Legislature(2015 - 2016)SENATE FINANCE 532
01/27/2016 09:00 AM Senate FINANCE
Download Mp3. <- Right click and save file as
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE BILL NO. 74 "An Act relating to permanent fund dividends; relating to a medical assistance reform program; establishing a personal health savings account program for medical assistance recipients; relating to the duties of the Department of Health and Social Services; establishing medical assistance demonstration projects; and relating to a study by the Department of Health and Social Services." 10:01:41 AM Co-Chair Kelly stated that Medicaid had become unsustainable in its current form and needed to be reformed. He noted that his office had hired a private contractor to draft a Medicaid reform bill over the interim, the result of which was SB 74. He relayed that the heart of the bill was the case management system, otherwise called managed care, and added that Alaska was one of only 12 systems that did not have a case management system. He relayed that through a case management system the state could regulate emergency facility use, make sure that people were using cheaper, generic prescription drugs as much as possible, restrict travel for care, and to keep recipients from engaging in self-referral to specialists when primary care physicians were sufficient. He said that the bill contained a feasibility study that would direct the administration toward privatization. He added that the bill contained language on fraud prevention and recovery. 10:06:38 AM Co-Chair MacKinnon pointed out to the committee that there were individuals available online for questions. 10:07:22 AM HEATHER SHADDUCK, STAFF, SENATOR PETE KELLY, began the sectional analysis. 10:08:20 AM AT EASE 10:11:55 AM RECONVENED Ms. Shadduck continued discussing the Sectional Analysis for CSSB 74: Section 1: Allows the Department of Health and Social Services (DHSS) to enter into a contract through the competitive bidding process under the State Procurement Code for durable medical equipment or specific medical services provided in the Medicaid program. Section 2: Requires the department to establish a computerized eligibility verification system to verify eligibility and to deter waste and fraud. It also requires DHSS enter into a competitively bid contract with a third-party vendor for the eligibility verification system. Section 3: Adds new sections establishing civil penalties for false claims for medical assistance and authorizing the Department of Health and Social Services (the department) to assess civil penalties against medical assistance providers. Section 4: Requires DHSS to design, adopt, and implement a medical assistance (Medicaid) reform program. Requires the department to prepare and submit a report about reforms, savings, and costs related to the Medicaid program. Provides for a definition of "telemedicine." Ms. Shadduck discussed the sub-sections related to Section 4: (1) referrals to community and social support services, including career and education training services available through the Department of Labor and Workforce Development under AS 23.15, the University of Alaska, or other sources; (2) distribution of an explanation of medical assistance benefits to recipients for health care services received under the program; (3) expanding the use of telemedicine for primary care, behavioral health, and urgent care; (4) enhancing fraud prevention, detection, and enforcement; (5) reducing the cost of behavioral health, senior, and disabilities services provided to recipients of medical assistance under the state's home and community-based services waiver under AS 47.07.045; (6) pharmacy initiatives; (7) enhanced care management; (8) redesigning the payment process by implementing fee agreements that include (A) premium payments for centers of excellence; (B) penalties for hospital-acquired infections, readmissions, and outcome failures; (C) bundled payments for specific episodes of care; and (D) global payments for contracted payers, primary care managers, and case managers for a recipient or for care related to a specific diagnosis; (9) stakeholder involvement in setting annual targets for quality and cost-effectiveness; (10) to the extent consistent with federal law, reducing travel costs by requiring a recipient to obtain medical services in the recipient's home community, to the extent appropriate services are available in the recipient's home community. (b) The department shall identify the areas of the state where improvements in access to telemedicine would be most effective in reducing the costs of medical assistance and improving access to health care services for medical assistance recipients. The department shall make efforts to improve access to telemedicine for recipients in those locations. The department may enter into agreements with Indian Health Service providers, if necessary, to improve access by medical assistance recipients to telemedicine facilities and equipment. (c) On or before October 15 of each year, the Department of Health and Social Services shall prepare a report and submit the report to the senate secretary and the chief clerk of the House of Representatives and notify the legislature that the report is available. The report must include (1) realized cost savings related to reform efforts under this section; (2) realized cost savings related to medical assistance reform efforts undertaken by the department other than the reform efforts described in this Act; (3) a statement of whether the Department of Health and Social Services has met annual targets for quality and cost-effectiveness; (4) recommendations for legislative or budgetary changes related to medical assistance reforms during the next fiscal year; (5) changes in federal laws that the department expects will result in a cost or savings to the state of more than $1,000,000; (6) a description of any medical assistance grants, options, or waivers the department applied for in the previous fiscal year; (7) the results of demonstration projects the department has implemented; (8) legal and technological barriers to the expanded use of telemedicine, improvements in the use of telemedicine in the state, and recommendations for changes or investments that would allow cost-effective expansion of telemedicine; (9) the percentage decrease in costs of travel for medical assistance recipients compared to the previous fiscal year; (10) the percentage decrease in the number of medical assistance recipients identified as frequent users of emergency departments compared to the previous fiscal year; (11) the percentage increase or decrease in the number of hospital readmissions within 30 days after a hospital stay for medical assistance recipients compared to the previous fiscal year; (12) the percentage increase or decrease in average state general fund spending for each medical assistance recipient compared to the previous fiscal year; (13) the percentage increase or decrease in uncompensated care costs incurred by medical assistance providers compared to the percentage change in private health insurance premiums for individual and small group health insurance; (14) the cost, in state and federal funds, for providing optional services under AS 47.07.030(b). (d) In this section, "telemedicine" means the practice of health care delivery, evaluation, diagnosis, consultation, or treatment, using the transfer of medical data through audio, visual, or data communications that are performed over two or more locations between providers who are physically separated from the recipient or from each other. Section 5: Requires the legislature to approve any new additional groups added to the Medicaid program on or after March 23, 2010. Section 6: Requires the department to design and implement a demonstration project to reduce nonurgent use of emergency departments by Medicaid recipients. Ms. Shadduck spoke to subsection 5 of Section 6: (5) a process for assisting frequent users with plans of care and for assisting patients in making appointments with primary care providers within 96 hours after an emergency department visit; 10:20:49 AM Ms. Shadduck continued with the sectional analysis: Section 7: Requires the department and the attorney general to annually prepare a report regarding fraud prevention, abuse, prosecution, and vulnerabilities in the Medicaid program. Section 8: Requires the department to develop one or more managed care or case management demonstration projects through a contract with a third party. The managed care program would be for individuals enrolled in all Medicaid programs. Ms. Shadduck spoke to the subsections in Section 8: (b) The department shall enter into contracts with one or more third-party primary care case managers, managed care organizations, prepaid ambulatory health plans, or prepaid inpatient health plans to implement the project established under this section. The contract must provide for a fee based on a per capita expense that is fair and economical. The department or administrator shall develop a comprehensive system of prior authorizations for payment of services under the project. However, prior authorization may not be required for mental health or primary care services. (c) The department or a third-party administrator shall designate health care providers or one or more teams of health care providers to provide services that are primary care and patient centered as described by the department for purposes of a project under this section. The department or a third-party administrator shall enter into necessary provider and fee agreements. For primary care case managers, the fee agreement must include an incentive-based management fee system. The fee agreements may not be based on a fee for service but must be based on performance measures, as determined by the department. (d) A project under this section must include additional cost-saving measures that include innovations to (1) reduce travel through the expanded use of telemedicine for primary care, urgent care, and behavioral health services; to the extent legal barriers prevent the expanded use of telemedicine, the department shall identify those barriers; (2) simplify administrative procedures for providers, including streamlined audit, payment, and stakeholder engagement procedures. (e) In this section, "department" means the Department of Health and Social Services. 10:23:20 AM Section 9: Requires the department to conduct a study analyzing the feasibility of privatizing certain services. Ms. Shadduck explained that the studies would vary from item to item; exploration into privatizing the Alaska Psychiatric Institute was one plan, another was be to privatize certain divisions of juvenile justice facilities, and certain pioneer homes. Section 10: Requires the department to amend the state Medicaid plan and apply for any waivers necessary to implement the projects and programs described in the bill. Requires the Commissioner of Health and Social Services to certify to the revisor of statutes federal approval of specified measures. Section 11: Allows the department to adopt regulations necessary to implement the changes made by the Act. The regulations may not take effect before the dates the relevant provision of the Act takes effect. Section 12: Conditional effects. Sections 13 - 17: Provides for effective dates for provisions that require waiver and state plan amendment approvals from the United States Department of Health and Human Services. Section 18: Provides an immediate effective date for sections 9 - 12. 10:25:29 AM Senator Olson asked about Section 8. He asked whether any private entities had expressed interest in taking over healthcare facilities in the state. Ms. Shadduck answered in the affirmative. She said that there was a lot of interest and excitement from the private sector. Senator Olson wondered whether the interest was coming from national corporations, as opposed to an Alaska based private company. Ms. Shadduck replied that the process was legally prescribed. The study would simply reveal feasibility on the matter. She assumed that privatization would follow state procurement code. 10:27:19 AM Vice-Chair Micciche observed the fiscal notes attached to the bill reflected savings beginning in FY18. Ms. Shadduck responded that the fiscal notes had been prepared by the administration in 2015 and could not speak to why savings would not begin until FY18. 10:28:15 AM Co-Chair Kelly encouraged the scrutinizing of the bill in subcommittee. He said that there had been recent developments that would result in serious savings in 2017, that would impact the FY18 budget process. He furthered that the finance committee would move quickly and reserve substantive policy debates for subcommittee. He asserted that Medicaid was a huge cost driver for the state, which suggested that the state was doing a poor job in providing the service. He concluded that the legislation would deliver savings and better care. 10:31:07 AM Vice-Chair Micciche felt that the effort would take teamwork. 10:31:59 AM Senator Olson asked about Section 6. He wondered how the bill addressed the problem of the prescription of narcotics in the emergency room. Ms. Shadduck replied that there was currently a prescription drug database, which would continue to receive funding under the bill. 10:33:36 AM Co-Chair MacKinnon assigned SB 74 a subcommittee comprised of: Co-Chair MacKinnon Co-Chair Kelly Vice-Chair Micciche Senator Olson Senator Geissel Co-Chair MacKinnon clarified that both SB 78 and SB 74 were being referred to the same subcommittee. She asserted that the subcommittee would examine valuable pieces and components of each in order to come up with a single recommendation for the committee to consider. She offered that the timeline was expected to be one month. SB 74 was HEARD and HELD in committee for further consideration. Co-Chair MacKinnon discussed housekeeping.