Legislature(2015 - 2016)CAPITOL 106

02/18/2016 03:00 PM House HEALTH & SOCIAL SERVICES

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03:03:10 PM Start
03:03:44 PM HB227
04:50:52 PM Presentation: Key Coalition
05:00:44 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Presentation: Key Coalition
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                HB 227-MEDICAL ASSISTANCE REFORM                                                                            
3:03:44 PM                                                                                                                    
CHAIR SEATON announced that the  first order of business would be                                                               
HOUSE  BILL  NO. 227,  "An  Act  relating to  medical  assistance                                                               
reform  measures; relating  to  administrative  appeals of  civil                                                               
penalties  for  medical  assistance providers;  relating  to  the                                                               
duties of the Department of  Health and Social Services; relating                                                               
to audits  and civil penalties for  medical assistance providers;                                                               
relating to  medical assistance cost containment  measures by the                                                               
Department  of Health  and Social  Services; relating  to medical                                                               
assistance coverage  of clinic  and rehabilitative  services; and                                                               
providing for an  effective date."  He said that  the focus would                                                               
be on the fiscal notes.                                                                                                         
3:07:45 PM                                                                                                                    
CHAIR SEATON directed attention  to the responses from Department                                                               
of  Health   and  Social  Services  to   the  committee  members'                                                               
questions  from  the February  2  meeting  [Included in  members'                                                               
REPRESENTATIVE  VAZQUEZ   said  that  she  was   not  ready  with                                                               
questions to the fiscal notes.                                                                                                  
CHAIR  SEATON reiterated  that he  was asking  about the  written                                                               
responses from  the Department of  Health and Social  Services to                                                               
the  questions  posed by  the  committee  during the  last  House                                                               
Health and Social Services Standing Committee.                                                                                  
3:09:24 PM                                                                                                                    
The committee took an at-ease from 3:09 p.m. to 3:11 p.m.                                                                       
3:11:52 PM                                                                                                                    
CHAIR SEATON  directed attention  to the fiscal  note on  HB 227,                                                               
labeled  OMB Component  Number:  2696.  [Previously discussed  on                                                               
February 2, 2016.]                                                                                                              
3:13:26 PM                                                                                                                    
JON  SHERWOOD,  Deputy  Commissioner, Medicaid  and  Health  Care                                                               
Policy,  Office of  the Commissioner,  Department  of Health  and                                                               
Social  Services, explained  that  the fiscal  note, labeled  OMB                                                               
2696, was for the Office  of Rate Review [Allocation], as Section                                                               
12  of  proposed  HB  227  required  one  or  more  demonstration                                                               
projects  focused on  innovative  payments, including  one for  a                                                               
global  payment fee  structure.   This fiscal  note included  the                                                               
one-time  cost, $500,000  in  FY17, for  hiring  a contractor  to                                                               
analyze and  implement the new  payment model.  It  was estimated                                                               
that the  ongoing actuarial work  in subsequent years  would have                                                               
an  annual cost  of  $100,000 and  that there  would  not be  any                                                               
additional positions  associated with this activity.   He pointed                                                               
out that the funding included a 50 percent federal match.                                                                       
CHAIR  SEATON  reflected  that   the  demonstration  project  was                                                               
intended as  an analysis  for saving  money and  improving health                                                               
through  a managed  care  or global  payment  model for  Medicaid                                                               
MR. SHERWOOD added  that the provisions of the  bill required the                                                               
program to reduce the growth in cost.                                                                                           
3:15:21 PM                                                                                                                    
CHAIR SEATON  directed attention to  the fiscal note  labeled OMB                                                               
Component Number:  2788, Allocation:  Women, Children  and Family                                                               
MR.  SHERWOOD explained  that  this fiscal  note  was for  Women,                                                               
Children and  Family Health [Allocation]  within the  Division of                                                               
Public  Health  [Appropriation]  to satisfy  the  requirement  in                                                               
Section 15 of the proposed  bill which required the Department of                                                               
Health  and Social  Services to  design and  implement a  project                                                               
studying the  impact of nutrition,  including Vitamin D,  on pre-                                                               
term birth rates.  He reported  that the fiscal note assumed that                                                               
the project  would have  a cost  of $661,100  per year  for three                                                               
years, beginning in  FY17.  He noted that $500,000  of this would                                                               
include  a contract  with either  the University  of Alaska  or a                                                               
medical school  to conduct  the study, and  the remainder  of the                                                               
funding would  pay for  one full time  nurse consultant  to write                                                               
the  request for  proposals (RFP)  and manage  the contract.   He                                                               
noted  that   funds  for  travel   necessary  for   training  and                                                               
counseling expenses  was also included  in the project cost.   He                                                               
pointed out  that all of  these expenditures would come  from the                                                               
general fund.   He compared this to similar  language in proposed                                                               
HB  148, although  HB  148 had  not required  that  the study  be                                                               
CHAIR SEATON shared that amendment  language would be forthcoming                                                               
to  require  a third  party  contract,  as currently  there  were                                                               
models  for this  allowing  for its  completion  at a  reasonable                                                               
cost.    He  pointed  out   that  this  fiscal  note,  OMB  2788,                                                               
identified what was  currently written in the proposed  bill.  He                                                               
referenced a  South Carolina project,  Protect Our  Children Now,                                                               
[Included in members'  packets] noting that it was  also about to                                                               
start in  Montana.   He pointed  out that,  as the  Department of                                                               
Health  and Social  Services had  previously stated  that it  was                                                               
"not set  up to do research,"  a contract was much  more economic                                                               
and efficient.                                                                                                                  
3:20:03 PM                                                                                                                    
CHAIR SEATON moved  on to the fiscal note,  labeled OMB Component                                                               
Number:  2663,  Allocation:   Senior  and  Disabilities  Services                                                               
MR.  SHERWOOD  explained  that this  fiscal  note  addressed  the                                                               
administrative costs for the Division  of Senior and Disabilities                                                               
Services  associated with  the proposed  bill, specifically  that                                                               
Section 12  of the proposed  bill required implementation  of the                                                               
1915(i) and  (k) options.   He reported  that it  was anticipated                                                               
that new  staff would  be required to  develop and  oversee these                                                               
new options.   There would  be one  new staff beginning  in FY17,                                                               
with two  additional staff beginning  in FY18.  He  reported that                                                               
the annual cost associated for  each staff was $116,300 per year,                                                               
and that  funds would be  necessary to make modifications  to the                                                               
"Automated Service  Plan" management  information system  used by                                                               
the division to manage its  home and community based programs, at                                                               
an estimated cost  of $300,000 over 3 years, of  which 90 percent                                                               
would be federally funded.  He  pointed out that there would also                                                               
be costs  associated with the increase  of functional assessments                                                               
during the  start-up period,  as more  people applied  at program                                                               
inception, estimated  to be $250,000  over the first  three years                                                               
of the program.   He noted that all of  the increased costs, with                                                               
the  exception   of  the  aforementioned  modifications   to  the                                                               
management information  system, would  have a 50  percent federal                                                               
CHAIR SEATON asked if the costs were anticipated to be the same.                                                                
MR. SHERWOOD replied  that originally it had  been envisioned for                                                               
savings from  the waiver by  entering into an agreement  to treat                                                               
expenditures for tribal beneficiaries  which occurred outside the                                                               
tribal  system  as being  delivered  through  a tribal  facility,                                                               
which was the  criteria for receiving 100  percent federal funds.                                                               
He relayed that the governor  had recently received a letter from                                                               
Secretary Burwell [U.S. Department  of Health and Human Services]                                                               
indicating that the  "1115 waiver was not the way  they wanted us                                                               
to pursue this,  and they were actually going  to change national                                                               
policy."    He  explained  that  there  was  an  expectation  for                                                               
comparable  savings to  the original  forecast with  this waiver,                                                               
although  there was  not yet  a  final policy  which allowed  for                                                               
"some degree of uncertainty in  terms of the timing, exactly when                                                               
we can start and  how fast we can bring it up."   He expressed an                                                               
expectation for the savings to be  at least the same as those for                                                               
the  waiver projection.   He  declared that  it would  reduce the                                                               
administrative cost,  as it would  not be necessary  to implement                                                               
an 1115 waiver  which carried its own  administrative burdens for                                                               
data reporting  and evaluation,  not necessary  with a  change in                                                               
federal policy.  He directed  attention to earlier testimony on a                                                               
fiscal  note  for  the  cost  of a  position  under  the  medical                                                               
assistance  administration  component  necessary  to  manage  the                                                               
claims under  the new policy,  noting that  it would not  be seen                                                               
under  the  costs  for  the   Senior  and  Disabilities  Services                                                               
CHAIR SEATON asked what kind of savings this would generate.                                                                    
MR. SHERWOOD, in  response, said that all the money  shown in the                                                               
fiscal note for  Senior and Disabilities Services  was related to                                                               
adding  the  1915 (i)  and  (k)  optional services,  which  would                                                               
increase  federal funding  for the  currently provided  services,                                                               
but were not associated with  the aforementioned change in policy                                                               
for the  claims on tribal  services or the 1115  waiver initially                                                               
CHAIR  SEATON  asked  if  the Department  of  Health  and  Social                                                               
Services would help  with the language to the  amendment so there                                                               
would be a request to achieve the desired outcome.                                                                              
MR. SHERWOOD replied that the language was readily available.                                                                   
3:27:23 PM                                                                                                                    
REPRESENTATIVE  STUTES,  directing  attention to  the  governor's                                                               
budget and its departmental cuts,  asked how much was actual cuts                                                               
as opposed to changing payment from state to federal.                                                                           
MR. SHERWOOD  expressed his agreement  that there were  some fund                                                               
source  changes in  the  budget,  although he  did  not have  the                                                               
REPRESENTATIVE STUTES  asked for this to  be provided, suggesting                                                               
that  a significant  amount of  money  was simply  a transfer  of                                                               
funds as opposed to actual cuts in the budget.                                                                                  
CHAIR SEATON  emphasized that  the object  was to  provide better                                                               
health and social  services with more and better  service for the                                                               
citizens of Alaska, while reducing costs to the state.                                                                          
MR. SHERWOOD, in response to  Chair Seaton, replied that he would                                                               
speak about the change in  expenditures for long term care during                                                               
discussion for other fiscal notes.                                                                                              
REPRESENTATIVE  STUTES  asked  if  patient travel  fit  into  the                                                               
administrative category.                                                                                                        
MR.  SHERWOOD replied  that travel  for  Medicaid recipients  was                                                               
included in the Health Care Medicaid Services component.                                                                        
3:33:06 PM                                                                                                                    
REPRESENTATIVE VAZQUEZ,  directing attention to the  option for a                                                               
1915(i)  waiver mentioned  in the  proposed bill,  suggested that                                                               
there could  be additional  beneficiaries to  Medicaid, including                                                               
those individuals  suffering from dementia.   She asked  if these                                                               
additional enrollees had been taken into consideration.                                                                         
MR.  SHERWOOD  explained  that   the  provisions  would  increase                                                               
services  available  under  1915(i),  but would  not  expand  the                                                               
number  of  eligible  individuals.   The  increase  of  available                                                               
services would expand  the Medicaid program, but  this would also                                                               
provide off-setting  reductions in  other grant  funded programs.                                                               
He relayed that the intention  was to target the 1915(i) services                                                               
as  closely  as  possible  to the  populations  served  by  those                                                               
REPRESENTATIVE  VAZQUEZ   suggested  that  this  may   merely  be                                                               
semantics,  as there  currently were  individuals with  dementia,                                                               
but  no other  diagnosis,  who  did not  qualify  for the  waiver                                                               
programs,  although they  received grant  benefits.   She offered                                                               
her  understanding  that  they   would  be  eligible  for  waiver                                                               
services  under  1915(i),  which   would  expand  the  number  of                                                               
Medicaid beneficiaries.                                                                                                         
MR.  SHERWOOD   explained  that   these  people  would   have  to                                                               
financially  and generally  qualify for  Medicaid as  individuals                                                               
who  were  not  waiver  recipients, although  there  were  higher                                                               
income  eligibility standards  for  waiver recipients.   If  that                                                               
criteria was not  currently met, this would not  allow someone to                                                               
use   those  enhanced   eligibility  standards.     However,   an                                                               
individual  would be  eligible for  waiver like  services without                                                               
having to  qualify for the  waiver, if an individual  was already                                                               
eligible for Medicaid.  He  expressed agreement that this did add                                                               
to  the  services covered  under  Medicaid.   He  acknowledged  a                                                               
critical point  that it  was important in  the design  of 1915(i)                                                               
that  the state  design the  functional eligibility  criteria for                                                               
the services  to ensure that  "the people we're serving  as close                                                               
as we  can reflect  the people that  we're providing  services to                                                               
through our grant programs right now."                                                                                          
REPRESENTATIVE VAZQUEZ offered her  belief that implementation of                                                               
the 1915(i)  and (k) options would  not allow a cap  to be placed                                                               
at a later time.                                                                                                                
MR. SHERWOOD explained that, unlike  waivers which could restrict                                                               
the number of individuals served in  any given year, there was no                                                               
fixed cap for services for 1915(i) or  (k).  He noted that it was                                                               
critical  for the  eligibility criteria  to be  established in  a                                                               
prudent, conservative way.                                                                                                      
3:37:43 PM                                                                                                                    
REPRESENTATIVE STUTES asked  if the 1915(i) or  (k) waivers would                                                               
allow for a wait list.                                                                                                          
MR. SHERWOOD replied that there would  not be a wait list for the                                                               
optional services.                                                                                                              
REPRESENTATIVE STUTES asked about  those individuals currently on                                                               
the wait list.                                                                                                                  
MR.  SHERWOOD replied  that individuals  who meet  the functional                                                               
criteria  established  for  1915(i)   or  (k)  options  would  be                                                               
entitled to  receive the  services, and  would not  be on  a wait                                                               
list for Medicaid purposes.                                                                                                     
REPRESENTATIVE  STUTES asked  if individuals  would have  to meet                                                               
those obligations to be currently on the wait list.                                                                             
MR.  SHERWOOD replied  no, and  explained that  the only  current                                                               
wait   list  was   a  registry   for  those   with  developmental                                                               
disabilities.   He noted that  those individuals had to  meet the                                                               
developmental  disabilities  established  in  statute,  and  that                                                               
there was  nothing in  the proposed bill  that required  that the                                                               
eligibility criteria  for the 1915(i)  or (k) options  be defined                                                               
as   equivalent   for   the  eligibility   to   the   development                                                               
disabilities registry.   He surmised that  many individuals would                                                               
have  conditions that  did  not qualify  them  for the  registry,                                                               
whereas  others  on  the  registry  would  not  qualify  for  the                                                               
services.  He  pointed out that it was  necessary for eligibility                                                               
to 1915(k) to meet an institutional level of care.                                                                              
REPRESENTATIVE VAZQUEZ asked for  clarification that not everyone                                                               
on the present wait list would qualify for the 1915 options.                                                                    
MR. SHERWOOD  replied that  was probably  true.   "Without having                                                               
defined  what the  specific criteria  is for  those two  options,                                                               
it's hard  for me to make  a definitive statement.   I don't want                                                               
to be glib about it."                                                                                                           
3:42:02 PM                                                                                                                    
DUANE  MAYES, Director,  Central Office,  Division of  Senior and                                                               
Disabilities Services, Department of  Health and Social Services,                                                               
reported that  there were currently  between 610 - 620  people on                                                               
the  registry.   He  noted  that  there  were  two types  on  the                                                               
registry, those that  may qualify for the 1915(k)  option as they                                                               
need institutional level  of care, and those who  may qualify for                                                               
the  1915 (i)  option as  they need  less than  the institutional                                                               
level of  care.  He offered  that the implementation of  both (k)                                                               
and (i) would allow a refinance  for the current grant funding so                                                               
that 50 percent  would be federal dollars.  He  shared that those                                                               
who did  not qualify for the  (k) option would be  served through                                                               
the (i) option.                                                                                                                 
CHAIR SEATON  asked for  clarification that  not everyone  on the                                                               
registry would meet the new definition for (i).                                                                                 
MR.  MAYES  replied that  it  was  necessary for  a  well-defined                                                               
eligibility process to ensure good controls.                                                                                    
CHAIR SEATON acknowledged  that this was a concern.   He asked if                                                               
the  criteria were  totally developed  within  the Department  of                                                               
Health and  Social Services, or  if the Alaska  State Legislature                                                               
had any role for development.                                                                                                   
MR.  SHERWOOD replied  that, as  currently written,  the criteria                                                               
would  be developed  by the  department.   He offered  his belief                                                               
that  (k) required  development  of the  proposal in  conjunction                                                               
with  a consumer  advisory board.    He stated  that the  general                                                               
options would be  cited in the statute, and  the department would                                                               
define  the  specific  criteria,  as it  could  often  get  quite                                                               
technical, and  include a level  of detail which was  not usually                                                               
placed in statute.                                                                                                              
CHAIR SEATON asked if intent  language from the legislature would                                                               
be helpful  to the Department  of Health and Social  Services for                                                               
development of the criteria.                                                                                                    
MR.  SHERWOOD  replied  that  the   department  could  work  with                                                               
committee to research language that would be useful.                                                                            
CHAIR SEATON  stated that the  committee members would  talk with                                                               
the  department "to  figure  out what  some  of those  parameters                                                               
could  be."   He shared  that  there was  concern for  [Medicaid]                                                               
expansion without any  ability to contract.  He  noted that there                                                               
would  also be  public input  for the  development of  the intent                                                               
language in the bill.                                                                                                           
3:47:14 PM                                                                                                                    
REPRESENTATIVE VAZQUEZ  asked if  experts had already  been hired                                                               
by the department for analysis.                                                                                                 
MR.  SHERWOOD  replied  that  the   Alaska  Mental  Health  Trust                                                               
Authority had assisted  with the hiring of  a national consulting                                                               
firm, Health  Management Associates,  which had worked  with many                                                               
state Medicaid  departments and directors.   He pointed  out that                                                               
this had benefited the department.   Specifically for the 1915(k)                                                               
option, the  initial recommendation  had been for  broad coverage                                                               
because of the  potential for expanded coverage.   Currently, the                                                               
recommendation was  to focus on  personal care services,  as this                                                               
was already covered as a state  plan option, and was available to                                                               
everyone who was Medicaid eligible,  regardless of current waiver                                                               
status.  He  acknowledged that the advice of  experts had brought                                                               
some good insights.                                                                                                             
CHAIR  SEATON  asked  for  any  documentation  from  these  study                                                               
3:49:29 PM                                                                                                                    
CHAIR SEATON  directed attention to  the fiscal note  labeled OMB                                                               
Component Number: 2875.                                                                                                         
MR. SHERWOOD explained  that this fiscal note  focused on Section                                                               
12  of the  proposed bill,  and 1915(i),  the home  and community                                                               
based services  option.  He  reiterated that this option  was for                                                               
Medicaid to  replace state  funded services,  which brought  a 50                                                               
percent  federal  funding.   He  explained  that this  component,                                                               
temporary assisted living,  was a program that  would be impacted                                                               
as it  provided assisted living  care to individuals who  did not                                                               
meet criteria for waivers, or  whose application was pending.  He                                                               
reported that  use of the  1915(i) would  refinance approximately                                                               
$4.7  million   annually  by  transferring  individuals   to  it,                                                               
beginning  in FY19.    He  noted that  this  was  a general  fund                                                               
savings,  and added  that  later there  would  be the  associated                                                               
Medicaid  expenditure.   He pointed  out  that this  was not  the                                                               
entire  general relief  assisted  living program,  as there  were                                                               
still people who  were not Medicaid eligible or did  not meet the                                                               
CHAIR  SEATON  asked  for clarification  that  the  general  fund                                                               
savings would be about 50 percent from this switch.                                                                             
MR.  SHERWOOD replied  that this  expenditure  represented a  bit                                                               
more than  half of the  almost $8  million spent for  the general                                                               
relief  program  in the  current  budget.    He noted  that  this                                                               
component  would  save  about  $4.7  million  annually  from  the                                                               
general  funds,  but  the  expenditure of  the  $4.7  million  in                                                               
Medicaid services would be halved  as 50 percent would be federal                                                               
REPRESENTATIVE  VAZQUEZ  asked  if  this fiscal  note  should  be                                                               
MR.  SHERWOOD explained  that the  50  percent would  show up  in                                                               
another  fiscal  note  as  an expenditure,  and  he  offered  his                                                               
understanding that  this was the correct  way to reflect it  as a                                                               
budget component.                                                                                                               
3:54:16 PM                                                                                                                    
CHAIR SEATON  directed attention to  the fiscal note  labeled OMB                                                               
Component Number: 2787.                                                                                                         
MR. SHERWOOD  explained that this  fiscal note was  an allocation                                                               
for Senior Community Based Grants  in the Senior and Disabilities                                                               
Services, and was  another grant program which paid  for home and                                                               
community based  services through  the general  fund.   He shared                                                               
that Department  of Health and  Social Services  anticipated that                                                               
the  1915(i)  option would  reduce  the  expenditure by  $735,000                                                               
annually beginning  in FY19.   He noted  that this was  "the same                                                               
basic  math as  the  one  before, there  would  be an  offsetting                                                               
increase  later  when we  look  at  the Senior  and  Disabilities                                                               
Services Medicaid Services."   He reported that it  would also be                                                               
50 percent federally funded.                                                                                                    
3:55:38 PM                                                                                                                    
CHAIR SEATON  directed attention to  the fiscal note  labeled OMB                                                               
Component Number: 309.                                                                                                          
MR.  SHERWOOD  explained  that  this  fiscal  note  was  also  an                                                               
appropriation  for Senior  and Disabilities  Services and  was an                                                               
allocation  for  Community   Developmental  Disabilities  Grants,                                                               
which   were   grants    for   individuals   with   developmental                                                               
disabilities.  He stated that  this was the largest grant program                                                               
in the  Division of Senior  and Disabilities Services, as  it was                                                               
for more than $11 million,  that could be refinanced beginning in                                                               
FY 19.                                                                                                                          
CHAIR  SEATON stated  that it  was necessary  to ensure  that the                                                               
Department of  Health and Social  Services programs  and services                                                               
were  necessary and  beneficial,  even as  the  costs were  being                                                               
shifted to federal  funding.  He asked that  the department share                                                               
any  necessary  changes,  as  "we [the  committee]  only  have  a                                                               
certain  amount  of  knowledge  and we're  relying  on  you,  the                                                               
experts, to make  sure that ... if the population  has grown away                                                               
from a  previous policy choice,  that we make the  correct policy                                                               
choice at this point in time."                                                                                                  
MR. SHERWOOD  expressed his appreciation,  stating "we  really do                                                               
want to keep  looking at our services and making  sure that we're                                                               
hitting the needs  that individuals have and not  simply going on                                                               
inertia."  He shared that the  department was always open to that                                                               
3:58:50 PM                                                                                                                    
CHAIR SEATON  directed attention to  the fiscal note  labeled OMB                                                               
Component Number: 2660.                                                                                                         
MR. SHERWOOD explained that this,  for Behavioral Health, was the                                                               
first of  the three Medicaid  Services fiscal notes.   He relayed                                                               
that  Section   12  of  the   proposed  bill   included  language                                                               
instructing the  necessity to seek  an 1115  demonstration waiver                                                               
to improve  Medicaid for  tribal providers.   He noted  that DHSS                                                               
had received notification from the  U.S. Department of Health and                                                               
Human Services for a change  in policy, which would eliminate the                                                               
need  for  an  1115  waiver.     He  opined  that  it  was  still                                                               
appropriate,  as there  had been  changes  in some  of the  other                                                               
language  around innovation  and improving  tribal services.   He                                                               
stated   that  the   change  allowed   services,  presently   not                                                               
considered to be  delivered through a tribal facility,  to now be                                                               
considered through  a tribal facility  and allowed DHSS  to claim                                                               
100 percent federal  fund match rate.  He reported  that this was                                                               
anticipated to  begin in  FY17, and the  first year  savings were                                                               
encompassed  in   the  reductions   in  the   governor's  budget.                                                               
Although the  department did  not yet have  the final  policy, in                                                               
order  to claim  the enhanced  match,  it was  necessary to  have                                                               
agreements  in  place  between tribal  providers  and  non-tribal                                                               
providers around care  management.  There were  assumptions for a                                                               
start with  agreements with the  larger providers of  services in                                                               
the  initial   years,  before  branching   out  to   the  smaller                                                               
providers.  He declared that  DHSS did not anticipate substantial                                                               
difficulty in obtaining  those agreements.  He  stated that there                                                               
was  not  any  change  in  expenditures  for  Behavioral  Health,                                                               
although  there  was  a  change in  revenue  source,  as  federal                                                               
receipts  were   increased  while  general  fund   receipts  were                                                               
decreased beginning in FY17.                                                                                                    
REPRESENTATIVE  VAZQUEZ   asked  how   these  savings   would  be                                                               
realized,  as it  did not  appear through  the implementation  of                                                               
1915(i) and (k).                                                                                                                
MR.  SHERWOOD  replied that  the  savings  would be  realized  by                                                               
implementing  the   change  in  federal  policy   which  CMS  had                                                               
announced  was forthcoming.   He  stated that  it appeared  to be                                                               
exactly aligned with the intent  language in Section 1, paragraph                                                               
(2)(A) on page 2, line 5.                                                                                                       
REPRESENTATIVE VAZQUEZ  asked about  the specific  federal policy                                                               
4:05:47 PM                                                                                                                    
VALERIE  DAVIDSON,  Commissioner,  Office  of  the  Commissioner,                                                               
Department of  Health and Social Services  (DHSS), explained that                                                               
after  the   initial  review  of  1115   waiver  for  partnership                                                               
opportunities  with  tribal  health  organizations  in  order  to                                                               
maximize  100  percent  match  opportunities,  Secretary  Burwell                                                               
[U.S. Health  and Human Services]  indicated that an  1115 waiver                                                               
process would not necessarily work  for some of these services as                                                               
it required budget neutrality for  the federal government for the                                                               
Centers  for  Medicare  and Medicaid  Services.    The  Secretary                                                               
suggested  that instead,  there  would be  a  change in  national                                                               
policy  to  provide 100  percent  federal  match for  travel  and                                                               
accommodation  services and  that  for services  initiated in  an                                                               
Indian Health Services  facility but not available  and needed to                                                               
be referred out,  it would still be considered for  a 100 percent                                                               
federal  match.   She pointed  to the  guidance published  in the                                                               
federal register which indicated  the kind of services, including                                                               
specialty and long term care and support services.                                                                              
REPRESENTATIVE  VAZQUEZ asked  what type  of services  this would                                                               
MR.  SHERWOOD,   in  response,  asked  if   this  referenced  the                                                               
aforementioned fiscal  note, labeled OMB Component  Number: 2660,                                                               
and  then   reported  that  it  would   include  the  residential                                                               
psychiatric  treatment facilities  to which  tribal beneficiaries                                                               
were currently referred.                                                                                                        
CHAIR SEATON asked if this  new federal policy was anticipated to                                                               
also be  for long term care,  as well as for  any referred tribal                                                               
health services  when Indian Health  Services (IHS) did  not have                                                               
the capacity.                                                                                                                   
COMMISSIONER  DAVIDSON  replied  that the  federal  guidance  had                                                               
indicated that  there had  to be  agreement between  the parties,                                                               
such as  a Memorandum  of Agreement  (MOA) or  a contract.   This                                                               
would require that an individual  could not self-refer, but would                                                               
need to  be referred  through an  IHS facility  in order  for the                                                               
state to claim the 100 percent federal match.                                                                                   
REPRESENTATIVE VAZQUEZ  asked whether the federal  match was just                                                               
a policy, and not in statute.                                                                                                   
COMMISSIONER  DAVIDSON  pointed  out  that  although  it  was  in                                                               
federal statute,  the Centers for Medicare  and Medicaid Services                                                               
(CMS) had a narrow interpretation  for "through an IHS facility."                                                               
She opined  that guidance  by CMS now  indicated that  the policy                                                               
had been applied too narrowly.                                                                                                  
REPRESENTATIVE  VAZQUEZ asked  if  this was  based  on a  current                                                               
federal policy.                                                                                                                 
COMMISSIONER DAVIDSON replied that the  CMS policy was created by                                                               
whichever current  administration, and that it  could be changed.                                                               
It was  stated that the  current policy  had been in  place since                                                               
IHS facilities had  been permitted to bill Medicaid,  in the late                                                               
REPRESENTATIVE   VAZQUEZ    asked   if   this   was    a   recent                                                               
COMMISSIONER DAVIDSON replied, "yes."                                                                                           
CHAIR SEATON  asked if  this guidance had  been published  in the                                                               
federal register.                                                                                                               
MR. SHERWOOD  clarified that  it had been  published by  CMS, but                                                               
not in the federal register.                                                                                                    
CHAIR SEATON asked if that could be provided to the committee.                                                                  
4:11:57 PM                                                                                                                    
CHAIR  SEATON  shared  that  the  committee  was  looking  at  an                                                               
increase in bonding authority for  tribal health facilities as it                                                               
was beneficial,  and he asked  whether this would be  impacted by                                                               
the aforementioned CMS policy.                                                                                                  
COMMISSIONER  DAVIDSON  replied that  this  would  depend on  the                                                               
community, noting that IHS had  an interest for providing care as                                                               
close  to  home  as  possible,  as this  care,  in  a  culturally                                                               
appropriate  environment, led  to  better health  outcomes.   She                                                               
acknowledged the work  to construct long term  facilities in some                                                               
hub communities, including Kotzebue and  Bethel.  She opined that                                                               
people in rural  and urban communities preferred  having the care                                                               
provided as close to home as possible.                                                                                          
CHAIR  SEATON  suggested that  the  proposed  bill might  receive                                                               
intent language  to accelerate  bringing services  and facilities                                                               
closer to home.                                                                                                                 
4:14:59 PM                                                                                                                    
CHAIR SEATON  directed attention to  the fiscal note  labeled OMB                                                               
Component Number:  2077, an allocation  for Health  Care Medicaid                                                               
MR.  SHERWOOD  stated that  this  was  another Medicaid  Services                                                               
fiscal note  for the  proposed bill, pointing  out that,  as many                                                               
parts  of the  proposed  bill affected  Medicaid Services,  there                                                               
were many things going on in  the fiscal note.  He explained that                                                               
there  were fund  source shift  and changes  in expenditures,  as                                                               
well as capital budget costs for  system changes to the MMIS.  In                                                               
Section 12,  there was  a fund  source shift,  decreasing general                                                               
funds and  increasing federal funds  by $6.7 million in  FY17 and                                                               
growing  to $24.2  million in  FY22, around  the tribal  claiming                                                               
policy,  shifting air  travel and  ambulance  service for  tribal                                                               
members to  100 percent federal  funding.  In  Sections 5 &  6 of                                                               
the  proposed  bill,  provisions  would be  implemented  for  the                                                               
collection  of  interest, penalties,  and  civil  fines by  DHSS,                                                               
reflected  in  the  fiscal  note   under  revenues,  as  well  as                                                               
increased expenditures  in the grant  line, and it  was necessary                                                               
for the authority  to spend those receipts.  He  noted that there                                                               
was an  increase in  expenditures under  Services, to  reflect an                                                               
increase   in  administrative   hearings,   $500,000,  and   case                                                               
management  services under  the  emergency  room super  utilizers                                                               
provision,  $600,000,  in  FY17.    He  pointed  out  that  these                                                               
services had a  50 percent federal match.   He directed attention                                                               
to Section 9 of the proposed  bill, as the super utilizer program                                                               
was projected  to reduce expenditures  in the grant line  by $9.2                                                               
million annually  beginning in  FY17, also  a 50  percent federal                                                               
fund  match.   He  expressed  an anticipation  for  the need  for                                                               
capital funds to make extensive  system modifications to the MMIS                                                               
to  implement the  1915(i) and  (k) options,  as well  as conduct                                                               
required   identifications  and   development   for  the   health                                                               
information  technology   components  for  some  of   the  listed                                                               
projects, $7.85 million  with a federal match of 90  percent.  He                                                               
declared that this was the most complicated fiscal note.                                                                        
REPRESENTATIVE   STUTES  asked   if  these   fiscal  notes   were                                                               
sustainable, offering  an analogy to school  bonding for payments                                                               
of 70  percent by the  State of  Alaska.  She  questioned whether                                                               
projections should be made for 100 percent federal funding.                                                                     
MR. SHERWOOD explained that the  federal funding for the Medicaid                                                               
program had been "remarkably stable  over its history."  He noted                                                               
that  there had  been times  of economic  hardship when  the U.S.                                                               
Congress  had  increased its  federal  match  rate to  states  to                                                               
provide additional relief.   He stated that there  had never been                                                               
a substantial reduction other than back  to the base.  He allowed                                                               
that although it was possible  that federal funding could change,                                                               
DHSS operated  as best as  possible on the history  and awareness                                                               
that  Medicaid was  a  critical program  in all  50  states.   He                                                               
stated  that it  would  be very  difficult  to get  congressional                                                               
support to dramatically  reduce the program that  would have such                                                               
a big impact across all the states.                                                                                             
REPRESENTATIVE  STUTES  relayed  that   she  had  held  the  same                                                               
conversation  in  Kodiak  regarding  the  state  school  bonding,                                                               
"they've been  doing it since the  what, 60s or 70s,  and they've                                                               
never  changed.   Why  shouldn't we  do it,  and  guess what,  it                                                               
CHAIR  SEATON clarified  that the  Alaska  State Legislature  had                                                               
passed  a statute  which  made that  change  for school  bonding,                                                               
pointing out  that it was  not retroactive, but was,  instead for                                                               
any new bonds.  He declared  that there was no more security than                                                               
that both  houses of  congress in the  federal government  had to                                                               
agree, and the president had to  sign it, as this was a provision                                                               
of  law,  not  regulation.   He  acknowledged  that  this  could,                                                               
however,  happen.   He pointed  out that  the Medicaid  Expansion                                                               
bill  allowed  an  opt-out  by   the  state  should  the  federal                                                               
reimbursement rate drop below 90 percent.                                                                                       
4:24:29 PM                                                                                                                    
CHAIR SEATON  directed attention to  the fiscal note  labeled OMB                                                               
Component   Number:   2662,   an  allocation   for   Senior   and                                                               
Disabilities Medicaid  Services.   He noted  that some  costs had                                                               
shown on this fiscal note  which mirrored savings on other fiscal                                                               
notes, as there was shifting from a grant program to Medicaid.                                                                  
MR. SHERWOOD  expressed his agreement that  a substantial portion                                                               
of the  fiscal note was to  show a movement of  expenditures from                                                               
the current grant programs to  the 1915(i) and (k) options, which                                                               
were to  begin in FY  19.  He  noted that  the other part  of the                                                               
fiscal  note was  for the  change in  tribal policy  as it  would                                                               
impact our  long term  care services,  assuming that  this impact                                                               
would  first be  seen  in the  larger  nursing facilities  before                                                               
moving  to  the  smaller  nursing facilities  and  the  home  and                                                               
community based waiver  services.  He pointed out  that this fund                                                               
source  shift  [from payment  through  general  funds to  federal                                                               
funds] would increase from FY17 through FY22.                                                                                   
CHAIR SEATON asked for clarification  that the term "refinancing"                                                               
meant switching to  an increased federal match  for Medicaid from                                                               
100 percent state general funds.                                                                                                
MR.  SHERWOOD  explained  that  the  terminology  came  from  the                                                               
refinancing  for a  more favorable  home mortgage  interest rate,                                                               
although it now referred to a  shift for a more favorable federal                                                               
match rate.                                                                                                                     
REPRESENTATIVE  TARR asked  how  the reform  measures already  in                                                               
existence dovetailed with  the proposed changes.   She asked what                                                               
vehicle  would   be  used  to   move  forward  as  some   of  the                                                               
recommendations  by  the  Agnew::Beck report  would  not  require                                                               
statutory change.                                                                                                               
4:30:32 PM                                                                                                                    
COMMISSIONER DAVIDSON  expressed her agreement that  there were a                                                               
lot of  reform activities, and  that "it's my heart's  dream that                                                               
the legislature  and the administration  are so  heavily invested                                                               
and  providers and  stakeholders  recognize  that health  reform,                                                               
Medicaid Reform  specifically, is  not a  nice to  have, it  is a                                                               
must  have because  we realize  that our  current program  in its                                                               
current form  is not sustainable."   She acknowledged  the budget                                                               
challenge, but stated that  challenges necessitate innovation and                                                               
a different way of doing things.   She listed a variety of reform                                                               
opportunities  taking   advantage  of  changes,   which  included                                                               
different  refinancing  opportunities  available.   She  reported                                                               
that  the  Alaska State  Hospital  and  Nursing Home  Association                                                               
suggested  for all  the parties  to gather  and create  a public-                                                               
private  partnership to  ensure better  primary care  management,                                                               
monitoring  prescription drug  information, and  over utilization                                                               
of the  emergency rooms.   She referenced the  Agnew::Beck report                                                               
which partnered with HMA, who also  worked on the 1915(i) and (k)                                                               
options.   She  mentioned the  Menges report  which reviewed  the                                                               
proposed  legislative reform  options and  offered an  assessment                                                               
for moving  forward.   She pointed  out that  various contractors                                                               
recognized  that   the  stakeholders  would  benefit   from  more                                                               
intensive  conversations  with  Oregon  and  Colorado  for  their                                                               
experiences  about   accountable  care  organizations   and  care                                                               
coordination models.   She relayed that  there was also a  lot of                                                               
conversation  among  the  parties, noting  that  the  Agnew::Beck                                                               
report  was  posted on  the  DHSS  website.   She  reported  that                                                               
legislation  might  be required  to  make  mandatory progress  on                                                               
health care reform.                                                                                                             
4:35:37 PM                                                                                                                    
REPRESENTATIVE   TARR  suggested   that  a   good  exercise   for                                                               
efficiency and priority would be  to place the proposed bill side                                                               
by side  with the  various reports.   She expressed  concern that                                                               
the consideration of multiple proposals  would make more work for                                                               
the department.                                                                                                                 
COMMISSIONER DAVIDSON  relayed that  some of  that work  had been                                                               
done in the  Committee Substitute (CS) for SB  78, which included                                                               
many of  the recommendations  from the  Agnew::Beck report.   She                                                               
acknowledged  that  SB  78  was  still in  the  Senate,  and  its                                                               
Medicaid Committee working group.                                                                                               
CHAIR SEATON relayed  that proposed HB 227 had  also gone through                                                               
the same process,  though not in a subcommittee,  as the proposed                                                               
amendments  were   looking  at  the  various   suggestions.    He                                                               
expressed  a problem  that  the legislature  had  given DHSS  the                                                               
option for  a model of  care coordination,  whereas it was  now a                                                               
requirement.   He  pointed out  that  the demonstration  projects                                                               
would  not   necessarily  go  forward   in  the   future  without                                                               
requirement.  He pointed out  the DHSS recognized the legislative                                                               
intent to  do these things,  and that  there would be  funding to                                                               
initiate these requirements.                                                                                                    
4:39:18 PM                                                                                                                    
COMMISSIONER  DAVIDSON reflected  on a  prior provision  that had                                                               
not been extended  which allowed for a  $50 million discretionary                                                               
budget authority  which allowed DHSS  to move funds  from various                                                               
divisions, if  necessary, to take  advantage of  opportunities to                                                               
realize savings or  reform or redesign programs.   She said that,                                                               
as  this authority  was no  longer  available, there  was a  lost                                                               
opportunity for more flexibility.                                                                                               
CHAIR  SEATON asked  if  this  was the  authority  to move  money                                                               
already  appropriated,  and  not  a new  allocation,  within  the                                                               
department to accomplish those specific goals.                                                                                  
COMMISSIONER  DAVIDSON  replied that  it  was  for money  already                                                               
REPRESENTATIVE TARR  asked for  a chart  listing the  1915(i) and                                                               
(k) services and the 1115 services.                                                                                             
COMMISSIONER DAVIDSON  relayed that  the department  would supply                                                               
this chart.                                                                                                                     
REPRESENTATIVE  STUTES   asked  about   payment  for   travel  by                                                               
COMMISSIONER DAVIDSON  explained that  the Medicaid  program paid                                                               
for pre-approved medically necessary travel.                                                                                    
REPRESENTATIVE  STUTES   asked  how  this  was   tracked  by  the                                                               
department, stating that this was "a fairly abused program."                                                                    
COMMISSIONER DAVIDSON said that  DHSS would provide more specific                                                               
information about  travel.  She  stated that the no-show  rate by                                                               
Medicaid appointments was  no different than by  any other payer,                                                               
noting that this  was mainly due to weather.   She explained that                                                               
the  pre-authorizations by  providers for  Medicaid beneficiaries                                                               
had to be medically necessary,  and was only approved, and valid,                                                               
for specific  days.   She noted  that any  delays could  void the                                                               
CHAIR SEATON asked  for more information as this  was a recurring                                                               
theme heard by the committee.                                                                                                   
4:44:16 PM                                                                                                                    
CHAIR  SEATON stated  that the  proposed  bill was  looking at  a                                                               
change  for behavioral  health grants,  as  currently only  grant                                                               
recipients could bill  Medicaid.  This would be  changed, as well                                                               
as  the   requirement  for  supervision  by   psychiatrists  when                                                               
behavioral  health services  were provided.   He  asked if  there                                                               
were any  problems or any "easy  fixes that we can  accomplish in                                                               
the bill if there is a problem."                                                                                                
MR.  SHERWOOD  replied  that  he   was  reluctant  to  begin  the                                                               
conversation, as it  was very complicated.  He  relayed that most                                                               
often any reference  to the psychiatry oversight  referred to the                                                               
criteria around  physicians, mental health clinics,  and billings                                                               
for  services.    He  reported   that  psychiatrists  could  bill                                                               
Medicaid  for  other  licensed  professionals  serving  in  their                                                               
clinic, but  it required the  psychiatrist be present  30 percent                                                               
of  the  time.    He relayed  that  community  behavioral  health                                                               
clinics  could also  use  non-licensed  clinicians for  services,                                                               
although  they had  a different  standard for  medical oversight.                                                               
He  stated  that  psychologists  were listed  in  statute  as  an                                                               
optional service, and were only  authorized for their independent                                                               
service  for  psychological  assessment   and  testing,  not  for                                                               
therapy,  as that  would require  a regulation  change.   He said                                                               
that  most   other  professionals   desiring  to   bill  Medicaid                                                               
independently, as  "other licensed  practitioners of  the healing                                                               
arts," would  need to be  named in the statute,  AS 47.070.30(b),                                                               
which listed the covered optional services.                                                                                     
CHAIR SEATON  declared that he  wanted to have  this conversation                                                               
should the  need for an amendment  be brought forward.   He noted                                                               
that the  proposed bill removed  the criteria to be  a behavioral                                                               
health  grant  recipient,  noting  that  psychiatrists  don't  do                                                               
therapy, but usually  administered drugs.  It seemed  there was a                                                               
disconnect between  the services provided for  mental health when                                                               
trying to  integrate behavioral health into  primary health under                                                               
Medicaid.  He stated that there  was a requirement that it needed                                                               
to  be under  the auspices  of psychiatrist.   He  asked for  the                                                               
department to  look at  this issue,  determine whether  there was                                                               
another category  of provider  to list in  the statute,  and what                                                               
was the fiscal impact.                                                                                                          
4:49:30 PM                                                                                                                    
CHAIR SEATON declared  that he wanted providers to  know that the                                                               
committee was looking and listening,  and if there were any other                                                               
aspects of  Medicaid reform that  could be helpful  for improving                                                               
health and  controlling health care costs,  the suggestions would                                                               
be welcomed.                                                                                                                    
[HB 227 was held over]                                                                                                          

Document Name Date/Time Subjects
Key Priorities 2016.pdf HHSS 2/18/2016 3:00:00 PM
department responses to HB 227 questions_from 2.02.2016.pdf HHSS 2/18/2016 3:00:00 PM
HB 227
HB 227 DHSS response to 2-18-2016 questions_graphs included.pdf HHSS 2/18/2016 3:00:00 PM
HB 227