HOUSE OF REPRESENTATIVES COMMONWEALTH OF

•k -k -k -k Budget Hearing Department of Aging •k -k -k -k House Appropriations Committee Main Capitol Building Majority Caucus Room 140 Harrisburg, Pennsylvania Monday, March 14, 2011 - 1:00 p.m. --oOo—

BEFORE:

Honorable H. William Adolf, Jr., Majority Chairmar Honorable Douglas Reichley Honorable Gordon Denlinger, Subcommittee Chair on Fiscal Policy Honorable Thomas Killion, Subcommittee Chair on Health and Welfare Honorable David Millard, Subcommittee Chair on Health and Welfare Honorable , Subcommittee Chair on Criminal Justice Honorable , Subcommittee Chair on Education Honorable Honorable Jim Christiana Honorable Brian Ellis Honorable Honorable T. Mark Mustio Honorable Bernie O'Neill Honorable Honorable Scott Perry Honorable Honorable Jeffrey Pyle Honorable Thomas Quigley Honorable Curtis Sonney Honorable Joseph Markosek, Minority Chairman Honorable Cherelle Parker, Minority Subcommittee Chair on Health and Welfare BEFORE: (CONT'D) Honorable , Minority Subcommittee Chair on Education Honorable Matthew Smith, Minority Subcommittee Chair on Economic Impact and Infrastructure Honorable , Minority Subcommittee Chair on Fiscal Policy Honorable Jewell Williams, Minority Subcommittee Chair on Criminal Justice Honorable Honorable H. Scott Conklin Honorable Honorable Deberah Kula Honorable Tim Mahoney Honorable Michael O'Brien Honorable John Sabatina, Jr. Honorable Ronald Waters

IN ATTENDANCE:

Honorable Kerry Benninghoff Honorable Honorable Lawrence Curry Honorable Margo Davidson Honorable Pam DeLissio Honorable Maria Donatucci Honorable Bob Godshall Honorable Honorable Honorable Rick Mirabito Honorable Honorable Joseph Preston

ALSO PRESENT:

Dr. Edward Nolan, Majority Executive Director Joanne Hunt, Majority Administrative Officer Jeanna Gettys, Majority Administrative Asst. Darlene Schaffner, Majority Budget Adm. Asst. Kathryn Vranicar, Majority Budget Analyst Mariam Fox, Minority Executive Director CONTENTS

WITNESSES PAGE

Honorable Joseph Markosek 4 Opening remarks

Department of Aging Brian Duke, Acting Secretary 4 Tom Snedden, Director 11 Bureau of PACE David Gingerich, Special.Asst.to.Sec. 20 Jennifer Burnett, Deputy Sec 52 Long-Term Living CHAIRMAN ADOLF: Good afternoon, everyone. The hour of 1:00 having arrived, I would like to call to order the House

Appropriations budget hearings.

Today, we have with us the Acting

Secretary of Aging, Brian Duke. Welcome, Mr.

Secretary.

ACTING SEC. DUKE: Thank you. Good to be here.

CHAIRMAN ADOLF: Mr. Duke comes from the Bucks County area -¬

ACTING SEC. DUKE: That's right.

CHAIRMAN ADOLF: -- where he served as the Director of Agency on Aging; is that correct?

ACTING SEC. DUKE: That's correct.

CHAIRMAN ADOLF: And, Chairman

Markosek, do you have any opening comments?

REP. MARKOSEK: I would just like to welcome the Acting Secretary, and just indicate that he was nice enough to stop by my office earlier for a meet and greet. Very -¬

I think that went well. And we look forward to your testimony. Thank you.

ACTING SEC. DUKE: Thank you. CHAIRMAN ADOLF: Okay. I would like to recognize the Republican Chair of

Aging, Tim Hennessey. And Chairman Hennessey has a couple of questions he would like to start off with. Thank you.

ACTING SEC. DUKE: Great. Thanks.

REP. HENNESSEY: Thank you, Mr.

Chairman.

Acting Secretary Duke, in recent years the last administration had sought legislation to move a number of disability programs -- disability waiver programs from the Department of Welfare to the Department of

Aging.

That legislation passed the House, never made it through the Senate, so essentially it was never authorized; but we understand that those programs have been, in fact, moved from the Department of Welfare to the Department of Aging.

I realize that you are new to the

Department of Aging, but tell us what you found when you first arrived on the scene.

Are they there?

And if we are in a situation where we can move those back to the Department of

Welfare, which in my view is where they belong, would you be willing to support that?

Or do you believe that you can comfortably accept them then within the

Department of Aging?

ACTING SEC. DUKE: I believe what you are speaking to is the Pennsylvania

Department of Aging and the proposal last year to create a Department of Aging and Long-term

Living; is that correct? That's what -¬

REP. HENNESSEY: Yes, essentially.

ACTING SEC. DUKE: And so, as we look at that, the operations right now, there is a Department of Aging and there is an

Office of Long-term Living. And the Office of

Long-term Living right now consists of a joint deputy secretary that reports to both Aging and Welfare, and Deputy Secretary Burnett is with us today.

We do find that waiver programs are managed by the Office of Long-term Living as part of a joint agreement with Welfare.

Where I think we are going is we want to take a look at what works. The collaboration between Welfare and Aging goes back to the administration of Governor Ridge.

And during that time, memorandums of understanding were executed between Welfare and Aging. And the collaboration between the two entities benefited older Pennsylvanians, in that: The people in Aging had the expertise, the ability to do assessments and care management; and the people that were on the Public Welfare side had the ability to manage, as a single authority, for Medical

Assistance for the Commonwealth.

We believe that laid a foundation of collaboration that we hope continues.

And so, I don't think I have a definitive answer of what the future will be for you. Representative; but what I would like to say to you is that we are looking at what's working, we are doing this in collaboration with the Department of Public Welfare, and then we will see where it takes us.

REP. HENNESSEY: I guess what I am looking for, philosophically, is could you tell me whether you believe that the disability waiver program, since they deal primarily with people who are under the age of

60, really fit well with under -- underneath the umbrella of the Department of Aging, or more -- are they more, better suited with the

Department of Welfare?

I realize there are protections.

ACTING SEC. DUKE: Right.

REP. HENNESSEY: But, I mean, the programs and the funding sources and that kind of thing.

ACTING SEC. DUKE: I think there is common ground in our waiver programs that could lead to efficiency and effectiveness, and I believe that's what we are looking to work with the Secretary of Public Welfare on and the Acting Secretary Alexander.

Whether you are looking for an opinion as to whether they should be separate, until I learn more, I don't think I can -- I could reply.

REP. HENNESSEY: Well, I realize you are new to the job, and we wish you success today. We thank you for that.

ACTING SEC. DUKE: Thank you.

REP. HENNESSEY: I do have one more question in terms of going forward as well.

ACTING SEC. DUKE: Sure.

REP. HENNESSEY: And that is, in recent years the entire operating budget of the Department of Aging has been, as I understand it, taken out of the Lottery Fund.

And I believe it is the only department of state government where you take the general operating budgets for any department and take it out of the source of which is not the

General Fund.

ACTING SEC. DUKE: Um-hum.

REP. HENNESSEY: It seems to me, by doing that, we really set up the situation where, first of all, we are draining the

Lottery of assets that should better be diverted toward -- or used for programs and services for our seniors because that's the premise upon which the Lottery was created here in Pennsylvania 30 years ago.

And I realize this is not the time, this year's budget is probably not the time, it doesn't present the opportunity to move those operating expenses back into the General

Fund as opposed to the Lottery. But going forward, you know, when we get a year or two or three down the road, I would like to see those operating funds back being paid from the General Fund and not draining the Lottery. Do you share that idea, or do you think that it is appropriate that we fund the operating expenses of this Department of Revenue from the Lottery?

ACTING SEC. DUKE: Yeah, a brief recap. I think what you are referring to is:

In the previous administration, there was a shift of expenses, particularly the administrative expenses of the Department of

Aging from the General Fund to the Lottery.

What I do support and can say today is I support that the Lottery should remain solely for the support of older Pennsylvanians at this time. And I believe in this budget, in these tough economic times, those funds are outlined for that purpose right now.

Two or three years down the road, should there be a better economic environment, if we want to have conversations, I would be open to the collaborative process where we talk about that. REP. HENNESSEY: Okay. Thank you.

Mr. Snedden, can you tell us, in terms of the Medicare Part D implementation in the state -- It seems to me your program, because we have experienced significant savings, can you tell the committee what the -- what those savings amount to and on a monthly basis? At least an estimate, so we know what the effect of Medicare Part D implementation has had on the -- our ARRA program. I am sorry, I am having a senior moment here.

MR. SNEDDEN: That's okay.

Well, let me say, first, with respect to Part D, the integration of PACE, would that benefit?

It has, in large measure, given probably 150,000 people in the program an even richer benefit than what they would have had would it just be PACE alone, which is a pretty generous benefit.

Now, from the standpoint of the

PACE Program budget over the past five years since we did the integration, the ability of

PACE to shift cost for its beneficiaries over to Part D has reduced our outlays by about 50 percent on the average.

It depends where you are at in the

Medicare Part D benefit cycle; but on average, we have been able to reduce expenses by about

50 percent.

REP. HENNESSEY: Okay. Can you quantify that for the committee in terms of millions of dollars saved?

MR. SNEDDEN: Let us get you the number on that.

REP. HENNESSEY: Okay. And, by the way, thanks when you mentioned PACE and

PACENET. I was thinking Penn Care, and I knew that wasn't the right acronym. So, thanks for the rescue. I appreciate that.

MR. SNEDDEN: That's okay.

REP. HENNESSEY: If you could provide those numbers in estimated savings -¬

MR. SNEDDEN: Sure.

REP. HENNESSEY: -- over the course of, you know, what we may look forward to in the next year, six months to a year? I think that the information, it would be helpful to the committee. MR. SNEDDEN: Sure, I'd be happy to do that.

REP. HENNESSEY: Thank you very much.

Thanks, Mr. Chairman.

MR. SNEDDEN: Thank you.

CHAIRMAN ADOLF: Thank you.

Chairman Hennessey.

Rep. Parker.

REP. PARKER: Thank you, Mr.

Chairman.

And good afternoon, Mr. Secretary.

ACTING SEC. DUKE: Good afternoon.

REP. PARKER: First let me just state for the record that I have a grand amount of admiration for your role on the ground as head of the triple AAA.

ACTING SEC. DUKE: Thank you.

REP. PARKER: So, that means that you understand what the operations and the challenges are like for the people who are actually giving the services.

You know, in the past three budget cycles, we often hear questions about the funding formula used to decide who and how much the triple AAAs are receiving.

Tell me, has anything changed in the funding formula, and just state for the record sort of what some of those elements are.

ACTING SEC. DUKE: Well, I think when you talk about the allocation formula, you talk about probably a process that some of the committee members may have heard about that took place over the past year; and that was a joint effort of the Department of Aging and the Board of the Pennsylvania Association of Area Agencies on Aging, and it was about a

12-to-18-month discussion to look at the allocation formula.

The formula, as it was established, used different factors and different weights to determine how much a particular Area Agency on Aging or planning service area received in terms of the allocation formula.

So, this would be spread along people over the age of 60, looking at people who are poor, people from rural communities, people from communities of diversity, and then a percentage of people over the age of 75; and these factors were used with different weights.

At the same time, the hold harmless provision comes to play. The hold harmless provision is saying that no Area Agency on

Aging would receive less than it received the year prior, correct?

REP. PARKER: Um-hum.

ACTING SEC. DUKE: As it exists now.

Over the years that allocation formula was applied, but cost-of-living increases were not applied over the years. As demographic shifts took place in different areas, funding was not adjusted for certain planning service areas.

Over the past 12 to 18 months, the dialogue has gotten to the point where we have identified an allocation formula with alternate weights for different factors:

Looking at those who are over the age of 60 and in poverty, and 60 percent of those over age 60 from communities of diversity or minority communities, 10 percent;

Those over 60, from rural communities, 10 percent;

Those over the age 75, 10 percent;

Those over the age of 85, 10 percent.

And that allocation formula, as it was laid out, looked to address some of the -¬ what was called inequities in funding that were created by demographic shifts.

The formula didn't have a hundred percent consensus, but it did have a majority among the Area Agencies on Aging.

The hold harmless provision would need to be addressed in some way in order to make any new formula have a applicable chance of correcting inequities.

Does that answer your question?

REP. PARKER: Yes. Yes, it does.

My next question is actually a DPW question; but I think a portion of it, as relates to the administration, could be applicable to your department, and it is under the long-term care.

There is a reduction of eighteen million, a hundred and sixty-four thousand for rebalancing long-term living system initiatives.

And it talks about savings that will be able to be obtained by the

Commonwealth through a variety of home- and community-based sort of reforms and particularly as it relates to the expanded directed care.

And that's something that I very much have a passion, aside from the fact that

I think almost every county in the

Commonwealth has seen an increase in seniors, who are living over the age of 75 and even over 85 years of age, and in-home services are very important.

So, when you talk about the community-based services reforms, speak to the reduction for me in sort of what kind of strategies or techniques are you actually talking about.

ACTING SEC. DUKE: I think we want to look towards strategies that would maximum federal match if that's possible.

We would look for enhanced care management. We know that care management is provided throughout the Commonwealth by very dedicated professionals, and our partner agencies, the Agencies on Aging, and by service care coordinators with providers across the Commonwealth; and we would look to enhance that care management.

It's not to say there is anything egregious happening now. It is just that I believe that as you enhance it, people are able to look at how resources are used to help a person meet their goals.

And the second thing I think is, well, you said it, is person centered. But it is the ability for individuals to manage their own care, to make their own choices. And we have found, although we don't have extensive studies on it, we are able to see some savings in those situations. And we would want to work, again, with our partner agencies and with providers to expand that initiative.

REP. PARKER: Finally, Mr.

Secretary, I have a question.

I believe in '08 and '09, and I know we have some very challenging times facing the Commonwealth and our nation as it relates to the economy, but the direct service workers, who are actually going into the homes of our seniors and, you know, bathing them and feeding them and allowing them to live in an environment that is extremely comfortable, were fortunate enough to have received an increase a few years ago.

And I just want to make sure that we don't take our eyes off of the fact that we need to be able to hire quality workers to go into the homes to care for our seniors.

Because we don't want to be so fiscally conservative and put such a strain on our providers that we risk the public health and safety of the seniors, who are living longer, because we are not careful about who we are selecting to actually go into their homes and service them.

So thank you, Mr. Chairman.

ACTING SEC. DUKE: Thank you.

CHAIRMAN ADOLF: Thank you.

Rep. Scott Petri.

REP. PETRI: Thank you, Mr.

Chairman.

And thank you, Mr. Secretary, for being here. It is always nice to have a fellow Bucks-countian here. Welcome to the wonderful world of Harrisburg.

ACTING SEC. DUKE: Thank you,

Representative.

REP. PETRI: The current balance in

Penn Care, can you give me an approximation of how much money is maintained in the Lottery

Fund portion of that, of that fund?

MR. GINGERICH: In the proposed budget?

REP. PETRI: Yes. Well, just what's the present fund balance or the balance of that fund?

MR. GINGERICH: In fiscal year

2010-11, there was $56 million.

REP. PETRI: Okay. And what's the trend on that? Is it trending equal, is it trending higher, or is it trending lower, given the fact that Medicare Part D savings have kicked in a couple of years ago?

MR. GINGERICH: As far as this year, it's been trending down.

REP. PETRI: Mr. Secretary, as you know, one of the things that we have been working on -- And when you were with Bucks County, you were certainly involved with that as part of a task force.

In following up to Rep. Parker's question, what solutions do you see that could be done immediately in this year, if any, to assist counties with that discrepancy, those counties that we found aren't getting enough money, to catch up, if you will?

And, you know, speaking on behalf of Bucks County seniors, I think you and I both believe, not only in Bucks County but in the many, many counties, that funding is critical.

ACTING SEC. DUKE: And the funding is critical.

And I wish we were here in better times because the first answer would be:

Revise the funding formula and let's address hold harmless in some fashion so that demographic shifts could be addressed in different counties and service areas across the Commonwealth.

I don't think we are at that time right now, and I think what the current budget proposes is reflective of that. I think our best way to work with the counties will be to look at requirements, look at if there is ability to be flexible on certain requirements.

I don't know if we will have a cash solution, though, to address the inequity in the funding balance.

REP. PETRI: Knowing that there is

56 million and that counties have been shortchanged a lot of money for a long time--and I want to put this in context--if my

House Bill 441, which eliminates the hold harmless, and be passed without some fusion of additional cash, do you think that would necessarily be fair to all of the systems, or would that leave some of those that are over-funded in a precarious position?

ACTING SEC. DUKE: Without seeing it, I'm -- I would like to analyze that and get back to you. I really think that would be -¬

REP. PETRI: Okay.

ACTING SEC. DUKE: I mean -¬

REP. PETRI: I guess I am looking for a solution and a way to get there, and I think you are too.

And it occurs to me that depending upon how the numbers fall out with this new funding formula, if we just eliminate hold harmless, some counties might have some difficulty.

But it would seem to me that we ought to try to make up some of those deficiencies by taking some of the Penn Care dollars and advancing them, so we at least get closer.

ACTING SEC. DUKE: We would have to look at that and see if that's an option.

REP. PETRI: Okay. If you could do so?

ACTING SEC. DUKE: And we'll get back to the Chair.

REP. PETRI: And maybe hypothetically divide each number by 8 million to 10 million, and see, if we took that kind of figure, how that might balance some of those inequities so that our counties aren't strapped in trying to deliver the important services that they need to deliver. Thank you. ACTING SEC. DUKE: I would be happy to look at it and get back to the committee.

CHAIRMAN ADOLF: Thank you.

Rep. Scott Conklin.

REP. CONKLIN: Thank you, Mr.

Chairman.

I would like to thank you for coming as well.

Mine is a two-part question.

Actually, I want to follow up on what Rep.

Parker was saying as well.

I have had some providers and some consumers come to us with some current concerns that they haven't seen any reimbursements in the Aging waiver program, that's the in-house services, since December of 2010.

And then my second question I have for you is: I see in the Governor's budget, there is going to be a little over an $18 million savings and that that is going to restructure for rehabilitation type of services for -- in Aging. Can you tell us just a little bit about how that is going to be done and how it is going to affect the consumer?

ACTING SEC. DUKE: The first part of your question, in terms of Aging waiver, are you referring to financial management services and citizens care -¬

REP. CONKLIN: I am talking about under the PDA.

ACTING SEC. DUKE: Yeah. There were some issues in delays with reimbursement for some services, and we believe a lot of those have been addressed.

REP. CONKLIN: Okay.

ACTING SEC. DUKE: And if they haven't been, please instruct those providers to give my office a call. We would be happy to follow up.

REP. CONKLIN: Absolutely.

ACTING SEC. DUKE: The second part of your question I believe goes to the 18 million as far as savings for long-term living? Is that -¬

REP. CONKLIN: Yes.

ACTING SEC. DUKE: And the answer I gave earlier is probably as specific as I can get right now. That we want to increase person-centered or person-driven care, and then we also want to look for more efficiencies and effectiveness in care management; and we will do this by working in partnership with the Department of Public

Welfare to achieve those.

REP. CONKLIN: So as it goes forward will you be able to have what the plans to address this are, as it becomes available to you, exactly what programs?

ACTING SEC. DUKE: Whatever plans that will be developed and will be available, yeah.

REP. CONKLIN: Thank you.

ACTING SEC. DUKE: Thank you.

REP. CONKLIN: Thank you, Mr.

Chairman.

CHAIRMAN ADOLF: Thank you.

Rep. Mario Scavello.

REP. SCAVELLO: Thank you, Mr.

Chairman.

Good afternoon, Mr. Secretary.

ACTING SEC. DUKE: Good afternoon.

Representative.

REP. SCAVELLO: You know, I have to tell you, you are a breath of fresh air because you have experienced firsthand what the hold harmless can do to a county all of these years.

And I refer to my director in my area, Patty Fretz, as a magician, because of the growth that we have had and still getting funded at a 1990 census; and you have experienced that firsthand as well.

And I am hopeful that, you know, in the next few years, we are able to correct that in some way. Even if we put -- You know, when we put an increase in the budget, when things get better, some of those areas that have been getting affected by that hold harmless in a positive way should be -- we should be looking at those numbers and help and try to recoup some of those monies for those seniors that are really lacking the dollars in some of these counties.

ACTING SEC. DUKE: I thank you for your comment. It is an area that's been longstanding.

We do want to continue to work with the Area Agencies on Aging and the counties and the planning service areas to see what can be done.

But again, I think in better times, we would be able to address this with funding issues. Right now, I think we need to work to see what we can do to collaborate.

REP. SCAVELLO: Every year, for the last few years at these hearings, I have asked the Secretary in regard to the Penn Care waiting list; and every year, the budget, there was nothing extra put into that budget.

The budget proposes a 4.2 million increase for Penn Care appropriations. And I had suggested to the prior administration, and like I said earlier, did not give much attention to that waiting list.

Do you think that there should be more of an equal consideration, for these seniors who need support services, so they do not have to become Medical Assistance eligible?

ACTING SEC. DUKE: Well, I think you are referring to our Options Program and the waiting list that exists there and throughout the Commonwealth. REP. SCAVELLO: Right.

ACTING SEC. DUKE: We would, of course, like to see that waiting list go away.

REP. SCAVELLO: Exactly.

ACTING SEC. DUKE: But we know the realities that we are living in. The majority of the increase you are seeing in Penn Care is for our attending care waiver, and for those that are aging into that program, those going over the age of 60.

REP. SCAVELLO: Over.

ACTING SEC. DUKE: And some of those care plans are rather costly so that's what we are seeing there.

REP. SCAVELLO: I see.

ACTING SEC. DUKE: I think if we are not seeing that and there was more freedom to use those monies, we would probably address the waiting list for the Options Program.

REP. SCAVELLO: Okay. Thank you very much.

CHAIRMAN ADOLF: Thank you.

Rep. Steve Samuelson.

REP. SAMUELSON: Thank you, Mr.

Chairman. And just a quick follow up to my colleague from Monroe. It looks like the last three years, the Penn Care has gone up 240 million, 241 million. Two hundred forty-four million under the prior administration and now

248 million, so we appreciate that you are continuing to move in the positive direction.

My question is on the PACE and

PACENET Program. On paper, it looks like there is a $50 million increase coming from the Lottery Fund for that.

I do realize that 25 million of that replaces money that used to be -- come out of the Tobacco Settlement Fund, and there is an offsetting reduction in the amount that is being allocated to long-term care to offset that; but the other 25 million looks like an increase in the costs of the -- to the PACE -¬

PACE and PACENET Program.

You were talking earlier, along with Mr. Snedden, about savings under the

Medicare Part D. I just wanted to have you address what those 25 million in increased costs are. And also, what has the enrollment been doing for PACE and PACENET over the last few years?

ACTING SEC. DUKE: I am going to ask Mr. Snedden to answer.

MR. SNEDDEN: Yes, sir. In the

PACE Program, costs are driven by three things: enrollments, the utilization of those enrollees in terms of number of claims, and the cost per claim.

If you look back over the last two years at the trends on those three factors, enrollment has been relatively flat, at about

314,000 per year.

But if you look at the pricing of claims, it has gone up fairly dramatically.

Drug prices are increasing, and increasing faster than they have in the recent past. And so, a lot of the increase that we are preparing for is an increase -- slight increase in utilization and a big increase in the price per claim for that utilization.

REP. SAMUELSON: That amount is for the 25 million, which looks like about 10 percent of what we -¬

MR. SNEDDEN: Yes.

REP. SAMUELSON: -- a 10-percent increase on what we spent in the previous year?

MR. SNEDDEN: Yes, sir.

REP. SAMUELSON: Thank you, Mr.

Chairman.

CHAIRMAN ADOLF: Thank you.

Rep. Doug Reichley.

REPRESENTATIVE REICHLEY: Sitting way over here in the bleacher section of the hearing, Mr. Secretary.

My first question for you is on the

Alzheimer's Program. I am one of the co-chairs of the Alzheimer's Caucus we have in the House. And one thing that Rep. Kortz, the other co-chair, and I have been very struck by in the last couple of years when we have discussed this is how many members were personally, including myself, touched with family situations involving Alzheimer's.

And I see Miss Martino sitting in the audience here.

It looks like from the budget, you are maintaining that $250,000 appropriation and the Lottery Fund were in Alzheimer's outreach, but based upon what I think are national statistics about the growing numbers of Alzheimer's patients, if the administration is prepared to undertake more serious financial contributions towards that population. And if not, if there are other legislative means in terms of developing more outreach plans for community programs for the

Alzheimer's population we have here in

Pennsylvania.

I would appreciate your response to that.

ACTING SEC. DUKE: I share with you the seriousness of Alzheimer's. My late mother was a victim of Alzheimer's disease, so

I am quite sensitive to it and the growing need.

Let me tell you that I don't know if we have a funding solution in this next year in this budget, but I am pleased that the funding is maintained for Alzheimer's outreach.

I think a lot of our strategy moving forward will be to partner with those associations and organizations, the

Alzheimer's Association and others, to see what we can do to expand outreach through partnerships in the Commonwealth so that's one of the things I would like to pursue as a strategy.

REP. REICHLEY: Now, my second question is in a similar area of inquiry. Not to completely contradict myself, but you will find it happens a lot in legislative hearings.

It appears that you are assuming

$32 million in home- and community-based services costs into the Lottery Fund, out of the Tobacco Settlement Fund; is that accurate from my reading?

ACTING SEC. DUKE: Their portion of home- and community-based services were supported by the Tobacco Fund and now are supported by Lottery funds, yes.

REP. REICHLEY: I guess my question is, how much capacity are you and the administration estimating?

Because within the Lottery Fund, if you have the wherewithal to assume $32 million in new expenditures while recognizing the overall plan by the administration to shift costs off of the Tobacco Fund and bring it over to the General Fund side, had there been any consideration, you know, following up just on Rep. Samuelson's question, about expanding income eligibility for PACE and PACENET?

We have a lot of seniors right now, who are contacting our offices, faced with potential higher property taxes, groveling with higher gasoline prices, food prices.

Just on the issue of the

Alzheimer's outreach, why, if you have the capacity to assume $32 million in new expenses using the Lottery Fund, why isn't a portion of that going to increase in PACE and PACENET eligibilities and/or Alzheimer's outreach?

ACTING SEC. DUKE: Well, I -- Thank for that observation. And I think one of the things I would like to do is work with the

Acting Secretary of Revenue to look into what exists and what's possible. I mean, I would assume that funding is not available at this point.

Did you have more information?

MR. GINGERICH: Yeah. That the increase in Lottery is also offset by a decrease in the proportion of Lottery that went to the long-term care appropriation.

REP. REICHLEY: Well, in light of the fact that I think the state is benefiting from what is often described in the general media as Obama Care and the expansion of that program and the benefit the state is receiving from prescription drug coverage through that, there should be more consideration given towards using state resources, such as the

Lottery Fund, to try to assist those seniors right now, who are struggling in a very tough economy - particularly, as Mr. Snedden just mentioned about prescription drug costs escalating.

And then, so I am going to ask that you go back and consult the Secretary of

Revenue and the Budget Secretary to see if there is not some wherewithal within these spending numbers to at least divert a portion of some of this money towards those other items. Thank you.

ACTING SEC. DUKE: Thank you.

CHAIRMAN ADOLF: Thank you.

Chairman Markosek.

REP. MARKOSEK: Thank you, Mr. Chairman.

A couple of brief -- One brief housekeeping, and we have had a couple of our members walk in. And I know that I saw Maria

Donatucci and Pam DeLissio from Philadelphia are here; also Margo Davidson is here from

Delaware County; and Dom Costa was here.

They are not members of the committee, but they did stop by and I wanted to at least recognize them.

Mr. Secretary, we all know that we have a very, very successful share drive program here in Pennsylvania. And it is interesting to note that we are going to have all 67 counties with that program, and there is only one state in the Union that can make that claim and that's Pennsylvania.

We are the only state that has such a successful program, and I don't think we get enough credit for it, quite frankly. And I think it is just one of the great programs that the state runs.

And I know all of us in every county that have senior citizens who use that program and handicap folks who use that program. It is almost a lifesaver for everybody. Yet, I see there is a $2.5 million reduction in the spending for that program, if

I am correct.

And I guess my question is, why would we reduce that, that appropriation for that very successful program?

ACTING SEC. DUKE: I am not sharing that awareness level, so maybe I need to look into that and get back to you as far as that reduction.

REP. MARKOSEK: Okay. Because -¬

ACTING SEC. DUKE: I am not sure.

REP. MARKOSEK: And I doubt that it would be incorrect about that.

ACTING SEC. DUKE: We will provide you clarification.

REP. MARKOSEK: But if that is true, I would urge you to consider: The price of gasoline being what it is, we are going to have more and more people using -- trying to use that program as well; and I just think it is one of those programs that we cannot afford to curtail or cut back. Thank you.

ACTING SEC. DUKE: Thank you. Thank you, Mr. Chairman.

CHAIRMAN ADOLF: Thank you.

Rep. .

REP. SONNEY: Thank you, Mr.

Chairman.

Thank you. Acting Secretary.

I would like to go back to the

Alzheimer's, dementia questions. I believe that the budget talks a little bit about possibly a pilot program -¬

ACTING SEC. DUKE: Um-hum.

REP. SONNEY: -- which I think you are going to go into, maybe, with one of the triple AAAs; and I was wondering if you could just elaborate on that a little bit, and what your objectives might be from doing this program.

ACTING SEC. DUKE: That program is taking place in York County, and I believe the essence of the program is to find out how caregivers are impacted as they themselves care for people living with dementia and

Alzheimer's.

We find those essential skill sets and knowledge that would be helpful to them as they do that. We know the behavioral changes that take place can be a challenge to the caregiver, both family caregiver and the paid caregiver.

And so, I think the program in York is to look at what are those differences and how can the health caregivers give better care in caring for someone with dementia and

Alzheimer's; so, what are those unique behavioral challenges they'll face, how can they prepare for those challenges, how can they help the person they are caring for.

REP. SONNEY: And for those of us that have been touched by it personally--for instance, my father had dementia--we know that those are very varied outcomes, I guess, of what a caregiver might be anticipating. There are oftentimes very difficult patients to deal with.

What -- Do you believe that your department is going to be more proactive in that area with the population aging the way that it is and with the number of older residents that we know will be affected by these two diseases in the coming years? ACTING SEC. DUKE: Most certainly I would think our future is definitely going to be impacted by growth of Alzheimer's and dementia related illnesses.

The trends have been in the press, the trends are personally experienced; so, I know that we will be looking at it as we move forward, to what can be done.

REP. SONNEY: Thank you.

CHAIRMAN ADOLF: Thank you.

Rep. Tina Pickett.

REP. PICKETT: Thank you, Mr.

Chairman.

Mr. Secretary, I understand that there has been some pharmaceutical litigation that was brought about by the Attorney

General's Office. There was a settlement to the state for $51 million and a $68 million settlement from AstraZeneca, and that there were contingency arrangements made by the

Attorney General's Office in regard to these lawsuits.

Can you tell me, do you see, first, future trials, future settlements? What amounts of money? And has the Department of Aging been able to realize any of those funds that have come from those lawsuits?

ACTING SEC. DUKE: I guess Mr.

Snedden will speak to the lawsuits.

MR. SNEDDEN: Yes, we have actually been working with the Attorney General's

Office for the better part of the decade on litigation that involves the marketing pricing of pharmaceuticals and to some extent similar issues with the chain drug stores and pharmacy benefit managers.

Both the PACE Program and the state's Medical Assistance Program have provided resources to the Attorney General's

Office in effectively prosecuting these cases.

And both Aging and PACE and DPW Medical

Assistance are sharing in the considerable settlements that are coming about as a result of these cases.

Actually, currently we are seeing the culmination of better -- of the better part of eight years of litigation, largely against pharmaceutical manufacturers, that should produce settlements somewhere in the neighborhood of between 150 and 200 million here in the near future. Where we have already gotten some of that money, PACE and

Medicaid has already gotten some of that money, more is coming.

As to the future, there will be some other litigation forthcoming against some of the generic manufacturers. It won't be anything like we have seen over the past decade in terms of number of cases, intensive kind of resources that's required of PACE and

Medicaid.

REP. PICKETT: How is it determined that those dollars will be spent?

MR. SNEDDEN: Well, in most cases, the money that is provided us through settlement is treated as a refund of an expenditure; meaning that the money goes back into the PACE Fund, which then reduces the draw on the Lottery with respect to future expenses for the program.

In some cases involving this litigation, the money comes to the department and the PACE Program and can be used to provide other pharmacy benefits to people who are designated in the settlement. Or I should say groups, the individuals that were designated.

So some of you may know that the

PACE Program has the Patient Assistance

Program, or clearinghouse, which is basically an operation that provides limited pharmacy benefit to people who do not qualify for

Medicaid or PACE; and the monies that we are able to provide that with are the result of settlements.

REP. PICKETT: Thank you.

Thank you, Mr. Chairman.

CHAIRMAN ADOLF: Thank you.

Rep. Martin Causer.

REP. CAUSER: Thank you, Mr.

Chairman.

Thank you, Mr. Secretary.

The PACE and PACENET Programs are programs that we, as legislators, hear a lot from our constituents about and are certainly very important.

In looking at the information provided, the Rendell Administration had estimated the total number of enrollees for PACE and PACENET for the 2010-11 fiscal year at 319,000 with a $200 million funding level; and it looks like that that was an overestimate.

There is a new reduced estimate for the 'lO-'ll fiscal year of 313,000 and 315,000 total enrollees for '11-'12. You know, so while estimating less total enrollees than last year, your budget is also requesting $250 million, or a $50 million increase, in funding. Can you further explain the need for the increase?

MR. SNEDDEN: Yeah. Well, it is two parts. I think, as Rep. Samuelson was asking earlier, 26 million of that is to have the Lottery Fund pick up the funding that was previously covered out of the tobacco settlement.

In other words, going forward, the

PACE Program will not be getting tobacco settlement monies. That the monies that are needed to cover those expenses will be covered by Lottery funding.

With respect to the 24 million of added cost, I had mentioned earlier that the dynamics that drive costs in PACE are enrollment, utilization, and price per claim; and price per claim has been increasing quite rapidly over the past couple of years.

So even though the enrollment is flat-to-declining, even while utilization is fairly stable, slightly increasing, the cost per claim is going up; and that that's going to require more money, we think, unless something changes with respect to the pricing trend.

REP. CAUSER: I appreciate that information.

MR. SNEDDEN: Sure.

REP. CAUSER: And following along that same line with the PACE and PACENET

Program, the federal health care law included a provision, which increased pharmaceutical rebates, for example, 15 to 23 percent for some brand name prescriptions; and I understand this became effective in January of

2010.

MR. SNEDDEN: (Nods affirmatively.)

REP. CAUSER: What has this meant in savings to the PACE and PACENET Program? MR. SNEDDEN: We are estimating that the -- that increased rebate will provide us with about 20 to 30 million in added rebates going forward.

But until we complete the process of billing those rebates and then receiving the monies from the industry, I can't be exactly sure.

But we will definitely get the benefit of the higher flat and federal rebates. And it will be significant, but I can't give you an exact dollar amount at this point.

REP. CAUSER: Thank you.

Thank you, Mr. Chairman.

CHAIRMAN ADOLF: Thank you.

Just a couple questions. In looking at your budget, Mr. Secretary, I just want to clarify a couple of things for the members and for myself as well.

The first line item on your budget, the GGO, General Government Operations, have a proposed budget of six million, seven hundred and five thousand dollars. Can I assume that that is wages and benefits? ACTING SEC. DUKE: It would be more on benefits and overhead expenses. The changes that you see there will not impact our complement, so.

CHAIRMAN ADOLF: Okay. What is the total budget for the Department of Aging's wages?

MR. GINGERICH: The total.

CHAIRMAN ADOLF: Wages before benefits.

MR. GINGERICH: As of -- Oh, a breakdown is -- We can get you the specific breakdown minus the benefits.

CHAIRMAN ADOLF: Okay. Yeah. I mean, I know you have -- I think you have filled positions with 78?

MR. GINGERICH: Um-hum.

CHAIRMAN ADOLF: And I would just like to know what the wages are of those 78 folks, okay?

ACTING SEC. DUKE: We will break that out for you.

CHAIRMAN ADOLF: Okay.

MR. GINGERICH: It's 5 million.

Oh, sorry, it was reduced. Sorry. Four million and five hundred thousand.

MR. SNEDDEN: State.

CHAIRMAN ADOLF: Four million, five hundred thousand?

MR. GINGERICH: State funds.

MS. BURNETT: State funds.

MR. GINGERICH: State funds. And then two million, seven hundred thousand in federal funds on top of that; so, it's seven million, two hundred thousand.

CHAIRMAN ADOLF: For those 7 8 positions ?

MR. GINGERICH: Um-hum.

CHAIRMAN ADOLF: Okay. All right.

Thank you.

Another question that I would just like to have you expand upon, and you may have answered this; but, you know, with the increasing aging population and the possible decreasing revenue from the Lottery, any thoughts on how we are going to face this in the years to come?

ACTING SEC. DUKE: As far as a trend down in Lottery, I am not quite sure about that; but it -- I have to talk to the Acting Secretary of Revenue, but let me -- How will we move ahead, in other words, if there is fewer funds?

CHAIRMAN ADOLF: Yes.

ACTING SEC. DUKE: And, I mean, we

-- We have spoken, before I arrived in this position, that the demand will exceed the capacity of any one sector of our society to address needs.

And I think what we are going to see is a call for public-private partnerships, a call for work with nonprofit organizations as well as the government to come up with solutions in the community, a call for local government to join us at the table to talk about issues that are being experienced. I think these will be the ways that we'll address care as it needs to be delivered in the local community.

CHAIRMAN ADOLF: Okay. And, possibly, if you can help us out on this debate--at least this is a debate that I am having with myself--in sitting in on conversations that our budget analysts are going through, with whether it's home care or nursing facilities.

And, you know, common sense, you would think that it would be less costly to have folks cared for at home, okay?

And I know there is a application process that each county has, but I think they are all the same. Is it a standardized application?

ACTING SEC. DUKE: Access to home- and community-based services?

CHAIRMAN ADOLF: That is correct.

ACTING SEC. DUKE: There is.

CHAIRMAN ADOLF: All right. And I always hear the conversation saying, well, why aren't the nursing homes decreasing as far as the applications or participants, residents of these nursing homes?

We still have tremendous waiting lists to get in, and more and more folks are getting home care. And are we missing something, or is it just so many more people applying? We are struggling with the -- with this philosophy here.

ACTING SEC. DUKE: The importance of rebalancing care between home- and community-based services and nursing home care remains high on our agenda, both at the

Department of Aging and in collaboration with the Department of Health and Welfare.

The situation that you bring to light, there had been a savings in nursing home days over the past several years and that's been an important thing to recognize.

I think the balance between home- and community-based services, nursing home care, when it comes to just the aging population leaves us much more work to be done.

I mean, we are at a 90/10 percent split right now, where 90 percent of our older people are in nursing homes, 10 percent are receiving home- and community-based services.

Those numbers shift if you include people living with disabilities.

We are not in the process of closing beds for nursing homes.

I don't know if you want to say anything to this, Jenn, as far as rebalancing it.

MS. BURNETT: Yes. Good afternoon. I am Jennifer Burnett, the Deputy Secretary of the Office of Long-Term Living.

There are a number of things that we are doing at the Office of Long-Term Living to continue to rebalance the long-term care system.

But just as an example, there is a set of regulations we are going through called participation review, which is the process by which a nursing home has to go through to add nursing home beds in a given community.

Those regulations are due in final form by the end of September per legislation that was passed last year so that's something you should be definitely paying attention to.

We are down by about two million bed days in the last two years, so we are consistently paying less; but the acute need is going up in nursing facilities, which is driving the costs. So, we continue to build home- and community-based services while we are kind of flattening the use of nursing facilities, but the demographics are there.

ACTING SEC. DUKE: Yeah. And the other thing that is important is, is some people would hear us talk about home- and community-based services and think, well, we are trying to negate nursing home care and in no way is that true.

We know that nursing home facility level of care is necessary. It is just a matter of trying to achieve that balance between the two that is going to be essential.

CHAIRMAN ADOLF: Thank you for that answer and -- because that's a big debate going on. And, you know, obviously, common sense would tell you that home care would be less costly, but we are not seeing the overall savings.

And I don't know if I am comparing apples with apples, but as much information that you have on that, I would appreciate it.

ACTING SEC. DUKE: I think giving you information on that would be good. Yeah, we will feed you that information.

CHAIRMAN ADOLF: Do you have something to add, Jennifer?

MS. BURNETT: Yeah, just let me make one comment about that.

We track that every quarter, and we do a balancing report by county; and we can certainly share those benchmark reports with you. We can provide you that information.

CHAIRMAN ADOLF: Okay. Thank you.

Rep. Mario Scavello.

REP. SCAVELLO: Thank you, Mr.

Chairman. I just want to clarify a comment made earlier by Rep. Samuelson.

My question for the last five years, and it was here that I questioned the

Secretary, always, about that waiting list; there was never any money in the budget.

However, since Lehigh and

Northampton seems to be growing, I would recommend that you ask that question on a yearly basis because it is going to affect him as much as it affects the residents in Monroe and Pike and the growing counties.

Thank you, Mr. Chairman.

CHAIRMAN ADOLF: Thank you.

Chairman Markosek.

REP. MARKOSEK: Thank you, Mr.

Chairman.

I would just like to announce to everyone here that the Democratic Chairman of the House Aging Committee, Rep. Larry Curry, from Philadelphia, has arrived.

And welcome, Larry. Thank for stopping by.

CHAIRMAN ADOLF: Thank you.

Chairman Hennessey.

REP. HENNESSEY: Thank you, Mr.

Chairman.

Mr. Secretary, welcome.

ACTING SEC. DUKE: Yes.

REP. HENNESSEY: I know that you share the concerns, your background has spoken to the concerns that you have had for older

Pennsylvanians; and we welcome you as in your new position of Secretary of the Department of

Aging.

ACTING SEC. DUKE: Thank you.

REP. HENNESSEY: As Chairman Adolf and others have pointed out: As more and more of our PA citizens hit the boomer age and reach, you know, the Social Security qualifying age, we have a lot of work cut out for us in the next decade and several decades in trying to meet the needs that they will present to us. So, we are very happy to have you on board running the ship and -¬

ACTING SEC. DUKE: Thank you.

REP. HENNESSEY: -- as far as the

Department of Aging is concerned, and we look forward to working with you as we go forward.

ACTING SEC. DUKE: Thank you, Mr.

Chairman.

CHAIRMAN ADOLF: Chairman Markosek.

REP. MARKOSEK: Also, Rep. Matthew

Bradford is here with us today. Welcome.

CHAIRMAN ADOLF: Okay. Mr.

Secretary, I want to thank you for your presentation and for all of the information you gave to us. It is a process that we are going to go through right now, and that information that we talked about will be very helpful. And welcome aboard.

ACTING SEC. DUKE: Thank you.

CHAIRMAN ADOLF: And we are looking forward to working with you.

ACTING SEC. DUKE: Thank you.

Chairman.

CHAIRMAN ADOLF: For the members information, there will be a public hearing with the PUC at 2:30. Thank you. ACTING SEC. DUKE: Thank you, and I thank the committee.

(At 1:55 p.m., the hearing concluded.) CERTIFICATE

I, Roxy C. Cressler, Reporter, Notary

Public, duly commissioned and qualified in and for the County of York, Commonwealth of

Pennsylvania, hereby certify that the foregoing is a true and accurate transcript of my stenotype notes taken by me and subsequently reduced to computer printout under my supervision, and that this copy is a correct record of the same.

This certification does not apply to any reproduction of the same by any means unless under my direct control and/or supervision.

Dated this 7th day of April, 2011.

Roxy C. Cressler - Reporter Notary Public

My commission Expires 5/09/2013