Legislature(2009 - 2010)SENATE FINANCE 532

03/11/2009 09:00 AM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 13 Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSSB 116(FIN) Out of Committee
SENATE BILL NO. 32                                                                                                            
     "An  Act relating  to  medical assistance  payments  for                                                                   
     home and community-based services."                                                                                        
9:50:14 AM                                                                                                                    
Senator Ellis presented SB 32.                                                                                                  
     Senate Bill 32 creates a  mechanism for regular Medicaid                                                                   
     rate review  for providers of home-  and community-based                                                                   
     services   to  Alaska's   elderly  and   developmentally                                                                   
     disabled  citizens.    Institutional  service  providers                                                                   
     receive regular reviews in  order to bring rates in line                                                                   
     with costs.                                                                                                                
     However, home  and community-based services  (HCBS) have                                                                   
     been  conclusively  proven  to lower  overall  long-term                                                                   
     Medicaid  costs.    One recent  study  in  the  academic                                                                   
     journal  Health  Affairs found  that  states with  long-                                                                   
     established high  proportions of HCBS spending  saw a 3%                                                                   
     overall  decrease  in long-term  care  spending  between                                                                   
     1995 and 2005 as opposed to a 14.5% increase in low-                                                                       
     HCBS states.  The study concluded:                                                                                         
       "Justifications     based     on    financial                                                                            
          constraints   can   no  longer   be  credibly                                                                         
          offered  as reasons  for forcing  such  people                                                                        
          [seniors   and  persons   with  developmental                                                                         
          disabilities]  into  nursing homes  and  other                                                                        
          institutions.    HCBS  programs   may  be  one                                                                        
          instance  in  which  offering  people greater                                                                         
          choice also helps reduce costs."                                                                                      
     Over the  last few years,  however, rates for  home- and                                                                   
     community-based services  have been frozen.  During that                                                                   
     time,  not  only  have  costs   increased,  the  medical                                                                   
     environment  -  including regulations,  technology,  and                                                                   
     client expectations  - has shifted dramatically.   These                                                                   
     shifts threaten the continued  viability of the hundreds                                                                   
     of  HCBS providers,  primarily  private businesses  that                                                                   
     employ  thousands of  Alaskans  in every  region of  the                                                                   
     Home  and  community  based  services  are  the  key  to                                                                   
     helping our seniors and those  living with developmental                                                                   
     disabilities live  their lives as productive  members of                                                                   
     our communities  while controlling the growth  of health                                                                   
     care  costs.   Without  the  regular review  process  in                                                                   
     Senate  Bill 32, many  providers will  be forced  out of                                                                 
  Health Affairs 28, no. 1 (2009): 262-272.                                                                                     
     business and HCBS services will be taken away from                                                                         
     thousands of Alaskans across the state.                                                                                    
9:58:25 AM                                                                                                                    
Senator  Ellis  noted  that  most  providers  have  not  seen                                                                   
increases  in   ten  years.  He  pointed  to   problems  with                                                                   
contractor's  assessments precluding  testimony from  smaller                                                                   
providers. He  explained that SB  32 gives the  Department of                                                                   
Health and Social  Services (DHSS) the flexibility  to devise                                                                   
a cost  based system, while  repairing the disparity  between                                                                   
home  and community  based  services and  institutional  care                                                                   
rates.  Hospitals  and  nursing homes  require  regular  rate                                                                   
reviews. Home  and community based services deserve  the same                                                                   
treatment from the state.                                                                                                       
10:00:19 AM                                                                                                                   
Co-Chair  Hoffman asked  for  a list  of  home and  community                                                                   
based providers.  He asked how the fiscal notes  would affect                                                                   
their earnings.                                                                                                                 
Senator  Ellis noted  that new  and  possibly reduced  fiscal                                                                   
notes would be provided to the  committee. He emphasized that                                                                   
the legislation is  not a rate increase, but  a mechanism for                                                                   
rate review. He  believed that work in the  finance committee                                                                   
could further  reduce the cost.  He informed that  DHSS could                                                                   
provide the requested provider information.                                                                                     
10:01:55 AM                                                                                                                   
Co-Chair  Stedman observed  that  the fiscal  notes are  $4.4                                                                   
million  for  FY10  and  $8 million  for  FY11.  A  committee                                                                   
substitute  (CS) bill is  in the  works, but information  for                                                                   
committee  members is  today's goal.  Senator Ellis  stressed                                                                   
that the fiscal impact could be reduced.                                                                                        
Senator  Olson asked  how non-Medicaid  eligible  individuals                                                                   
would  be impacted  by  the  mandatory rate  review.  Senator                                                                   
Ellis  explained  that SB  32  addresses providers  that  are                                                                   
reimbursed  through Medicaid.  Senator Olson  stated that  he                                                                   
had  not  witnessed  a  component  of  the  fiscal  note  for                                                                   
providers ineligible for Medicaid.                                                                                              
10:03:32 AM                                                                                                                   
MAX HENSLEY,  STAFF, SENATOR  ELLIS, responded to  questions.                                                                   
He  informed  that  there  are  approximately  350  home  and                                                                   
community  based providers,  who  receive approximately  $140                                                                   
million in Medicaid funding per year.                                                                                           
Mr. Hensley informed  that Section 1 of SB 32  creates a rate                                                                   
review process for home and community  based services as well                                                                   
as assisted living  homes, which are outside  of the Medicaid                                                                   
arena.  Section 1 adds  personal care  services and  assisted                                                                   
living homes for needy and vulnerable  adults to the services                                                                   
receiving the rate review process.  As drafted, the bill only                                                                   
covered home and  community based services provided  though a                                                                   
Medicaid waiver.                                                                                                                
Mr. Hensley reviewed  Sections 2 and 3, which  are conforming                                                                   
language  for  the  assisted   living  homes  for  needy  and                                                                   
vulnerable adults. Section 4 creates  an annual report to the                                                                   
legislature  detailing trends  in rates  based on the  review                                                                   
process  in the bill,  and sunset  that reports  in 2014.  He                                                                   
stressed  that the legislation  is designed  as a  management                                                                   
10:06:15 AM                                                                                                                   
Mr.   Hensley   explained   that   Section   6   delays   the                                                                   
implementation of the program  for two years to allow DHSS to                                                                   
create the methodology to set the rates.                                                                                        
10:07:25 AM                                                                                                                   
JON SHERWOOD, DIRECTOR, OFFICE  OF PROGRAM REVIEW, DEPARTMENT                                                                   
OF  HEALTH AND  SOCIAL  SERVICES  (DHSS), observed  that  the                                                                   
process  has  been  collaborative.  The  department  hired  a                                                                   
consultant  to   review  the   program.  The  department   is                                                                   
committed to moving  forward with a rate setting  system, but                                                                   
is  still seeking  compromise,  including adequate  direction                                                                   
without  restriction in  the rate setting  process of  larger                                                                   
hospitals  and nursing  homes.  The department  supports  the                                                                   
process of accountability.                                                                                                      
10:09:21 AM                                                                                                                   
Senator  Olson questioned  how the  legislation would  affect                                                                   
residents  of  the  Mary  Conrad  center  in  Anchorage.  Mr.                                                                   
Sherwood observed that they would not be affected by SB 32.                                                                     
Senator Olson  asked if semi-private home  services providers                                                                   
were  affected. Mr.  Sherwood answered  that the  legislation                                                                   
requires  the department  to  change rates  reflecting  costs                                                                   
incurred   by  providers.   Senator   Olson   asked  if   the                                                                   
legislation would  affect health  care corporations  in rural                                                                   
10:10:51 AM                                                                                                                   
Senator Ellis acknowledged that  there are home and community                                                                   
based  providers,  especially  in  rural  Alaska,  who  would                                                                   
benefit from the  legislation. The intent of  the legislation                                                                   
is  to   find  the  proper   balance.  Rural   providers  are                                                                   
struggling  and the  state is  in  danger of  losing a  cross                                                                   
section of service providers.                                                                                                   
10:12:19 AM                                                                                                                   
Senator  Huggins requested  clarification  regarding the  two                                                                   
year  delay in  the  implementation of  SB  32. Mr.  Sherwood                                                                   
agreed  that the  department requested  the  two year  delay.                                                                   
Senator  Huggins asked  if the  department  has concerns  for                                                                   
home  and  community  service organizations  that  might  not                                                                   
survive two  years. He  felt concern  about the attrition  of                                                                   
these services.                                                                                                                 
Mr. Sherwood  answered that two  years was an  ambitious goal                                                                   
for implementing  a cost based rate system.  He explained the                                                                   
difficulty in creating the system.                                                                                              
Senator  Huggins  asked when  the  five year  repealer  would                                                                   
begin. Mr. Hensley explained that  the repealer addresses the                                                                   
report from  the department and  takes effect June  30, 2014,                                                                   
meaning that  the report would  occur during the  first three                                                                   
years of the program.                                                                                                           
10:14:27 AM                                                                                                                   
DENISE  DANIELLO,   DIRECTOR,  ALASKA  COMMISSION   ON  AGING                                                                   
testified in favor of SB 32.                                                                                                    
     Good Morning.  My name is  Denise Daniello and I  am the                                                                   
     executive director of the  Alaska Commission on Aging. I                                                                   
     am  here to testify  in support  of CSSB  32, a  bill to                                                                   
     allow for  regular rate reviews of home-  and community-                                                                   
     based services for Medicaid-eligible  persons similar to                                                                   
     the  process used  by hospitals  and  nursing homes.  We                                                                   
     believe  that this  proposed  legislation addresses  the                                                                   
     need for a  fair and consistent process  to maintain the                                                                   
     systems  of care  for vulnerable  Alaskans and  promotes                                                                   
    sounds fiscal planning for providers and the State.                                                                         
     The  Governor's  Council  on  Disabilities  and  Special                                                                   
     Education,  the  Alaska Mental  Health  Board,  Advisory                                                                   
     Board  on  Alcoholism  and  Drug Abuse  along  with  the                                                                   
     Alaska  Mental  Health  Trust   Authority,  the  Suicide                                                                   
     Prevention Council, the Alaska  Brain Injury Network and                                                                   
     the Alaska  Commission on Aging have  jointly identified                                                                   
     the establishment of a regular  and periodic schedule of                                                                   
     rate reviews  for home and  community based  services as                                                                   
     one  of our four  legislative priorities  for 2009.  The                                                                   
     provisions  that address  our  legislative priority  are                                                                   
     included in SB 32 sponsored by Senator Ellis.                                                                              
     Alaska's most  vulnerable populations depend  heavily on                                                                   
     a  network  of community  nonprofit  provider  agencies.                                                                   
     Before  last year's  rebasing  for FY09,  many home  and                                                                   
     community-based  service   providers  had  been  over  a                                                                   
     decade without  a rate review  receiving the  same level                                                                   
     of reimbursement  while their  costs continued  to climb                                                                   
     along with demand for more services.                                                                                       
     Home- and community-based  services are an effective and                                                                   
     efficient  means  of providing  care  for nearly  57,000                                                                   
     Alaskans who  would otherwise need to be  served by more                                                                   
     costly  institutions. Investment  in  the foundation  of                                                                   
     home- and community-based  services is prudent to assure                                                                   
     that services meet the needs  of all vulnerable Alaskans                                                                   
     to maintain their  quality of life and to  hold down the                                                                   
     costs of higher level health care.                                                                                         
     According  to  2006  estimates provided  by  Senior  and                                                                   
     Disabilities  Services,  the average  annual  cost of  a                                                                   
     semi-private  room in  a nursing  facility was  $172,685                                                                   
     compared to $21,436 for the Medicaid waiver.                                                                               
     It should also be kept in  mind that as more individuals                                                                   
     are able to receive home-  and community-based services,                                                                   
     fewer  of  them will  need  to  enter much  more  costly                                                                   
     institutions  such as nursing  homes. Thus, it  is quite                                                                   
     possible  that  by  adequately  funding  these  critical                                                                   
     pieces  of  the  continuum  of care  may  result  in  an                                                                   
     ultimate cost savings for the State.                                                                                       
     Older  Alaskans  depend  on  home-  and  community-based                                                                   
     services  which help  them to continue  living  in their                                                                   
     home  communities  for  as  long as  possible  close  to                                                                   
     family,  friends, and cultural  tradition. For  seniors,                                                                   
     these   services  may   include  home-delivered   meals,                                                                   
     transportation,   chore  services,  care   coordination,                                                                   
     assisted  living homes, and  other services.  Thirty-six                                                                   
     percent  of the  3,498  individuals  served by  Medicaid                                                                   
     waivers are  older Alaskans -  the majority of  whom are                                                                   
     elders in their 80's on the Older Alaskans waiver.                                                                         
     This  bill  has  broad  support   from  a  coalition  of                                                                   
     providers  who have also  signed on  to our joint  Trust                                                                   
     and Advisory Boards' position paper. They include                                                                          
        · Alaska Association on Developmental Disabilities,                                                                     
          serving 2,636 Alaskans                                                                                                
        · AgeNet, serving 18,953 Alaskans                                                                                       
        · Personal Care Attendant Providers' Association,                                                                       
          serving 3,807 Alaskans                                                                                                
        · Assisted Living Association of Alaska, serving                                                                        
          1,500 Alaskans                                                                                                        
        · Alaska Behavioral Health Association, serving                                                                         
          26,285 Alaskans                                                                                                       
10:19:24 AM                                                                                                                   
TIM  SCHUERCH, POLICY  ANALYST,  ALASKA  NATIVE HEALTH  BOARD                                                                   
represented  the  state's  Native  Health  Organizations.  He                                                                   
stressed that providing basic  services in outlying areas has                                                                   
grown expensive. The medical inflation   index and employer's                                                                   
health insurance increase every  year. The rates for home and                                                                   
community based services  have been frozen for  nine years. A                                                                   
rate  freeze for  cost  effective  services does  save  money                                                                   
overall by  preventing and intervening  up front.  The Alaska                                                                   
Native  Health   Board  supports  SB  32.   Concerns  include                                                                   
gathering  the necessary data.  He stated  that the  two year                                                                   
delay was  crucial to  work with the  department to  create a                                                                   
rate establishing methodology.                                                                                                  
10:22:16 AM                                                                                                                   
PAT LUBY,  ADVOCACY DIRECTOR,  ALASKA ASSOCIATION  OF RETIRED                                                                   
PERSONS (AARP), ANCHORAGE (testified  via teleconference), in                                                                   
favor  of the  legislation. The  goal of  home and  community                                                                   
based  services is  to avoid  premature  institutionalization                                                                   
for  individuals. Rates  must  undergo review  ensuring  that                                                                   
providers  are  accurately reimbursed.  Older  citizens  have                                                                   
fewer options  without the help  of home and  community based                                                                   
MARITA  KAPLAN,  SENIOR  CITIZENS OF  KODIAK  (testified  via                                                                   
teleconference). She urged the  committee to allow the annual                                                                   
rate review. The Senior Citizens  are challenged with keeping                                                                   
services  alive  and  having trained  staff  available.  Home                                                                   
based services  are essential  for families striving  to keep                                                                   
elders at home.                                                                                                                 
JACK  NIELSON,  DEPARTMENT  OF  HEALTH  AND  SOCIAL  SERVICES                                                                   
(testified via  teleconference). He  stated that he  works in                                                                   
the office  of rate  review, which  works directly  with cost                                                                   
reporting and rate setting proposed under SB 32.                                                                                
Co-Chair Hoffman  asked if the  department believes  that the                                                                   
rate review must occur annually  or is a less frequent review                                                                   
10:27:26 AM                                                                                                                   
Mr. Nielson replied that his work  was involved with statutes                                                                   
and regulations.  Requirements  outlined in federal  statutes                                                                   
outline  the requirements  for rate setting  in the  Medicaid                                                                   
program. The department  must provide access  to services for                                                                   
clients  with  rates that  are  consistent with  economy  and                                                                   
efficiency, which  has an element  of cost. The  current laws                                                                   
do not require a cost review each year.                                                                                         
STEVE LESKO, PRESIDENT OF KEY  COALITION OF ALASKA (testified                                                                   
via teleconference)  in  favor of the  legislation.  He asked                                                                   
that  the impact  on  families  be considered.  This  governs                                                                   
rebasing, which accounts for mandatory  pass through costs on                                                                   
a periodic  basis. Community and  home based programs  do not                                                                   
have access  to such  a process. This  fiscal year  marks the                                                                   
fifth   year  of  the   rate  freeze.   These  factors   have                                                                   
devastating  consequences on  the community.  He mentioned  a                                                                   
few  of the  ways  impacts  are perceived.  Families  receive                                                                   
fewer and fewer  services. Care for so many is  not an option                                                                   
it is a matter of life and death.                                                                                               
10:33:37 AM                                                                                                                   
CONNIE SIPE,  EXECUTIVE DIRECTOR FOR CENTER  FOR COMMUNITIES,                                                                   
SITKA  (testified  via teleconference)  representing  a  non-                                                                   
profit  based   in  Sitka.   She  spoke   in  favor   of  the                                                                   
legislation. She explained  that the budget is made  up of 50                                                                   
percent Medicaid  reimbursements. She stated that  the center                                                                   
does not  receive grants.  She spoke of  the areas  served in                                                                   
Southeast Alaska. She stated that  the center had 113 clients                                                                   
in  Sitka,  Kake,  and  Ketchikan.   Medicaid  pays  for  the                                                                   
services. She  felt that her  organization had  been unfairly                                                                   
treated in  the Medicaid arena  for home and  community based                                                                   
services leading  to many position  cuts. SB 32  is necessary                                                                   
to keep home and community based services stable.                                                                               
10:38:38 AM                                                                                                                   
EMILY ENNIS,  EXECUTIVE DIRECTOR,  FAIRBANKS RESOURCE  AGENCY                                                                   
(testified  via   teleconference),  in  support   of  SB  32.                                                                   
Medicaid  supported home  and community  services enable  the                                                                   
care of  people who  are not able  to independently  care for                                                                   
themselves.   She  believed  that   the  Medicaid   community                                                                   
services  along with  hospitals and  nursing homes  represent                                                                   
Alaska's long term healthcare system in the community.                                                                          
10:42:32 AM                                                                                                                   
DON   CLINE,  THERAPIST,   BRISTOL   BAY  BEHAVIORAL   HEALTH                                                                   
COORPORATION,  DILLINGHAM  (testified   via  teleconference),                                                                   
spoke   in  support  of   SB32.  He   mentioned  the   recent                                                                   
termination of  the crisis center, "Our House,"  which served                                                                   
as respite for  the chronically mentally ill.  The center was                                                                   
closed and  the service  is missed by  both the families  and                                                                   
the mentally ill individuals.                                                                                                   
10:46:05 AM                                                                                                                   
RACHEL GREEN,  REPRESENTATIVE FROM  THE PALMER SENIOR  CENTER                                                                   
(testified  via teleconference),  in  support of  SB 32.  She                                                                   
supported the  bill due to the  regular rate review  of state                                                                   
services. The  senior citizen  population is increasing,  and                                                                   
senior  citizen  services  have  been  underfunded  for  many                                                                   
years.  This  bill  allows the  necessary  tools  to  provide                                                                   
educated  funding  decisions  for home  and  community  based                                                                   
services now and in the future.                                                                                                 
10:48:19 AM                                                                                                                   
EMMA HUNTSMAN,  SELF, BARROW (testified via  teleconference),                                                                   
in support of SB 32. She spoke  in support of the North Slope                                                                   
area.  She  spoke in  support  of  Medicaid and  annual  rate                                                                   
reviews.  She  relayed  appreciation   for  the  benefits  of                                                                   
Medicaid utilized by her disabled son.                                                                                          
10:51:14 AM                                                                                                                   

Document Name Date/Time Subjects
2009-02-25 Denali KidCare, CHIP.PDF SFIN 2/25/2009 9:00:00 AM
SFIN 3/11/2009 9:00:00 AM
SB 13
Alaska Heating Assistance Programs.ppt SFIN 3/11/2009 9:00:00 AM
SB 116
sectional.pdf SFIN 2/25/2009 9:00:00 AM
SFIN 3/11/2009 9:00:00 AM
SB 13
Repercussions.pdf SFIN 2/25/2009 9:00:00 AM
SFIN 3/11/2009 9:00:00 AM
SB 13
Poverty Guidelines.pdf SFIN 2/25/2009 9:00:00 AM
SFIN 3/11/2009 9:00:00 AM
SB 13
Background of SCHIP.pdf SFIN 2/25/2009 9:00:00 AM
SFIN 3/11/2009 9:00:00 AM
SB 13
ANHB Support Letter.pdf SFIN 3/11/2009 9:00:00 AM
SB 116
SB 116
SB 116 - gallons by comunity.xls SFIN 3/11/2009 9:00:00 AM
SB 116
SFIN letters of support addendum.pdf SFIN 3/11/2009 9:00:00 AM
SB 32
SFIN explanation of changes.pdf SFIN 3/11/2009 9:00:00 AM
SB 32
sb13_2009 summary 3-9-09.pdf SFIN 3/11/2009 9:00:00 AM
SB 13
SFIN letters of support.pdf SFIN 3/11/2009 9:00:00 AM
SB 32
SFIN sponsor statement.pdf SFIN 3/11/2009 9:00:00 AM
SB 32
SFIN supporting information.pdf SFIN 3/11/2009 9:00:00 AM
SB 32
sponsor statement.pdf SFIN 2/25/2009 9:00:00 AM
SFIN 3/11/2009 9:00:00 AM
SB 13
Work Draft CS for SB116(Fin) 031109.pdf SFIN 3/11/2009 9:00:00 AM
SB 116