 PM                                                                                                                    
KEN OZMENT stated his support of SB  238.  He relayed that he had                                                               
been denied Medicaid  a few years prior.  He  was able to procure                                                               
a  supplemental health  insurance  policy.   He  pointed out  the                                                               
difficulties to those on a fixed income.                                                                                        
3:38:33 PM                                                                                                                    
HOLLY HANDLER, Attorney, directed attention  to the small cost of                                                               
living increases at  the end of December, 2008,  which would have                                                               
terminated 50  - 60  people in  Juneau from  Medicaid.   She said                                                               
that  the   necessary  legal  steps  to   these  individuals  for                                                               
establishing  a Medicaid  qualifying income  [Miller] trust  were                                                               
very difficult.   She opined that a very critical  aspect was the                                                               
requirement that, in order to  establish this trust, the Medicaid                                                               
recipient  must  release  the  power over  their  finances  to  a                                                               
separate trustee.  She advocated  support for SB 238, which would                                                               
allow income eligibility  to be based on  social security limits,                                                               
instead of the current fixed amount.                                                                                            
3:42:25 PM                                                                                                                    
MS.  HANDLER,  in response  to  Co-Chair  Herron, said  that  the                                                               
Office of  Public Advocacy dealt  with issues of elder  fraud and                                                               
REPRESENTATIVE T. WILSON asked about  Medicaid eligibility with a                                                               
Miller Trust.                                                                                                                   
3:43:07 PM                                                                                                                    
MS.  HANDLER  explained  that  the Miller  Trust  allowed  for  a                                                               
special trust account which would  distribute the Medicaid income                                                               
to the  recipient, but  that upon death,  the remaining  money in                                                               
the Miller Trust was returned to the state.                                                                                     
3:43:36 PM                                                                                                                    
VANCE SANDERS, Attorney,  relayed that he was  also the President                                                               
of Alaska Legal  Services, which worked closely  with seniors and                                                               
other  disabled people.   He  noted that  many people  throughout                                                               
Alaska would be  affected by SB 238, as the  fixed income ceiling                                                               
had limited  eligibility.   He opined that  the fixed  income had                                                               
been  introduced  without an  understanding  of  how the  systems                                                               
worked together.   He  explained that  as social  security limits                                                               
increased,   this  increase   to   income   affected  the   fixed                                                               
eligibility income  levels.  He  explained the  difficulties with                                                               
an  irrevocable  trust,  which   included  the  necessity  for  a                                                               
trustee, provisions  to allow for  change of  living environment,                                                               
and registration with the court.   He reported that only death or                                                               
a court  order could terminate  the trust.   He reflected  on the                                                               
difficulty  of finding  qualified,  knowledgeable  trustees.   He                                                               
urged support for SB 238.                                                                                                       
3:47:01 PM                                                                                                                    
AMY ONEY,  Assisted Living, stated her  support for SB 238.   She                                                               
directed  attention to  the fiscal  note, and  opined that  there                                                               
would be  a cost savings from  passage of SB 238,  as the current                                                               
system was very costly to monitor and administer.                                                                               
3:49:14 PM                                                                                                                    
MARIANNE  MILLS,  President,   AgeNet,  Alaska's  Association  of                                                               
Senior Service Provider  Agencies, pointed out that  SB 238 would                                                               
allow elder Alaskans access to  cost effective home and community                                                               
based  services.     She  explained  the   two  requirements  for                                                               
eligibility  to  the home  and  community  based waiver  program:                                                               
financial need  and medical necessity  for nursing home  level of                                                               
care.  She  reflected that the annual cost of  living increase to                                                               
social  security benefits  would often  make a  person ineligible                                                               
for the  Medicaid waiver program.   She  pointed out that  SB 238                                                               
would  change the  income  eligibility relative  to  the cost  of                                                               
living  increases.   She  reported that  this  would allow  older                                                               
Alaskans to  remain longer in  their own  homes.  She  stated her                                                               
support for SB 238.                                                                                                             
3:51:47 PM                                                                                                                    
MARIE DARLIN,  AARP Capital City  Task Force, stated  support for                                                               
SB 238  as it would  correct the  current problems.   She pointed                                                               
out the cost increases in the seven years since the change.                                                                     
3:53:17 PM                                                                                                                    
SHERRY METTLER  offered her support  of SB  238.  She  stated her                                                               
belief that the Miller Trust was extremely complicated.                                                                         
3:55:54 PM                                                                                                                    
DENISE DANIELLO, Executive Director,  Alaska Commission on Aging,                                                               
Department  of   Health  and  Social  Services,   said  that  the                                                               
commission  became aware  of this  situation  in December,  2008,                                                               
when the cost of living  allowance was increased, and eligibility                                                               
for services was then threatened.   She opined that every cost of                                                               
living increase  would jeopardize more  individual eligibilities.                                                               
She pointed out  that managing personal finances was  a matter of                                                               
personal dignity,  and that  when the  Miller Trust  removed this                                                               
control  and  gave it  to  a  trustee,  it became  a  humiliating                                                               
process for the senior.                                                                                                         
3:58:55 PM                                                                                                                    
REPRESENTATIVE SEATON  asked if the  one time federal  payment of                                                               
$250 would affect eligibility.                                                                                                  
4:00:00 PM                                                                                                                    
JON   SHERWOOD,  Medicaid   Special  Projects,   Office  of   the                                                               
Commissioner,   Department  of   Health   and  Social   Services,                                                               
discussed the impact of the bill.   He stated that it would raise                                                               
the income  standard for eligibility  of people in  nursing homes                                                               
or recipients  of the home and  community based waivers.   He did                                                               
not anticipate that raising the  eligibility limit would increase                                                               
the number  of nursing home  or waiver recipients.   He explained                                                               
the cost of  care calculation which called for  a contribution of                                                               
income toward  the cost  of care.   This was  income that  was in                                                               
excess of personal needs and  other allowed deductions, and was a                                                               
separate  calculation done  after the  eligibility determination.                                                               
He opined  that the  cost of care  calculation would  not change.                                                               
He clarified that the Miller  Trust was still available for those                                                               
people who had income in  excess of the maximum allowable income,                                                               
300  percent of  SSI.   He  said that  those  people with  income                                                               
between the current fixed amount  and the proposed 300 percent of                                                               
SSI would not need to have a Miller Trust.                                                                                      
4:03:11 PM                                                                                                                    
CO-CHAIR KELLER  asked to clarify  that the zero fiscal  note was                                                               
because of the Miller Trust.                                                                                                    
4:03:31 PM                                                                                                                    
MR. SHERWOOD agreed.  He directed  attention to the large cost of                                                               
living  increase in  2009, and  noted that  everyone was  able to                                                               
retain Medicaid  eligibility.  He  allowed that it  was difficult                                                               
to set up a Miller Trust, especially on short notice.                                                                           
4:04:06 PM                                                                                                                    
CO-CHAIR KELLER  asked if the  Miller Trust was a  federal trust.                                                               
He  inquired  about  any  criteria   or  qualifications  for  the                                                               
4:04:32 PM                                                                                                                    
MR.  SHERWOOD  said that  there  was  a state  statute  regarding                                                               
compliance  with  the federal  statute  for  Miller Trusts.    He                                                               
explained  that federal  law dictated  that states  which operate                                                               
Medicaid programs have to recognize  these trusts for determining                                                               
Medicaid  eligibility.   He  reported  that  income entering  the                                                               
trust was  disregarded during the eligibility  determination, but                                                               
was included  in the cost  of care  calculation.  He  pointed out                                                               
that under  ordinary circumstances most income  trusts for people                                                               
with disabilities did not accrue much  money, as the cost of care                                                               
calculation   "cleans  them   out  every   month,  if   they  are                                                               
administered correctly."                                                                                                        
4:06:00 PM                                                                                                                    
CO-CHAIR  HERRON  asked if  the  new  federal health  reform  law                                                               
contained any eligibility criteria.                                                                                             
4:06:30 PM                                                                                                                    
MR. SHERWOOD  replied that he  was still analyzing its  effect on                                                               
Medicaid  eligibility.     He  reported  that   the  newly  added                                                               
categories  would use  different  income  calculations than  were                                                               
traditionally  used  for Medicaid  populations.    He noted  that                                                               
there were exceptions  to the existing Medicaid  populations.  He                                                               
shared that an analysis to the impact was still necessary.                                                                      
4:07:19 PM                                                                                                                    
REPRESENTATIVE T.  WILSON asked  if the  seniors would  have more                                                               
money without the trusts.                                                                                                       
MR.  SHERWOOD said  that was  not the  case.   He explained  that                                                               
after  the eligibility  determination there  was a  cost of  care                                                               
calculation  to  determine  the   individual  contribution.    He                                                               
reiterated that  the cost of  care calculation was  irrelevant to                                                               
the trust.   He listed the cost of care  to include prescriptions                                                               
not covered by Medicaid or  Medicare, a personal needs allowance,                                                               
and non-covered dependent medical expenses.                                                                                     
4:08:35 PM                                                                                                                    
CO-CHAIR HERRON closed public testimony.                                                                                        
4:08:45 PM                                                                                                                    
REPRESENTATIVE SEATON  shared that he  had watched the  burden on                                                               
recipients increase since  the shift to the  fixed dollar amount.                                                               
He noted  that the intent had  been to save money,  but that time                                                               
had shown that it did not.  He expressed support for SB 238.                                                                    
4:09:59 PM                                                                                                                    
CO-CHAIR KELLER  stated his support  for maintaining  the dignity                                                               
of the  seniors.  He reiterated  that it may become  necessary to                                                               
revisit this  issue in  the future when  the federal  health care                                                               
reform bill was better analyzed.                                                                                                
4:10:39 PM                                                                                                                    
REPRESENTATIVE T. WILSON moved to  report SB 238 out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  SB 238 was reported  from the                                                               
House Health and Social Services Standing Committee.                                                                            

Document Name Date/Time Subjects
CS HB 282 support letter - Tom Laing 03.30.2010.doc HHSS 4/1/2010 3:00:00 PM
HB 282
CS HB 282 support letter - Center for Natural Medicine 03.23.2010.pdf HHSS 4/1/2010 3:00:00 PM
HB 282
CS HB 282 - 26-LS1208.W - for intro into (H) HSS.pdf HHSS 4/1/2010 3:00:00 PM
HB 282
SCR 13 support letter - K. Turkington 03.15.2010.pdf HHSS 4/1/2010 3:00:00 PM
DCCED fiscal note for CS HB 282 - 26-LS1208.W.pdf HHSS 4/1/2010 3:00:00 PM
HB 282