Legislature(2015 - 2016)SENATE FINANCE 532

03/04/2016 08:30 AM Senate FINANCE

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08:44:34 AM Start
08:44:58 AM SB74
09:59:52 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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."                                                                                                          
8:44:58 AM                                                                                                                    
Co-Chair  MacKinnon stated  that  the purpose  of the  day's                                                                    
meeting was to discuss the  fiscal notes. She indicated that                                                                    
the bill  would be set  aside, as the committee  was waiting                                                                    
for  a committee  substitute reflecting  the  work done  the                                                                    
previous day. Some  of the fiscal notes were  still in draft                                                                    
form  but  were being  finalized.  She  asked if  there  was                                                                    
anything to  come before the committee  before reviewing the                                                                    
fiscal notes.                                                                                                                   
Co-Chair  MacKinnon  specified  that  in  the  previous  day                                                                    
twenty-seven amendments were offered  of which twenty-six of                                                                    
them were  passed and  one was  withdrawn. She  relayed that                                                                    
with the committee's  support she and her  staff had divided                                                                    
the fiscal notes  into departments so that  one person could                                                                    
testify  at  a  time.  She invited  Ms.  Hovenden  from  the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
(DCCED) to come to the table to testify.                                                                                        
8:46:41 AM                                                                                                                    
JANEY   HOVENDEN,   DIRECTOR,  DIVISION   OF   CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE,  COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  indicated                                                                    
that with her was  Sarah Chambers, the Division's operations                                                                    
SARAH CHAMBERS, ADMINISTRATIVE  OPERATIONS MANAGER, DIVISION                                                                    
OF  CORPORATIONS,   BUSINESS  AND   PROFESSIONAL  LICENSING,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
introduced herself.                                                                                                             
Senator  MacKinnon  clarified  that there  were  two  fiscal                                                                    
notes that  the team  would discuss.  The fiscal  notes were                                                                    
from DCCED.  She corrected herself reporting  there was only                                                                    
one fiscal note from the department.                                                                                            
8:47:45 AM                                                                                                                    
AT EASE                                                                                                                         
8:49:24 AM                                                                                                                    
Co-Chair MacKinnon  asked Vice-Chair  Micciche to  cover the                                                                    
financial  portion of  the  fiscal note  with  an Office  of                                                                    
Management and Budget (OMB) component number 2360.                                                                              
8:49:49 AM                                                                                                                    
AT EASE                                                                                                                         
8:50:08 AM                                                                                                                    
Vice-Chair  Micciche discussed  the draft  fiscal note,  OMB                                                                    
component number 2360. He reported  appropriations for FY 17                                                                    
in the  amount of  $443.6 [thousand] for  personal services,                                                                    
$3  thousand for  travel, $89.2  thousand for  services, and                                                                    
$25 thousand  for commodities.  The FY  17 total  was $560.8                                                                    
thousand.  He  reported that  nearly  the  same split  minus                                                                    
commodities  each year  totaled $607.4  thousand from  FY 18                                                                    
through FY 22.                                                                                                                  
8:50:56 AM                                                                                                                    
Ms.   Hovenden   relayed   that  SB   74   encompassed   the                                                                    
Prescription  Drug Monitoring  Program  (PDMP) portion  that                                                                    
affected  the  division.  She  explained  that  SB  98,  the                                                                    
telemedicine bill, was imported into SB 74.                                                                                     
Senator MacKinnon  asked Ms.  Hovenden to  avoid the  use of                                                                    
Ms. Hovenden continued that the  bill would incorporate $443                                                                    
thousand for  one full-time permanent program  coordinator I                                                                    
to  manage the  PDMP, two  full-time permanent  occupational                                                                    
licensing   examiners,    and   two    full-time   permanent                                                                    
investigator  III's who  would  help  with the  telemedicine                                                                    
portion. The cost of travel  was $3 thousand for the program                                                                    
coordinator to attend two board  meetings and to engage with                                                                    
communities and  stake holders in  the state  opioid control                                                                    
program. The  cost of  services was  $25 thousand  for legal                                                                    
costs  to amend  the regulations,  printing, and  postage in                                                                    
the  first year.  Other services  equaled  $12 thousand  for                                                                    
printing  and postage  to notify  prescribers  who would  be                                                                    
required  to  register.  The  cost  of  contracts  was  $2.2                                                                    
thousand  to   expand  the  periodic  data   matching  (PDM)                                                                    
database  from  monthly  to weekly.  The  amount  of  $108.6                                                                    
thousand was  for legal costs of  investigations and appeals                                                                    
beginning in the  second year. There was also a  cost of $50                                                                    
thousand for  department-wide services support for  five new                                                                    
8:53:11 AM                                                                                                                    
Ms.  Hovenden discussed  commodities.  The  cost equaled  $5                                                                    
thousand  in the  first year  for computers,  office panels,                                                                    
office furniture and  other one-time needs for  the five new                                                                    
positions.  The division  was a  receipt supported  service,                                                                    
therefore  any fees  that  were not  covered  by any  grants                                                                    
would be covered by licensees.                                                                                                  
8:53:38 AM                                                                                                                    
Senator  Bishop  wondered if  the  committee  was ready  for                                                                    
comments on the fiscal notes.                                                                                                   
Co-Chair  MacKinnon directed  attention to  the analysis  on                                                                    
the second  page of  the fiscal  note, remarking  that there                                                                    
was a specific  summary of the function of  the program. She                                                                    
highlighted that the program was  covered by receipts rather                                                                    
than from general fund (GF)  dollars in an effort to monitor                                                                    
and make  Alaskans safe as  they utilized  different opioids                                                                    
that were prescribed by pharmacists.                                                                                            
8:54:07 AM                                                                                                                    
Senator Bishop was curious if  there was surplus commodities                                                                    
that could  be repurposed  to save  money such  as furniture                                                                    
and computers.                                                                                                                  
8:54:42 AM                                                                                                                    
Senator Olson remarked that the  amount accounted for travel                                                                    
did  not   seem  adequate   to  cover   the  costs   for  an                                                                    
investigator  to be  able  to  go in  the  field to  perform                                                                    
Ms. Hovenden asked the senator to restate his question.                                                                         
Senator Olson pointed to the  second line down on the fiscal                                                                    
note  after  personal  services.  Travel was  funded  at  $3                                                                    
thousand. She  had talked  about the  number of  people that                                                                    
would be hired,  investigators that would have  to travel to                                                                    
do  an adequate  job. He  did not  think $3  thousand was  a                                                                    
sufficient amount of funds.                                                                                                     
Ms. Hovenden commented that  the investigations section used                                                                    
other  state investigations  whenever possible  in order  to                                                                    
avoid  traveling.  An  exceptional  case  could  require  an                                                                    
investigator   to  travel   across   state   lines  or   for                                                                    
investigative purposes.                                                                                                         
8:56:04 AM                                                                                                                    
Senator Olson had a question  pertaining to the increase for                                                                    
medical  licensing  in  the  State   of  Alaska  because  of                                                                    
telemedicine. He  asked if the  fee for a  person practicing                                                                    
telemedicine that  might not  be in Alaska  was the  same as                                                                    
for a practitioner that resided in-state.                                                                                       
Ms.  Hovenden  responded   that  out-of-state  practitioners                                                                    
would  be  required to  pay  the  same  fee as  an  in-state                                                                    
medical licensee.                                                                                                               
8:56:42 AM                                                                                                                    
Co-Chair  Kelly  shared  that  he  knew  Ms.  Hovenden  from                                                                    
outside  of  the  legislature and  welcomed  her  to  Senate                                                                    
8:57:06 AM                                                                                                                    
Co-Chair MacKinnon  referred to page  2 of the  fiscal note.                                                                    
The department was  suggesting that the division  had seen a                                                                    
400 percent  increase in medical license  applications since                                                                    
telemedicine  was  expanded  through  legislation  effective                                                                    
November  2014.  She  asked if  the  percentage  number  was                                                                    
representative  of 1  application, 10  applications, or  100                                                                    
Ms. Hovenden deferred to Ms. Chambers.                                                                                          
Ms. Chambers stated that the  increase that the division had                                                                    
seen over the  previous year and half made up  the sum total                                                                    
of all of the physician  and other licenses regulated by the                                                                    
medical  board which  were  in the  100s  currently for  new                                                                    
applications. An  example of  how the  division was  able to                                                                    
identify the  increase with telemedicine was  that since the                                                                    
effectiveness of HB 281 [Legislation  passed in 2014 - Short                                                                    
Title:    Prescription    without   Physical    Examination]                                                                    
telemedicine  companies  were  sending in  stacks  of  20-30                                                                    
applications at a time. The  division was obliged to license                                                                    
them if  they were qualified.  She was uncertain  at present                                                                    
if they were all planning  to practice under current law and                                                                    
come  to Alaska  to  perform telemedicine  services or  were                                                                    
anticipating the passage of SB 74.                                                                                              
8:59:01 AM                                                                                                                    
Co-Chair  MacKinnon asked  in a  normal application  period,                                                                    
prior to the bill HB  281 that allowed telemedicine practice                                                                    
in Alaska, how many doctors sought licensure in the state.                                                                      
Ms. Chambers  did not have  immediate access, but  agreed to                                                                    
provide  the committee  with  the  information. She  thought                                                                    
that   typically   the   division  saw   about   10-20   new                                                                    
applications  per  month.  The exponential  growth  exploded                                                                    
after HB 281 became law.                                                                                                        
8:59:59 AM                                                                                                                    
Co-Chair  MacKinnon asked  how  long it  took the  licensing                                                                    
board  to  approve  those  applications,   and  how  it  was                                                                    
different  currently.  She  wondered  if it  took  the  same                                                                    
amount of time.                                                                                                                 
Ms. Chambers responded  that typically it took  two to three                                                                    
months  to process  a physician's  application,  due to  the                                                                    
amount of  documentation that needed to  come from hospitals                                                                    
with privileges and other  licensing jurisdictions. Once the                                                                    
information  was received  the division's  staff took  about                                                                    
twenty days  on average  to process the  license. Processing                                                                    
time  was  outside  the division's  administrative  process.                                                                    
However,  in the  previous summer  the  division saw  delays                                                                    
increase because  of the  additional workload.  The division                                                                    
had  taken several  steps administratively  to mitigate  the                                                                    
delays. The  division was currently  back to the  twenty day                                                                    
processing    window.   Any    applications   that    needed                                                                    
investigative  review  or  additional board  review  due  to                                                                    
malpractice claims or other  professional fitness might take                                                                    
a little longer. She summarized  that the division went from                                                                    
eight to  twelve weeks to  the previous summer taking  up to                                                                    
six months. The  division had been able to  remedy the issue                                                                    
administratively,  however, there  was no  additional margin                                                                    
without expansion in staff.                                                                                                     
9:01:38 AM                                                                                                                    
Vice-Chair Micciche wondered if  the division went from five                                                                    
to  twenty applications.  He wondered  if  the division  was                                                                    
close  to  licensing several  of  the  providers wanting  to                                                                    
participate in  the telehealth industry in  Alaska that were                                                                    
anticipating  the  passage of  the  bill.  He asked  if  she                                                                    
thought the workload would be  dramatically reduced once the                                                                    
companies had their physicians licensed.                                                                                        
Ms.  Chambers thought  that any  forecasting  of numbers  of                                                                    
telemedicine  providers would  be conjecture.  Based on  the                                                                    
interest  and the  growth in  the telehealth  business model                                                                    
across the  US, she  did not believe  the division  had come                                                                    
close  to exhausting  the number  of telemedicine  companies                                                                    
that would  be seeking  licensure in  all fifty  states. She                                                                    
had seen an increase in  the number of providers that wanted                                                                    
to practice in  Alaska and did not  think telemedicine would                                                                    
be  diminishing as  an American  healthcare  model any  time                                                                    
9:03:30 AM                                                                                                                    
Vice-Chair Micciche  reminded the  committee that  the costs                                                                    
were covered  by the licensees.  He wondered if it  would be                                                                    
helpful for there  to be an out-of-state  fee adjustment for                                                                    
providers if the  costs continued to be  a larger proportion                                                                    
of the  burden. He would  be supportive of  charging out-of-                                                                    
state physicians a greater license fee.                                                                                         
9:04:15 AM                                                                                                                    
Co-Chair  Kelly  agreed  with Ms.  Chambers'  comment  about                                                                    
telemedicine  not diminishing  as  a  healthcare model  well                                                                    
into the future.                                                                                                                
9:04:29 AM                                                                                                                    
Senator  Olson  commented on  the  400  percent increase  in                                                                    
applications.  He  wondered  if  it was  accurate  that  the                                                                    
division  thought there  would be  roughly 8  thousand to  9                                                                    
thousand physicians licensed in the State of Alaska.                                                                            
Ms.  Chambers   reported  that   there  were   4.1  thousand                                                                    
physicians  licensed  in  the   state  regardless  of  their                                                                    
location.  The   department  could   only  see   the  amount                                                                    
expanding. However,  she did  not know  if the  amount would                                                                    
increase  by  20 thousand  or  50  thousand  - it  would  be                                                                    
difficult  to determine.  The  division  was evaluating  the                                                                    
numbers as well  as its experience being  as conservative as                                                                    
possible with the goal of  still meeting service level needs                                                                    
that the facilities demanded.                                                                                                   
Senator Olson commented that  a potential investigator would                                                                    
have to  travel. He reiterated  his point that  the proposed                                                                    
$3  thousand  for  travel related  to  investigation  seemed                                                                    
9:06:22 AM                                                                                                                    
Vice-Chair   Micciche    stated   that    the   department's                                                                    
expectation  was that  the investigations  would take  place                                                                    
within  the state,  and the  state would  make a  license no                                                                    
longer  valid  until  an  investigator was  able  to  do  an                                                                    
evaluation. Further, if it  appeared that additional funding                                                                    
was  needed he  would support  the idea.  He encouraged  the                                                                    
department to think about it.                                                                                                   
9:07:10 AM                                                                                                                    
AT EASE                                                                                                                         
9:07:33 AM                                                                                                                    
Co-Chair  MacKinnon  set  aside  DCCED's  fiscal  note.  She                                                                    
directed  the committee  to the  Department  of Law's  (DOL)                                                                    
fiscal note component 2203. She  invited Mr. Skidmore to the                                                                    
table.  She directed  Senator Micciche  to walk  through the                                                                    
highlighted financials on the front of the fiscal note.                                                                         
Vice-Chair Micciche indicated the  fiscal note was from DOL,                                                                    
the  appropriation  was  for   the  Criminal  Division,  OMB                                                                    
component number  2203. The allocation was  for the criminal                                                                    
appeals  and  special  litigation.  He detailed  the  FY  17                                                                    
requested  appropriation:   $316.6  thousand   for  personal                                                                    
services,  $1.5 thousand  for  travel,  $39.8 for  services,                                                                    
$6.1  for  commodities, and  $1.5  for  capital outlay.  The                                                                    
total FY  17 appropriation  request was $365.0  thousand. He                                                                    
noted that in  the out years the numbers  were consistent at                                                                    
$365  thousand. He  relayed that  the fund  sources included                                                                    
primarily  federal  receipts  of  $273.7  thousand,  and  GF                                                                    
dollars in the amount of $91.3 thousand.                                                                                        
9:09:00 AM                                                                                                                    
Co-Chair MacKinnon  explained that the funding  source would                                                                    
be  an  issue for  her.  She  thought  the money  should  be                                                                    
matching funds from receipts received  from the program. The                                                                    
committee would review her concern  prior to moving the bill                                                                    
from  committee. She  invited Mr.  Skidmore to  walk members                                                                    
through the details of the fiscal note.                                                                                         
9:09:22 AM                                                                                                                    
JOHN  SKIDMORE, DIRECTOR,  CRIMINAL DIVISION,  DEPARTMENT OF                                                                    
LAW,  addressed  the  fiscal note.  He  explained  that  the                                                                    
fiscal  note talked  about adding  a program  for the  False                                                                    
Claims  Act. He  explained the  False Claims  Act encouraged                                                                    
citizens to  file claims when  they believed there  had been                                                                    
fraud within  a Medicaid  application either by  a recipient                                                                    
or  a  provider.  It  encouraged  citizens  to  make  claims                                                                    
because  they   could  benefit  from  bringing   it  to  the                                                                    
attention  of state  government. He  furthered that  the law                                                                    
would require  the department to review  the claims, because                                                                    
any claim  brought forward was  actually brought  forward on                                                                    
behalf  of   the  state.  Additionally,  when   claims  were                                                                    
reviewed  there  was  one  of   four  outcomes.  First,  the                                                                    
department could decline the claim  from going forward if it                                                                    
was  already  the  subject   of  a  criminal  investigation.                                                                    
Second, the  department could dismiss the  claim because the                                                                    
department believed it to be  frivolous. The third potential                                                                    
outcome  was  that after  reviewing  a  case the  department                                                                    
could determine that the citizen  should move forward with a                                                                    
complaint  on  their  own.  The   department  would  not  be                                                                    
prosecuting a civil action, but  a citizen would likely have                                                                    
a  lawyer that  would be  acting on  their behalf.  He noted                                                                    
that the  third option would  be the opportunity  that would                                                                    
have  the greatest  amount of  benefit to  the citizen.  The                                                                    
forth  possibility was  that  the state  would  look at  the                                                                    
claim,  decide  it was  appropriate,  and  that the  state's                                                                    
lawyers  would  pursue the  claim.  In  such a  circumstance                                                                    
there  was a  greater recovery  for the  state than  for the                                                                    
Mr.  Skidmore  referenced  one attorney  and  one  paralegal                                                                    
requested on  the fiscal note that  were originally intended                                                                    
to be on  the civil side of the Department  of Law. However,                                                                    
it was  determine that the  more appropriate place  for them                                                                    
was  in  the Medicaid  Fraud  Control  Unit (MFCU)  for  the                                                                    
Criminal Division.  He thought  the benefit for  placing the                                                                    
positions in  MFCU was  that 75 percent  of the  unit's cost                                                                    
was  paid for  with federal  funds. Only  25 percent  of the                                                                    
costs were  paid with  state funds.  He also  mentioned that                                                                    
instead  of  having  just one  attorney  and  one  paralegal                                                                    
assigned there  were already two  other attorneys  that were                                                                    
within MFCU  as well as  10 investigators to allow  for more                                                                    
resources to apply  to the review of  cases. Conversely, the                                                                    
other benefit  that existed  was that the  MFCU had  seen in                                                                    
the previous several years an  uptick in the number of cases                                                                    
the unit took and the  number of recoveries received as well                                                                    
as  saving the  state in  the neighborhood  of $30  million.                                                                    
Even if there was not  a significant number of false claims,                                                                    
initially,  he  suggested  the additional  resources  placed                                                                    
within MFCU  could also be  used to further  prosecute other                                                                    
cases  within  the  unit that  the  department  hoped  would                                                                    
increase  the types  of recoveries  that  they were  already                                                                    
seeing on the criminal side.                                                                                                    
9:12:48 AM                                                                                                                    
Mr.  Skidmore concluded  that  the option  in  front of  the                                                                    
committee was  that if the  fiscal note was fully  funded it                                                                    
would be the most robust  scenario for Department of Law and                                                                    
for the state in the  pursuit of false claims. He understood                                                                    
there  had been  some questions  and concerns  about whether                                                                    
the state and  the criminal division could  absorb the costs                                                                    
without adding  any additional  personnel. His  response was                                                                    
that there was the possibility  that the state could attempt                                                                    
to  absorb them.  However, in  that  case, it  would not  be                                                                    
possible for the department to  exercise the forth option of                                                                    
pursuing  any claims  civilly. The  current attorneys  would                                                                    
not  have the  capacity to  do so.  The other  three options                                                                    
would remain available. He explained  that the difficulty in                                                                    
making  an  assessment  would be  the  number  of  referrals                                                                    
brought to the  Criminal Division of the  Department of Law.                                                                    
He  asserted  that  the department  could  not  predict  the                                                                    
number of  referrals that would  be brought to  the criminal                                                                    
Division. If there  were only a few false  claims brought to                                                                    
the  department  spread  out proportionately  over  time  it                                                                    
would not have  a dramatic impact on  the division. However,                                                                    
if  there   were  several  claims  initiated,   without  the                                                                    
additional  resources, a  policy decision  would have  to be                                                                    
made as to whether the savings  would be worth having to cut                                                                    
back the  funding for criminal  prosecutions or  provide the                                                                    
funding to be more robust.  He made himself available to the                                                                    
committee for questions.                                                                                                        
9:14:22 AM                                                                                                                    
Senator  Olson  asked  about the  department's  position  on                                                                    
using funds to pursue Medicaid  fraud cases in lieu of other                                                                    
criminal  cases.  Mr.  Skidmore thought  that  when  talking                                                                    
about  Medicaid fraud,  MFCU was  devoted strictly  to these                                                                    
types  of  cases. The  department's  ability  to talk  about                                                                    
other white collar  cases. He suggested that  because it was                                                                    
within Medicaid fraud  the state had resources to  try to go                                                                    
after those  types of cases.  As to whether it  was criminal                                                                    
or  civil, he  explained that  criminal cases  had a  higher                                                                    
burden  of proof  and  civil  cases had  a  lower burden  of                                                                    
proof.  Having the  civil option  would allow  the state  to                                                                    
pursue additional fraud claims  that it would otherwise have                                                                    
not been able to pursue civilly.                                                                                                
9:15:43 AM                                                                                                                    
Senator  Olson asked  if it  included being  able to  recoup                                                                    
some   of  the   money.   Mr.  Skidmore   answered  in   the                                                                    
affirmative. Senator Olson clarified  that it applied to the                                                                    
civil portion. Mr. Skidmore responded affirmatively.                                                                            
9:15:54 AM                                                                                                                    
Co-Chair MacKinnon  asked how many  attorneys the  state had                                                                    
on the civil side and on the criminal side.                                                                                     
Mr. Skidmore  provided an approximation of  120 attorneys on                                                                    
the  criminal  side.  The  criminal  attorneys  were  spread                                                                    
across  the   state  in  13   different  offices   and  were                                                                    
responsible   for  the   prosecution   of  "street   crimes"                                                                    
(robbery, murder, rape, assaults,  and thefts). The same 120                                                                    
attorneys included  a division  that handled the  appeals of                                                                    
the criminal cases  as well as a  special prosecutions unit.                                                                    
The attorneys  in that unit  handled various types  of cases                                                                    
including child  support cases and fish  and wildlife cases.                                                                    
Most  of  those  attorneys  were paid  for  with  reciprocal                                                                    
service agreements (RSA's). He did  not have the numbers for                                                                    
the Civil Division close at hand but would provide them.                                                                        
Co-Chair MacKinnon would reach out herself.                                                                                     
9:17:30 AM                                                                                                                    
Co-Chair  MacKinnon   directed  attention  to   fiscal  note                                                                    
component 2665  and invited Deputy Commissioner  Sherwood to                                                                    
the  table. She  indicated that  the remaining  fiscal notes                                                                    
were  from  the Department  of  Health  and Social  Services                                                                    
Vice-Chair Micciche  indicated the fiscal note  pertained to                                                                    
the Division  of Behavioral  Health. He  reviewed the  FY 17                                                                    
appropriation request:                                                                                                          
Personal Services: $115.9 Thousand                                                                                              
Travel:             $ 2.0 Thousand                                                                                              
Services:           $ 9.4 Thousand                                                                                              
Commodities:        $ 8.1 Thousand                                                                                              
Total Operating:    $135.4 Thousand                                                                                             
Senator Micciche  pointed out that  there was a  50/50 match                                                                    
between  federal  and GF  dollars.  He  highlighted that  in                                                                    
looking at FY 18 and into  the future the only reduction was                                                                    
in commodities for  a total of $127.8  thousand offset 50/50                                                                    
between the federal and GF match.                                                                                               
9:19:01 AM                                                                                                                    
JON SHERWOOD, DEPUTY COMMISSIONER,  MEDICAID AND HEALTH CARE                                                                    
POLICY,  DEPARTMENT OF  HEALTH AND  SOCIAL SERVICES,  gave a                                                                    
brief  overview of  some common  information  to avoid  some                                                                    
questions while going through the  fiscal notes. He detailed                                                                    
that  DHSS  had   13  fiscal  notes,  many   of  which  were                                                                    
interconnected  and  addressed  multiple provisions  of  the                                                                    
bill. He  would do his best  to provide an overview  of each                                                                    
note.  He had  many people  available for  questions on  the                                                                    
phone and  in the room.  He informed committee  members that                                                                    
the department had  not had time to update  the fiscal notes                                                                    
to  reflect the  26  amendments that  had  been adopted  the                                                                    
previous day. The fiscal notes  did not include estimates of                                                                    
the financial  participation from  the Alaska  Mental Health                                                                    
Trust  Authority   (AMHTA),  noting   that  the   Trust  had                                                                    
indicated  its willingness  to provide  support in  Medicaid                                                                    
reform. He emphasized the  department's deep appreciation of                                                                    
the support  of the  Trust and  its partnership.  The amount                                                                    
and  the specifics  of the  Trust's  participation would  be                                                                    
decided  on later  in the  month. The  department wanted  to                                                                    
respect the Trust's process.                                                                                                    
9:20:54 AM                                                                                                                    
Mr. Sherwood  addressed fiscal note  2665, stating  that the                                                                    
bill  called  upon the  department  to  coordinate with  the                                                                    
AMHTA  to  manage   a  comprehensive  integrated  behavioral                                                                    
health  system.  The   department  planned  on  implementing                                                                    
significant  behavioral health  performance and  would apply                                                                    
for an  1115 waiver. The  fiscal note reflected the  cost of                                                                    
one position  in the Division  of Behavioral Health  to work                                                                    
on  the  division's  redesign  and   the  1115  waiver.  The                                                                    
position would also support the  contracting efforts with an                                                                    
administrative  services organization  once  the waiver  was                                                                    
operating.  There was  an extra  cost in  the first  year in                                                                    
order to get new equipment for the new employee.                                                                                
9:21:39 AM                                                                                                                    
Co-Chair MacKinnon  asked if it  was fair to say  that there                                                                    
would  be  a fiscal  note  in  the  group that  contained  a                                                                    
negative number.                                                                                                                
Mr. Sherwood confirmed that several  of the fiscal notes had                                                                    
negative numbers,  but added  there would  be some  costs in                                                                    
some components.                                                                                                                
Co-Chair  MacKinnon  pointed  out  that all  that  had  been                                                                    
discussed  were  additional  state employees  that  required                                                                    
additional  investment versus  the  fiscal  notes with  cost                                                                    
saving measures. She  wanted to clarify that  the purpose of                                                                    
SB 74 was  to reform the system to  provide quality services                                                                    
to  Alaskans but  to also  reduce  or redirect  some of  the                                                                    
funds. The  cost saving fiscal  notes would come  before the                                                                    
9:22:29 AM                                                                                                                    
Vice-Chair Micciche  assumed that  with the letter  from the                                                                    
Centers for  Medicare and Medicaid Services  (CMS) the level                                                                    
of coverage would be much  higher for some behavioral health                                                                    
services. He asked  if the number was  conservative. He also                                                                    
asked if  some of  the matches would  be higher  than 50/50.                                                                    
Mr. Sherwood confirmed it  was the administrative component.                                                                    
He  specified  that  the  higher  matches  had  to  do  with                                                                    
Medicaid  services  and certain  specialized  administrative                                                                    
functions.  The   one  being   addressed  was   the  general                                                                    
administrative match of 50/50.                                                                                                  
9:23:15 AM                                                                                                                    
Co-Chair  MacKinnon directed  attention to  fiscal note  OMB                                                                    
component number 242.                                                                                                           
Vice-Chair Micciche  reviewed the fiscal note  applicable to                                                                    
the  Division of  Health  Care  Services medical  assistance                                                                    
administration  costs. He  relayed the  FY 17  appropriation                                                                    
Personal Services:  $355.9 Thousand                                                                                             
Services:           $107.9 Thousand                                                                                             
Commodities:        $ 37.4 Thousand                                                                                             
Total Operating:    $501.2 Thousand                                                                                             
Vice-Chair Micciche noted a similar  50/50 fund source match                                                                    
of federal receipts  and GF monies. On  outgoing years there                                                                    
was  a slight  increase for  personal services  and services                                                                    
and  a  reduction  of  commodities  bringing  the  value  to                                                                    
$529.00  in  FY  18.  The total  would  decrease  to  $412.1                                                                    
thousand in FY 20 and remain the same through FY 22.                                                                            
9:24:34 AM                                                                                                                    
Mr.  Sherwood explained  that the  fiscal note  was for  the                                                                    
department's  medical  assistance  administration  component                                                                    
where many of the  administrative and support components for                                                                    
the Medicaid  program were located.  Many parts of  the bill                                                                    
impacted the  support components  including fraud  and abuse                                                                    
prevention, primary care case  management, health homes, the                                                                    
emergency  room  reduction  project,  the  coordinated  care                                                                    
demonstrations, and  the tribal claiming policy  change. The                                                                    
largest  part of  the  fiscal note  is  personnel costs.  On                                                                    
position would be added to  develop regulations, policy, and                                                                    
work  on  appeals for  fraud  provisions.  He reported  that                                                                    
typically,  the  department  saw   an  increase  in  appeals                                                                    
activity when changes were made  that might adversely impact                                                                    
providers.   He  expected   that  the   position  would   be                                                                    
eliminated after  two years. There  were two  positions that                                                                    
would  be added  to work  on primary  care case  management,                                                                    
managed  care  provisions  in   Section  18,  health  homes,                                                                    
telemedicine provisions in Section  19, and the hospital and                                                                    
emergency  room   reduction  project  in  Section   20.  One                                                                    
position would  be added  to implement  and support  the new                                                                    
tribal claiming policy. The state  needed to track, process,                                                                    
and oversee  the contract provisions for  providers required                                                                    
to get  an enhanced federal match.  The department increased                                                                    
its services line by $75  thousand per year to accommodate a                                                                    
higher appeals volume around fraud  and abuse which would go                                                                    
to  the  Office  of Administrative  Hearings.  He  indicated                                                                    
Director Brodie was available for questions.                                                                                    
9:26:19 AM                                                                                                                    
Co-Chair  MacKinnon reported  that  the  committee had  been                                                                    
joined  by   Senator  Hoffman.  She  drew   the  committee's                                                                    
attention  to the  fiscal note,  OMB  component number  2696                                                                    
from DHSS.                                                                                                                      
Senator  Hoffman  reported  being at  a  committee  closeout                                                                    
Vice-Chair Micciche reported that  the fiscal note pertained                                                                    
to rate review within the  Division of Health Care Services.                                                                    
He reviewed the FY 17 appropriation request:                                                                                    
Personal Services: $112.3 Thousand                                                                                              
Services:           $509.4 Thousand                                                                                             
Commodities:        $ 9.6 Thousand                                                                                              
Total Operating:    $631.3 Thousand                                                                                             
Vice-Chair  Micciche pointed  out  there was  a 50/50  match                                                                    
with  federal receipts  and GF  dollars  which included  one                                                                    
full-time position.  He reported  that from  FY 18  into the                                                                    
future  there was  a  reduction in  services  down to  209.4                                                                    
thousand  and  a  reduction  in  commodities  down  to  $2.0                                                                    
thousand. The  total was $323.7  thousand each  year through                                                                    
FY 22.                                                                                                                          
9:28:08 AM                                                                                                                    
Mr. Sherwood  addressed the fiscal  note, pointing  out that                                                                    
sections 17, 19, and 20  all contained provisions that would                                                                    
require payment reform or  innovative payment methods. Under                                                                    
Section 19  the department would  need to apply for  an 1115                                                                    
demonstration waiver  focused on innovative  payment models.                                                                    
The  department  had  assumed  it  would  issue  a  one-time                                                                    
contract  for  $500  thousand  in   FY  17  to  analyze  and                                                                    
implement  the  payment  models and  have  an  ongoing  $100                                                                    
thousand in  subsequent years for actuary  work for updating                                                                    
and maintaining the rates. The  department estimated that it                                                                    
needed  one  additional  position  to work  on  the  payment                                                                    
reform projects. Section 20 of  the bill required that there                                                                    
would be an annual actuarial  report on the coordinated care                                                                    
demonstration   projects.  The   department  increased   the                                                                    
ongoing actuarial  contract by $100 thousand  to reflect the                                                                    
additional work  for a combined  ongoing cost  for actuarial                                                                    
services of $200 thousand.                                                                                                      
9:29:34 AM                                                                                                                    
Co-Chair   MacKinnon  wondered,   when   Mr.  Sherwood   was                                                                    
providing or presenting  to the committee a  range number on                                                                    
the salary  schedule, if  he was  giving members  a starting                                                                    
range or a payment method  that was somewhere in the middle.                                                                    
Mr. Sherwood  was unsure, and referred  Co-Chair Mackinnon's                                                                    
question to Ms. Efird.                                                                                                          
SANA  EFIRD, ASSISTANT  COMMISSIONER,  DEPARTMENT OF  HEALTH                                                                    
AND SOCIAL  SERVICES, relayed that, although  she would need                                                                    
confirmation, the department normally  budgeted for a step C                                                                    
allowing for  someone that might  have some  experience, but                                                                    
not for a high level position.                                                                                                  
Co-Chair  MacKinnon asked  if Ms.  Efird  could confirm  the                                                                    
information for the committee.                                                                                                  
Ms. Efird responded in the affirmative.                                                                                         
9:30:53 AM                                                                                                                    
Co-Chair  MacKinnon directed  attention to  the next  fiscal                                                                    
note, OMB component number 233.                                                                                                 
Vice-Chair  Micciche  pointed  out   that  the  fiscal  note                                                                    
related to  the Division  of Public Assistance.  He reported                                                                    
that the FY 17 appropriation  request of $854.5 thousand was                                                                    
a 2-year program  of contract services. The  fund source was                                                                    
composed  of about  10  percent in  federal  dollars and  90                                                                    
percent of  GF dollars. The only  other year of cost  was in                                                                    
FY 18 in the amount of  $349 thousand - split similarly with                                                                    
a  little  less that  10  percent  of funding  from  federal                                                                    
dollars and  the remainder  from GF  dollars. There  were no                                                                    
costs for FY 19 through FY 22.                                                                                                  
9:31:59 AM                                                                                                                    
Mr. Sherwood addressed the fiscal  note, explaining that two                                                                    
provisions  of  the bill  affected  the  Division of  Public                                                                    
Assistance.  First, section  13 required  the department  to                                                                    
establish   an  enhanced   computerized  income   asset  and                                                                    
identity   verification  system   to  determine   fraud  and                                                                    
eliminate  duplication  of benefits  through  the  use of  a                                                                    
third  party  vendor.  The  annual   savings  to  the  state                                                                    
resulting  from the  system had  to exceed  the cost  of the                                                                    
system. He pointed out that  the department had assumed that                                                                    
it would incur start-up costs of  $250 thousand in FY 17 for                                                                    
establishing   an   interface   between   the   department's                                                                    
eligibility system,  ARIES, and the third  party system. The                                                                    
department also  expected to incur another  $400 thousand in                                                                    
state  implementation  costs  for  user  exception  testing,                                                                    
documentation    training,   increased    supports   through                                                                    
implementation, and similar  needs. The department estimated                                                                    
an annual  charge for the  service to average  $349 thousand                                                                    
per year  with it going live  on January 1, 2017.  If, after                                                                    
an  18  month  period,  the   third  party  vendor  had  not                                                                    
demonstrated  savings,  the   department  would  cancel  the                                                                    
contract. Therefore, the department  had not shown any costs                                                                    
beyond FY  18. If there  was a demonstration of  savings the                                                                    
department would use the savings  to continue to finance the                                                                    
9:33:30 AM                                                                                                                    
Mr.  Sherwood  discussed  section   17  of  the  bill  which                                                                    
directed  the department  to  refer  Medicaid recipients  to                                                                    
various  resources for  education and  career opportunities.                                                                    
The department  had included  a one-time FY  17 cost  of $30                                                                    
thousand for program notices to  be sent to recipients since                                                                    
it did  not have face-to-face encounters  with many Medicaid                                                                    
recipients  at the  time of  application  or renewal.  Costs                                                                    
would  be  shared 50/50  with  the  federal government.  The                                                                    
majority   of  the   costs  for   the  third   party  vendor                                                                    
eligibility verification  system was not subject  to federal                                                                    
funding because the department  had similar interfaces built                                                                    
into Alaska's  Resource for Integrated  Eligibility Services                                                                    
(ARIES)  which  had  already  been  funded  by  the  federal                                                                    
government at  a level  of 90  percent. Typically,  it would                                                                    
not give  the state additional monies  that were duplicative                                                                    
of things it had already paid for.                                                                                              
9:34:44 AM                                                                                                                    
Co-Chair  MacKinnon directed  attention to  fiscal note  OMB                                                                    
component number 2663.                                                                                                          
Vice-Chair  Micciche  cited  the fiscal  note  appropriation                                                                    
related  to   the  Division   of  Senior   and  Disabilities                                                                    
Services. He relayed the FY 17 appropriation request:                                                                           
Personal Services: $ 97.3 Thousand                                                                                              
Travel:             $ 2.3 Thousand                                                                                              
Services:           $186.8 Thousand                                                                                             
Commodities:        $ 2.5 Thousand                                                                                              
Total Operating:    $288.9 Thousand                                                                                             
Senator  Micciche indicated  that the  funding source  was a                                                                    
90/10 split  with the federal  government picking up  the 90                                                                    
percent portion. The  numbers increased in FY  18. There was                                                                    
one position in FY 17  which increased to three positions in                                                                    
FY 18  costing $318.3  thousand for personal  services, $6.9                                                                    
thousand for travel, $193.8 thousand  for services, and $7.5                                                                    
thousand  for commodities.  The split  in funding  was less.                                                                    
The total  cost in FY 18  was $526.5 thousand. In  FY 19 the                                                                    
services  costs  increased  fairly  dramatically  to  $540.7                                                                    
thousand for  what he assumed  was systems  development. The                                                                    
total for  FY 19 was  $873.4 thousand. From  FY 20 to  FY 22                                                                    
the numbers  stabilized for a  total of $343.3 and  became a                                                                    
50/50 with federal receipts and a GF match.                                                                                     
9:36:23 AM                                                                                                                    
Mr.  Sherwood  addressed the  fiscal  note.  He referred  to                                                                    
Section 19  of the  bill, which  required the  department to                                                                    
apply 1915(i)  and 1915(k) options which  would increase the                                                                    
federal  funds  the  state  received  to  provide  home  and                                                                    
community-based  services.  The  fiscal note  reflected  the                                                                    
associated  administrative  costs.  He  continued  that  the                                                                    
department  anticipated having  to  add  positions to  plan,                                                                    
develop, and manage  the two options. One  position would be                                                                    
added in FY 19 [FY 17] to begin  the work and two more in FY                                                                    
18 as  the department  began to bring  up the  programs. The                                                                    
department believed it  was important to get  the design and                                                                    
implementation of the program  right, as they would generate                                                                    
considerable GF  savings. The department had  to ensure that                                                                    
the eligibility  requirements and  service limits  were well                                                                    
designed  and  strictly enforced  in  order  to achieve  the                                                                    
savings.  In addition  to the  costs of  the positions,  the                                                                    
department would  have costs  associated with  modifying the                                                                    
automated   service   plan,   which   was   the   management                                                                    
information system  within the  division. He  estimated that                                                                    
the $550,000 cost  would be spread out over  the first three                                                                    
years and would  be 90 percent funded  with federal dollars.                                                                    
He  pointed  out  the  one-time  cost in  FY  19  of  $346.9                                                                    
thousand for  assessing individuals for the  1915(i) option.                                                                    
It would  apply for  individuals coming from  grant programs                                                                    
to  Medicaid where  they would  not have  had an  equivalent                                                                    
assessment  out  of the  programs.  The  costs would  be  50                                                                    
percent funded with GF dollars.                                                                                                 
9:38:24 AM                                                                                                                    
Co-Chair MacKinnon  directed attention  to fiscal  note, OMB                                                                    
component number 2875.                                                                                                          
Vice-Chair Micciche  indicated that the fiscal  note was the                                                                    
second   pertaining   to   the  Division   of   Senior   and                                                                    
Disabilities  Services.  The   allocation  was  for  general                                                                    
relief/temporary  assisted  living.  He indicated  that  the                                                                    
fiscal note demonstrated  a savings beginning in  FY 19 when                                                                    
the grants  and benefits  for operating costs  diminished by                                                                    
$4.689 million from FY 19 through FY 22.                                                                                        
9:39:19 AM                                                                                                                    
Mr.  Sherwood  addressed  the  fiscal  note,  informing  the                                                                    
committee it was  the first of three notes  that reflected a                                                                    
100 percent  reduction of  GF program  funding for  home and                                                                    
community based  services resulting from  the implementation                                                                    
of the 1915(i)  option. The expenditures would  be offset in                                                                    
a later  Medicaid fiscal  note where  the expenses  would be                                                                    
from 50  percent GF and  50 percent federal funds.  The note                                                                    
was  for the  general relief  and temporary  assisted living                                                                    
home  which   paid  for  assisted   living  home   care  for                                                                    
vulnerable adults who did not  qualify for Medicaid home and                                                                    
community-based waiver services.  With the implementation of                                                                    
1915  Medicaid would  pay for  a substantial  amount of  the                                                                    
services covered under the program.                                                                                             
9:40:02 AM                                                                                                                    
Co-Chair MacKinnon  asked if the  application had  been made                                                                    
or was in progress. Mr.  Sherwood replied that with the help                                                                    
of  AMHTA, they  had hired  a contractor,  Health Management                                                                    
Associates  (HMA), to  help the  department with  the issue.                                                                    
The  department had  started having  stake holder  meetings,                                                                    
holding   committee  meetings,   planning,  and   conducting                                                                    
preliminary  analysis  in  addition   to  both  1915(i)  and                                                                    
1915(k)  options.  The  work  had been  started  but  was  a                                                                    
substantial process to plan and implement.                                                                                      
9:40:47 AM                                                                                                                    
Co-Chair  MacKinnon  suggested  that the  state  needed  the                                                                    
department  to   act  efficiently  and   expeditiously.  She                                                                    
commented  that FY  19 seemed  like a  conservative date  to                                                                    
start showing a  savings. She encouraged him to  go back and                                                                    
scrub the numbers again.                                                                                                        
Mr. Sherwood  stated that for  the 1915(k) option  which was                                                                    
not reflected  in the fiscal  note, the department  did plan                                                                    
to bring up the issue 6  months sooner. Currently, it was in                                                                    
the   process  of   implementing   major   changes  to   the                                                                    
department's home and  community-based waiver program around                                                                    
care  planning and  care coordination,  as  it would  impact                                                                    
many of the  same providers. He was  cautious of overloading                                                                    
the   system  with   change,  and   pointed  out   that  the                                                                    
implementation needed to be done  very carefully in order to                                                                    
achieve  the   anticipated  savings.  He   acknowledged  the                                                                    
pressure on the department  and would re-assess. He asserted                                                                    
that there  were other  things going on  in the  system that                                                                    
would  limit moving  as  quickly  as in  some  of the  other                                                                    
9:42:17 AM                                                                                                                    
Co-Chair MacKinnon  directed attention  to fiscal  note, OMB                                                                    
component number 2787.                                                                                                          
Vice-Chair Micciche  spoke to the third  fiscal note related                                                                    
to  the Division  of Senior  and  Disabilities Services.  He                                                                    
reviewed that there was no change in  FY 17 and FY 18. In FY                                                                    
19 there was  a savings of $735.2 thousand per  year from FY                                                                    
19 through FY 22.                                                                                                               
9:43:01 AM                                                                                                                    
Mr.  Sherwood stated  that the  fiscal note  was the  second                                                                    
showing reductions  in 100 percent  GF funded programs  as a                                                                    
result  of adding  the 1915(i)  options.  The senior  grants                                                                    
paid for adult  daycare and in-home services  which would be                                                                    
covered by 1915 (i) for Medicaid eligible individuals.                                                                          
9:43:24 AM                                                                                                                    
Co-Chair MacKinnon  directed attention  to fiscal  note, OMB                                                                    
component number 309.                                                                                                           
Vice-Chair  Micciche addressed  the  fiscal note  associated                                                                    
with the  Division of Senior and  Disabilities Services. The                                                                    
fiscal  note demonstrated  a savings  from  the program.  He                                                                    
reviewed that there was no change in  FY 17 and FY 18. In FY                                                                    
19 there was  a savings of $11.635 million per  year from FY                                                                    
19 through FY 22.                                                                                                               
9:44:05 AM                                                                                                                    
Mr. Sherwood  mentioned that the  fiscal note was  the third                                                                    
of three  fiscal notes having  to do with  1115(i) [1915(i)]                                                                    
showing  reductions  in  a grant  program.  He  stated  that                                                                    
community  developmental disabilities  grants provided  home                                                                    
and  community-based services  to  support individuals  with                                                                    
developmental  disabilities  who  were  not  served  by  the                                                                    
Medicaid  Home   and  Community-Based  Waiver   Program.  He                                                                    
continued to  explain that the  1915 option would  allow the                                                                    
department  to cover  services for  individuals through  the                                                                    
Medicaid program bringing in federal funds.                                                                                     
9:44:44 AM                                                                                                                    
Senator Hoffman asked  where the savings were  going to take                                                                    
place within the  state of Alaska. He wondered  if they were                                                                    
primarily  in Anchorage,  Fairbanks, and  Juneau or  if they                                                                    
were throughout  the state. Mr. Sherwood  explained that the                                                                    
savings   would   apply   to   people   with   developmental                                                                    
disabilities  living throughout  the  state.  He offered  to                                                                    
provide the  committee with the  breakout, as  services were                                                                    
available throughout many parts of Alaska.                                                                                      
9:45:26 AM                                                                                                                    
Co-Chair  MacKinnon directed  attention to  the DHSS  fiscal                                                                    
note, OMB component number 317.                                                                                                 
Vice-Chair Micciche  moved to the fiscal  note pertaining to                                                                    
departmental  support  services  within  the  Commissioner's                                                                    
office.  He reviewed  that  there was  a  one-time cost  for                                                                    
services in FY  17. It was an expense  for contract services                                                                    
for $575  thousand funded  with GF  dollars. He  reported no                                                                    
costs from FY 18 through FY 22.                                                                                                 
9:46:09 AM                                                                                                                    
Mr. Sherwood  stated that  Section 27  of the  bill directed                                                                    
the   department   to   conduct  feasibility   studies   for                                                                    
privatizing the pioneer homes,  certain Division of Juvenile                                                                    
Justice  facilities, and  the  Alaska Psychiatric  Institute                                                                    
(API). The current fiscal note  did not reflect the previous                                                                    
day's amendment  regarding the feasibility studies  for API.                                                                    
The  department  estimated  needing   $575  thousand  in  GF                                                                    
dollars  to  conduct  feasibility studies  for  the  pioneer                                                                    
homes  and the  Juvenile Justice  facilities. An  additional                                                                    
$160  thousand in  GF  in  FY 17  was  needed  to conduct  a                                                                    
feasibility study for privatizing API.                                                                                          
9:47:11 AM                                                                                                                    
Senator  Hoffman  asked  about   the  backlog  for  deferred                                                                    
maintenance on  all of the  pioneer homes. Mr.  Sherwood did                                                                    
not have the number readily  available, but he could provide                                                                    
it. He commented that it was not an insignificant number.                                                                       
9:47:39 AM                                                                                                                    
Co-Chair  MacKinnon  asked  Mr.   Sherwood  to  provide  the                                                                    
information to the committee.                                                                                                   
9:47:52 AM                                                                                                                    
Co-Chair MacKinnon  directed attention  to fiscal  note, OMB                                                                    
component number 320.                                                                                                           
Vice-Chair   Micciche  signified   that   the  fiscal   note                                                                    
correlated  to departmental  support  services. He  reported                                                                    
that  the  total  operating  cost   for  FY  17  was  $121.5                                                                    
thousand.  The total  for  FY  18 and  into  the future  was                                                                    
$111.5 thousand per year. There was  a higher GF match in FY                                                                    
17 and  in FY  18 and  in the  out years  the funding  was a                                                                    
50/50 match of federal receipts and GF monies.                                                                                  
9:48:41 AM                                                                                                                    
Co-Chair  MacKinnon  asked  if   there  were  any  full-time                                                                    
position changes.                                                                                                               
Vice-Chair  Micciche confirmed  that there  was a  full-time                                                                    
position hired in FY 17 and continued out through FY 22.                                                                        
9:48:56 AM                                                                                                                    
Mr.  Sherwood  relayed that  the  fiscal  note was  for  the                                                                    
department's  financial management  services. Section  17 of                                                                    
the  bill directed  the department  to prepare  a report  by                                                                    
November 15th of each year  with a number of complex metrics                                                                    
that spanned  across programs and data  systems. He conveyed                                                                    
that  to  plan,  develop,  and   manage  the  new  reporting                                                                    
requirement  the  department  would  add  one  new  position                                                                    
beginning  in FY  17.  The cost  was 60  percent  GF and  40                                                                    
percent  federal   funds.  He  confessed  that   as  he  was                                                                    
reviewing his notes  to prepare for the  meeting he realized                                                                    
he had  carried a  50/50 match  in the  out years.  He would                                                                    
revise  the fiscal  note when  the department  submitted its                                                                    
revisions for the  amendments. The reason the  portion of GF                                                                    
dollars equaled  60 percent  was that  a blended  match rate                                                                    
was used for multiple programs.                                                                                                 
9:50:12 AM                                                                                                                    
Co-Chair MacKinnon  asked if the department  already had new                                                                    
software   with   the   ability   to   make   blended   rate                                                                    
Mr. Sherwood deferred to Ms. Efird.                                                                                             
Co-Chair MacKinnon requested an answer in writing.                                                                              
9:50:56 AM                                                                                                                    
Co-Chair MacKinnon  directed attention  to fiscal  note, OMB                                                                    
component number 2660.                                                                                                          
Vice-Chair  Micciche   reviewed  the  complex   fiscal  note                                                                    
pertaining  to  Behavioral   Health  Medicaid  Services.  He                                                                    
reported that the  FY 17 ask was $315  thousand split evenly                                                                    
between federal  and state GF  receipts which  included $2.7                                                                    
million  from  the  governor's  FY 17  request  and  met  by                                                                    
federal  receipts. Operating  costs  increased in  FY 18  to                                                                    
$4.9 million,  in FY 19 to  $9.9 million, in FY  20 to $14.2                                                                    
million, in  FY 21 to  $19.065 million. The  operating costs                                                                    
for FY 22  remained at $19.065 million. He  pointed out that                                                                    
the federal receipt matches would  increase in FY 18 through                                                                    
FY  22:  the  federal  government's  portion  would  be  $17                                                                    
million and the state's GF portion would be $1.2 million.                                                                       
9:52:18 AM                                                                                                                    
Co-Chair MacKinnon asked if there  was any estimated capital                                                                    
for the project.                                                                                                                
Vice-Chair Micciche  stated that  the estimated  capital for                                                                    
FY 17 was $3 million.                                                                                                           
Co-Chair  MacKinnon   expressed  appreciation   for  Senator                                                                    
Micciche reviewing the numbers with the committee.                                                                              
9:52:54 AM                                                                                                                    
Mr.  Sherwood pointed  out that  the behavioral  health note                                                                    
was the first of the  three fiscal notes to address Medicaid                                                                    
Services. The  fiscal note reflected two  different parts of                                                                    
the  bill.  The   first  was  the  provision   to  manage  a                                                                    
comprehensive  integrated behavioral  health program  and do                                                                    
an 1115  demonstration waiver. The  second was  to implement                                                                    
the new federal  policy on 100 percent  federal claiming for                                                                    
tribal services.  He pointed out several  different types of                                                                    
expenses. There  were increases to  the grants  and benefits                                                                    
line  to  reflect  an   increase  in  Medicaid  expenditures                                                                    
related  to  reform  of the  behavioral  health  system  and                                                                    
eventually  to   cover  larger  substance   abuse  treatment                                                                    
facilities  under   the  1115   waivers.  The   fiscal  note                                                                    
reflected  a  blended  match  rate  for  different  Medicaid                                                                    
populations  whose  federal  match rate  varied  between  15                                                                    
percent and 100 percent. The waiver  began in FY 18 and grew                                                                    
over  time. There  were increases  in the  services line  to                                                                    
reflect  the  cost  of  paying  an  administrative  services                                                                    
organization to  develop and manage a  network of providers,                                                                    
manage utilization,  monitor outcomes, and audit  for fraud,                                                                    
waste, and  abuse. The  fund source  was 50  percent federal                                                                    
and 50  percent GF dollars.  The contract would begin  in FY                                                                    
Mr. Sherwood detailed  a 2-year cost in FY 17  and FY 18 for                                                                    
a consulting  contract in  the services  line to  assist the                                                                    
department  in   designing  and  implementing   the  managed                                                                    
behavioral care  system and to  develop the 1115 waiver  - a                                                                    
50  percent  federal  and  50 percent  GF  funds  match.  He                                                                    
discussed  ongoing  Medicaid Management  Information  System                                                                    
(MMIS) operations support in the  services line beginning in                                                                    
FY  17  split  50/50.  He   noted  that  the  expenses  were                                                                    
summarized on the table of page 3 of the fiscal note.                                                                           
Mr. Sherwood  explained that the fiscal  note also addressed                                                                    
a  capital  need of  $3  million  for one-time  MMIS  system                                                                    
changes. He noted that the  other portion of the fiscal note                                                                    
reflected the  change in federal policy  around claiming 100                                                                    
percent  federal  funds  for  services  provided  to  tribal                                                                    
beneficiaries.  The department  estimated  shifting some  of                                                                    
the  behavioral  health services,  particularly  residential                                                                    
psychiatric treatment services to  100 percent claiming from                                                                    
the  50 percent  federal claiming.  Although the  shifts did                                                                    
not  affect total  expenditures,  they did  impact the  fund                                                                    
sources  for the  behavioral  health  Medicaid. He  directed                                                                    
attention to  the bottom of page  3 of the fiscal  note that                                                                    
showed  the  department's  projections   of  the  shift  for                                                                    
behavioral health.                                                                                                              
9:55:29 AM                                                                                                                    
Co-Chair  MacKinnon asked  the committee  members to  review                                                                    
fiscal notes, OMB  component number  2077  and OMB component                                                                    
number 2662, which would be taken up the following Monday.                                                                      
Co-Chair  MacKinnon asked  the  department  to "scrub  their                                                                    
numbers" and  commented that it  seemed like  the department                                                                    
had several new  employees and not many cost  savings on the                                                                    
fiscal  notes  that had  been  reviewed.  She suggested  the                                                                    
deportment  needed   to  be   more  conservative   with  its                                                                    
expenditures. She  thought the department had  been a little                                                                    
aggressive on the personnel side to accomplish a savings.                                                                       
9:56:30 AM                                                                                                                    
Co-Chair  Kelly commented  on  Senator MacKinnon's  remarks.                                                                    
The department  added a  total of  27 people  anticipating a                                                                    
significant savings in the out  years due to the adoption of                                                                    
some  of   the  waivers   capturing  additional   funds.  He                                                                    
suggested  that the  bill  would be  back  in the  senator's                                                                    
possession  as the  committee  moved the  bill  out. He  was                                                                    
happy to  let the administration  "piggy back" on  his bill,                                                                    
but he was  concerned that the legislature  had not received                                                                    
estimations  on  some of  the  proposed  reforms. He  listed                                                                    
savings  from  telemedicine, eligibility  verification,  and                                                                    
care coordination.  He expressed  interest in  learning more                                                                    
about travel  costs. He  suspected that  there would  not be                                                                    
the anticipated savings  he had hope for in FY  17 but would                                                                    
achieve a  long-term savings.  He did not  want the  bill to                                                                    
move forward  without all of  the important  information. He                                                                    
noted  the   more  private  sector   piece  that   had  been                                                                    
discussed. He wanted better numbers.                                                                                            
9:59:03 AM                                                                                                                    
Co-Chair  MacKinnon  thought  there  would  be  a  committee                                                                    
substitute coming out and her  staff would provide a copy to                                                                    
committee  members. She  was  unsure if  the  bill would  be                                                                    
ready to  move from committee  on the following  Monday. She                                                                    
mentioned scrubbing the  numbers, as they were  not what the                                                                    
committee had expected.                                                                                                         
SB  74  was   HEARD  and  HELD  in   committee  for  further                                                                    

Document Name Date/Time Subjects
SB 74 Unpublished Fiscal Note Packet 030416.pdf SFIN 3/4/2016 8:30:00 AM
SB 74