Legislature(2015 - 2016)SENATE FINANCE 532

01/27/2016 09:00 AM Senate FINANCE

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Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
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                                                                                                                   
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                                                                    
          (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                                                                    
               (B)    penalties     for    hospital-acquired                                                                    
               infections,   readmissions,     and   outcome                                                                    
               (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                                                                    
               (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                                                                    
               (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                                                                    
                    (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                                                                    
                    (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                                                                    
                    (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                                                                    
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                                                                    
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                                                                     
          (2)   simplify   administrative   procedures   for                                                                    
          providers, including streamlined audit, payment,                                                                      
          and stakeholder engagement procedures.                                                                                
     (e) In this section,  "department" means the Department                                                                    
     Health and Social Services.                                                                                                
10:23:20 AM                                                                                                                   
     Section 9:  Requires the department to  conduct a study                                                                  
     analyzing  the   feasibility  of   privatizing  certain                                                                    
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                                                                    
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                                                                    
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                                                                    
     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                                                                    
Co-Chair MacKinnon discussed housekeeping.                                                                                      

Document Name Date/Time Subjects
SB 78 Corrections White Paper.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Economic Benefits of Medicaid Expansion-12april2015.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Sectional Analysis.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Supporters List and Support Documents - Vol 1 of 2.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Supporters List and Support Documents - Vol 2 of 2.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Supporting Document Evergreen Medicaid Expansion Analysis 020615.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Supporting Document Healthy Alaska Plan FINAL.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Transmittal Letter.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 74 Explanation of Changes.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Sectional Analysis.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Supporting Documents - LRS Report 15.284.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Supporting Documents - Lewin Group Medicaid Managed Care Cost Savings.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Supporting Documents - Legislative Finance Graphs.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Supporting Documents - Aetna Letter 3.27.15.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Sponsor Statement.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 78 Legal Services Memo 16-053dla.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
CSSB 78 FIN Sectional Analysis.docx SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 SFC Letter 5 Questions.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 CSSB78 version H.pdf SFIN 1/27/2016 9:00:00 AM
SB 78