Kansas Legislative Research Department January 21, 2020

MINUTES

SPECIAL COMMITTEE ON MEDICAID EXPANSION

November 12-13, 2019 Room 112-N — Statehouse

Members Present Representative Brenda Landwehr, Chairperson Senator Gene Suellentrop, Vice-chairperson Senator Molly Baumgardner Senator Ed Berger Senator Barbara Bollier Senator Ty Masterson Representative Will Carpenter Representative Jim Kelly Representative Monica Murnan Representative Troy Waymaster Representative Kathy Wolfe Moore

Staff Present Amy Deckard, Kansas Legislative Research Department Iraida Orr, Kansas Legislative Research Department Whitney Howard, Kansas Legislative Research Department Megan Leopold, Kansas Legislative Research Department Eileen Ma, Office of Revisor of Statutes Scott Abbott, Office of Revisor of Statutes Jenna Moyer, Office of Revisor of Statutes David Long, Committee Assistant

Conferees—November 12 Chad Austin, Senior Vice President, Government Relations, Kansas Hospital Association Kyle Kessler, Executive Director, Association of Community Mental Health Centers of Kansas Julie Holmes, Director, Health and Life Division, Kansas Insurance Department Linda Sheppard, Senior Analyst, Kansas Health Institute April Holman, Executive Director, Alliance for a Healthy Kansas David Soffer, Legislative Director, Kansas Department of Commerce

Conferees—November 13 Roy Lenardson, Government Affairs Director, Foundation for Government Accountability Kathleen Smith, Director of Research and Analysis, Kansas Department of Revenue Larry Campbell, Director of the Budget Adam Proffitt, State Medicaid Director, Kansas Department of Health and Environment Others Attending See Attached Lists for November 12 and November 13.

TUESDAY, NOVEMBER 12 Morning Session

Welcome and Opening Remarks

Chairperson Landwehr called the meeting to order at 10:02 a.m. and welcomed Committee members and staff.

Explanation of Resources

Amy Deckard, Kansas Legislative Research Department (KLRD), provided a description of supplemental resources provided to the Committee. She noted the information could also be accessed on KLRD’s resource page for this committee [http://www.kslegresearch.org/KLRD- web/Committees/Committees-Spc-MedExp-Resources.html] (Attachment 1).

The Chairperson provided information on the direction of the Committee discussion related to Medicaid expansion. She indicated these meetings would focus on the Medicaid expansion bill draft recommended by the Senate Select Committee on Healthcare Access (Senate Select Committee) and how the proposed bill language could be improved.

Discussion of Access to Care Considerations

Chad Austin, Senior Vice President, Government Relations, Kansas Hospital Association (KHA), provided testimony on the topic of Medicaid expansion. He stated KHA is encouraged the Legislature is moving toward what expansion would look like, rather than whether it would happen. He noted KHA is concerned there are currently Kansans who earn too much to qualify for KanCare, but too little to receive financial assistance to purchase private insurance on the individual Health Insurance Marketplace. He stated KHA believes there are some general principles necessary for any expansion plan: simplicity, timeliness, and maximization of access to health care coverage for low income Kansans. He stated KHA has discussed the following alternatives beyond traditional Medicaid expansion under consideration:

● The multiple waiver approach could affect the timeliness of expansion implementation. The Legislature should consider adding language in any expansion bill considered to ensure implementation of expansion would begin no later than January 1, 2021;

● The Primary Health Center (PHC) model, an alternative rural health model KHA members have been working on for several years, would change the service bundle and the payment mechanism. The PHC is intended to assist rural communities that cannot sustain the current health care delivery model and to fill the gap between a rural health clinic or federally qualified health center and a full- service hospital by focusing on emergency and outpatient needs;

Kansas Legislative Research Department 2 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● Provider taxes to assist with funding the State’s share of Medicaid expansion would place an additional financial burden on medical providers and must be fair and equitable;

● Co-pays often cost more to collect than the value of the co-pays and should be avoided;

● The level of the premiums charged would effect the ability of some Kansans to participate, and it would be difficult for providers to know whether a patient was covered at the time service was rendered;

● Lockouts would create administrative challenges for health care providers by becoming resource intensive; and

● KHA would support provisions in the bill draft recommended by the Senate Select Committee requiring the State to discontinue expansion should the Federal Medical Assistance Percentage (FMAP) fall below 90 percent, frequently referenced as the “poison pill.” KHA testified in support of 2019 SB 2, which would establish the FMAP Stabilization Fund.

Mr. Austin noted KHA hopes the Legislature develops the best KanCare expansion possible for Kansas (Attachment 2).

Mr. Austin provided the following responses to questions from Committee members and Senator Denning, who is not a Committee member but was asked to participate due to his knowledge of the proposed Senate bill being discussed:

● With regard to studies on the effect of expansion on rural hospital finances, Mr. Austin stated there have been a number of recent reports on the topic. A Navigant report indicated there are 29 at-risk hospitals in Kansas. A report from iVantage Health Analytics noted 85 percent of Kansas hospitals have negative operating budgets. Additional estimates as to the fiscal impact of expansion on critical access, rural, and urban hospitals were provided. The estimated increase in expansion revenue could fund additional staff, local services, or equipment and may reduce the local tax revenue provided to support operations of some hospitals;

● Uncompensated care is a combination of services provided to uninsured patients and the shortcomings in the Medicare and Medicaid payment rates. In some states with Medicaid expansion, the uncompensated care has been reduced by 35 to 45 percent;

● Medicaid expansion may help reduce the amount of unpaid collections for hospitals;

● With regard to any suggestions KHA might have regarding lockouts (preventing Medicaid patients from participating in the program for a period of time after they have been dropped from the program), Mr. Austin stated KHA wishes to provide the most access to health services with the fewest barriers. At issue are the

Kansas Legislative Research Department 3 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 details of how a lockout would work. KHA would prefer no lockouts, but would be willing to look into possible suggestions if lockouts were part of the plan going forward;

● KHA would have concerns with a permanent lockout as proposed in 2019 HB 2066. With regard to the difficulty that could arise for providers as a result of a lockout, under the proposed Senate bill lockouts would differ from the Children’s Health Insurance Program (CHIP) model and the health insurance exchange, Mr. Austin noted there is currently a 60-day grace period for CHIP participants and those on the health insurance exchange who are locked out;

● Mr. Austin responded it was his understanding the federal Centers for Medicare and Medicaid Services (CMS) would not allow a permanent lockout like the one included in 2019 HB 2066; and

● Mr. Austin deferred to Kansas Department of Health and Environment (KDHE) staff for information on how other states have used lockouts effectively for individuals to participate in Medicaid.

A Committee member asked legislative staff to provide the Committee with the specific definitions of “lockout” versus “discontinuation of coverage.”

Chris Swartz, Deputy Medicaid Director, KDHE, addressed the Committee to answer questions regarding lockouts. She stated she was unsure whether other states successfully implemented lockouts for beneficiaries, but she provided information on how lockouts work in Kansas for the CHIP population. According to the Patient Protection and Affordable Care Act (ACA), a CHIP participant may not be locked out for longer than 90 days. A reapplication process must be followed for reinstatement when a lockout occurs, and the applicant’s eligibility must be reassessed each time. Upon reapplication, the participant would have to be allowed back into CHIP if they qualify financially, and the participant would not be required to cure the delinquent payment. The lockout and reapplication process is a recurring event if payments are repeatedly not paid. She noted a provider reviews the eligibility system at the time of the initial visit to determine whether a participant is active and typically assumes the participant is qualified for a year until the annual renewal. However, with the occurrence of lockouts, a provider would have to check at each office visit to determine if a patient’s benefits were current, which can be a disruption to the provider’s operation.

Ms. Swartz responded to questions by Committee members regarding lockouts. She noted, in Kansas, lockouts apply only to CHIP because premium payments apply only to this population. KDHE collects CHIP payments, but there are many delinquencies and individuals moving in and out of the program due to nonpayment of premium payments. The average monthly CHIP premium is $25.00 to $30.00, and the high is $50.00. A third-party vendor processes the premiums and, if premium requirements were included in a Medicaid expansion bill, a third-party vendor would have to be hired to administer the collection of premiums. The current CHIP delinquency rate is 30 to 35 percent, which is also impacted by the renewal process. Premium adjustments may occur at annual renewal due to changes in the applicant’s financial status. For CHIP, the lowest required premium begins at 167 percent of the federal poverty level (FPL). She offered to provide details on the CHIP premium levels.

A Committee member provided an explanation of the lockout in the Senate bill draft. Lockout could apply at multiple stages other than nonpayment of premiums or co-pays . At the

Kansas Legislative Research Department 4 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 time of a Medicaid application or renewal, individuals are required to provide information concerning their barriers to employment. The KANSASWORKS program is a key component in the proposed Senate bill, and language may be added to enforce compliance with the KANSASWORKS provisions of the proposed Senate bill.

Mr. Austin resumed responding to Committee members’ questions as follows:

● With regard to lockouts, KHA would like to see a simple program that avoids barriers to individuals. KHA is of the opinion there are issues with the permanent lockout provisions in 2019 HB 2066 and needs additional details regarding the lockout provisions of the proposed Senate bill and how they will be administered. If lockout provisions were modeled like those in CHIP, KHA would have to look at the details of such provisions;

● KHA collects data from member hospitals on the types of inpatient and outpatient services provided by payer, and the information is provided on the KHA website. KHA will provide the Committee with data on the breakout of hospitals in the state and their Medicaid participation rate. KHA may not have access to information on the uncompensated debt of community mental health centers (CMHCs) and hospitals broken out by the percentage of those who are insured but have high deductibles, but they have data on uncompensated care due to bad debt and charity care. With regard to whether KHA has tracked over years whether unpaid debt follows along with the increase in deductibles, KHA has been collecting data and analyzing trends on uncompensated care for about 12 years and will check for the availability of that data;

● A Committee member stated some individuals believe the lack of Medicaid expansion is the only reason rural hospitals have closed, but additional data are needed to identify the variety of factors leading to hospital closures, including the lack of patients per day. For the past five years, KHA has been looking at alternative rural health care models and has received positive responses from the Legislature and CMS regarding its work;

● Additional information will be provided, but Mr. Austin believes there are approximately $50 million in disproportionate share hospital (DSH) payments with about 45 to 50 hospitals participating, including state hospitals that receive a significant portion of DSH funds. With regard to a difference in Medicaid reimbursement rates hospitals receive out of the DSH payments, Mr. Austin noted payments are divided among the hospitals that qualify for DSH payments. Some hospitals do not participate in the hospital provider assessment program, and those are typically critical access hospitals (CAHs); state hospitals do not pay provider taxes. The hospital provider assessment program assesses prospective payment system hospitals. The University of Kansas Hospital in Kansas City is not able to participate in the hospital provider assessment program because there was interest in not assessing CAHs when the program was established and, in order to meet the threshold required by federal law, state hospitals had to be excluded if CAHs were also excluded; and

● KHA believes the best option to shore up some rural hospitals is the PHC model, which is based on utilization and would focus more on outpatient and emergency hospital services and less on inpatient services. KHA has been talking with

Kansas Legislative Research Department 5 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 members of the Kansas congressional delegation regarding alternative rural health care models, and federal legislation was introduced last year by a Kansas congressional member to establish the new models. In response to what Kansas could do if Medicaid expansion is enacted to financially strengthen rural hospitals while federal legislation is pending to redefine hospitals, Mr. Austin stated a demonstration proposal for a PHC model could be approved by CMS by the end of 2019. With regard to the changes that could be made to the financial formula within the proposed Senate bill to shore up rural hospitals without waiting for a new federal model, Mr. Austin indicated KHA is looking at a broad strategy that would include an alternative health care model, workforce issues resolution, and provider assessments to place more resources in hospitals.

The Chairperson requested KLRD provide information on how the provider assessment program works, how much has changed in the program, and whether the Legislature needs to look at the changes.

Kyle Kessler, Executive Director, Association of Community Mental Health Centers of Kansas (ACMHCK), provided ACMHCK membership’s thoughts on concerns and areas of support regarding the Medicaid expansion plans that have been made public. He noted ACMHCK is concerned with the timeliness of the waiver submission processes that could obstruct the implementation of expansion by January 1, 2021. This is a pressing concern, as it could effect workforce provider recruitment and retention. Currently, there is an issue with pay differential between Kansas and its surrounding states, which are receiving additional federal funds through the Certified Community Behavioral Health Center Program or Medicaid expansion, with individuals being recruited away from Kansas to the surrounding states. A concern also exists regarding establishing managed care in statute because of the challenges faced by the managed care system in Kansas, but the most timely and efficient manner to implement expansion is the under the current KanCare process. ACMHCK membership is supportive of the FMAP Stabilization Fund concept and the Senate’s approach on the work survey idea. He noted the premium assistance program and the lockout process, while promoting personal accountability and responsibility, might create issues with persons needing assistance. He noted providing KDHE with more latitude on premiums to provide for a flat fee per month, instead of a percentage of income, would be easier and less costly to administer. He also stated support for the provision in the proposed Senate bill regarding behavioral health in law enforcement. He noted ACMHCK is working with two organizations to address incarcerated individuals with behavioral health issues.

Mr. Kessler stated the ACMHCK appreciates the Legislature’s efforts in support of community crisis centers. He stated a survey of the five community crisis centers in operation or beginning operations indicates an estimated 75 percent of the patients lack any payer source. ACMHCK believes many of those individuals would be eligible for Medicaid if expanded and expansion would provide access to additional services (Attachment 3).

Mr. Kessler responded to Committee members’ questions as follows:

● With regard to how Medicaid expansion under 2019 HB 2066 or the proposed Senate bill would influence innovation for mental health care, innovation would be secondary to workforce. One example would be funding training for innovative research practices. However, innovation and training take money, and the CMHCs are trying to remain open and keep their workforce in place. There has been an increase of 21 percent in crisis intervention services provided by

Kansas Legislative Research Department 6 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 CMHCs since the moratorium was put in place for state hospitals. Expansion would help with workforce and innovation;

● The waxing and waning of an individual’s mental health illness affects his or her ability to work and will be affected by a lockout. Depending on the mental illness, the benefit of Medicaid expansion is an opportunity to provide more case management to assist in maintaining employment and ensuring premiums are paid. The CMHCs’ therapeutic relationships with patients can be influenced by lockouts. If the individual’s mental health condition spirals, the individual may forget to or be unable to afford to pay the premiums, which could result in the next level of care being at a state hospital or an emergency room instead of case management;

● With regard to the absence in the proposed Senate bill for clinical judgment with regard to a lockout, he stated Indiana had a safety net premium assistance program that allowed CMHCs to assist and may be something to consider. The ACMHCK would be willing to work with KDHE or the Kansas Department for Aging and Disability Services (KDADS) to help address the needs of the behavioral health population;

● Surrounding states with expanded Medicaid eligibility and Excellence in Mental Health grant money affect the movement of Kansas employees out of state because the states are able to pay competitive rates for services. There is a workforce shortage of psychiatrists, nurse practitioners, and clinicians. All of southern Kansas has a large mental health workforce crisis;

● A Committee member stated Kansas also has a shortage of university graduates. CMHCs are not only competing with other states for workforce, but are in competition with Kansas school districts and the U.S. Department of Veterans Affairs for qualified counselors and social workers and with the Kansas Department for Children and Families (DCF), which hired additional social workers. Money set aside for three juvenile crisis intervention centers has never been utilized. Mr. Kessler addressed the status of the request for proposal (RFP) for juvenile crisis intervention centers and the failure to use more than $4 million budgeted for that purpose in 2018 and 2019 by noting KDHE and KDADS are reviewing the RFP and an update may not yet be available. There is a workforce capacity issue at the state agency level as a result of the early retirement option that depleted the state workforce. The Legislature is moving faster than the few staff at KDHE, KDADS, and DCF can accomplish the work to implement changes;

● Reciprocating with other states by facilitating credentialing in Kansas would help with the workforce issue. Lowering Kansas credentialing standards from one of the highest in the nation to closer to the national average will help with recruiting in the long run, but it takes time. Issues with wages and rate payments remain because other states are paying higher rates; and

● The Excellence in Mental Health Act, which provides a higher reimbursement rate for mental health services, is closed to Kansas, but the federal government is trying to add more states. A demonstration was done in Kansas, but the State

Kansas Legislative Research Department 7 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 pulled the plug on the Excellence in Mental Health grant application three weeks before it was due. Mr. Kessler noted his belief that the Excellence in Mental Health Act is about two years away from reopening at the federal level. The federal government limited the program to a certain number of states. In his discussions with Kansas congressional members, the next step would be for the federal government to open the program again to anyone who meets the thresholds of crisis service provision treatment open 24 hours per day and 7 days per week and other requirements, which CMHCs in Kansas are required to do by contract and statute. The current proposal before Congress would allow those who submitted an application for a grant to apply. This would open the door for Kansas to apply, but it would be sometime in 2021 or 2022 before that would be an option. Certification would be required from the State Medicaid Director and the state mental health authority. At the time of the previous effort, KDADS had signed but not KDHE, but Mr. Kessler believes the secretaries for both state agencies would work together to provide the required certification.

The Chairperson asked Mr. Austin to provide information regarding other states that have third parties, including hospitals, pay the Medicaid premiums. Any information provided regarding innovative efforts in other states would be appreciated. Mr. Austin stated he would research these topics and respond to the Committee.

Overview of Individual Health Insurance Market

Julie Holmes, Director, Health and Life Division, Kansas Insurance Department (KID), presented an update on the Health Insurance Marketplace in Kansas. She noted her presentation would reflect only the subject matter within KID’s jurisdiction. She stated KID’s job is to regulate and not to weigh in on policy.

Ms. Holmes stated Kansas does not have a state-based exchange, so KID sends a data call each year to insurance carriers in the state to gather current information about the types of coverage provided by insurance carriers. Her presentation began with a breakdown of the number of Kansans covered by various programs and those individuals not covered by insurance. A breakdown of the uninsured population under the age of 65 was given by county. A breakdown was also provided of uninsured Kansans ages 18 to 64 by county and by FPL.

Ms. Holmes provided an overview of the Federally Facilitated Marketplace (FFM) and information on how individuals would apply and enroll for health insurance. She provided a breakdown of the various marketplace policies offered to Kansans on the FFM in 2019, the insurance companies offering the policies, the required actuarial values for each metal level policy (e.g., gold health plan), open enrollment statistics, and average rate increases for individual policies. A detailed breakdown of the covered lives by metal level, age, and rating area was shown.

Ms. Holmes explained the Advance Premium Tax Credit (APTC), how it is applied, and the average premium in Kansas after the APTC. Additional information was presented regarding cost sharing reduction. An update on changes and policies available for Plan Year 2020 was also provided. She noted there are 82 individual policies being offered for 2020 by 5 health insurance companies on the FFM in Kansas. Data on FFM enrollment in Kansas from 2015 to 2019 and uninsured rates from Kansas and the United States from 2008 to 2018 was included in the presentation. She outlined the information available on the KID website (Attachment 4 and Attachment 5).

Kansas Legislative Research Department 8 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 Ms. Holmes and Lee Modesitt, Director of Government Affairs, KID, provided the following responses to Committee members’ questions:

● Language in the proposed Senate bill indicates KID would apply for the Section 1332 waiver (1332 waiver) to offset the cost of the Section 1115 waiver (1115 waiver). KID would have to ask the U.S. Department of Health and Human Services (HHS) whether the FFM is set up to function in a manner that could accomplish what the proposed Senate bill contemplates. Ms. Holmes deferred to Mr. Modesitt to respond to questions specific to the 1332 waiver. Mr. Modesitt stated the proposed bill would direct KID to complete the 1332 waiver application. He indicated he was unsure whether HHS had the capability to make state-specific changes to the FFM or whether Kansas would have to adapt its program to develop its own state marketplace. The 1332 waiver is a reinsurance process requiring an application process and an actuarial study. In theory, Kansas could do its own 1332 waiver; other states have done a straight 1332 waiver without contemplating these other matters;

● In response to whether the proposed Senate bill would be a good way to proceed to provide health insurance coverage for Kansans, Mr. Modesitt stated KID has not provided testimony on the issue because KID was asked to provide information on the FFM and Medicaid is not under the jurisdiction of the Commissioner of Insurance (Commissioner). The Commissioner has been very intentional about not weighing in on subject matters that are not within KID’s jurisdiction. If the Legislature were to pass a Medicaid expansion bill with language requiring KID to apply for a 1332 waiver, KID would proceed with the application process as required;

● Mr. Modesitt responded KID has some concerns about the cost of the 1332 waiver preparation on KID; the cost to some states to prepare a 1332 waiver has been a couple of million dollars. A bill would have to be enacted giving KID statutory authority to apply for a 1332 waiver before KID could move forward;

● In response to concerns expressed by a Committee member that no information is available on the cost to KID to prepare a 1332 waiver, Mr. Modesitt stated that no process has been developed to address fiscal notes on a “revisor’s draft.” Upon a formal bill introduction, the Division of the Budget issues a cost request to KID in preparation for a fiscal note. Changes made to a bill draft could impact the cost associated with the filed bill. The Committee member indicated she was unsure how she could vote without knowing the cost of the 1332 waiver application to KID. Mr. Modesitt responded KID is bound by the Professional Services Sunshine Act with regard to RFPs. One of the biggest costs with the 1332 waiver application would be actuarial costs. KID has an RFP for the actuarial services it has statutory authority to oversee, but the counsel for KID believes KID cannot prepare an RFP for actuarial services for a 1332 waiver for which it has no statutory authority. He noted it is difficult to compare the cost of 1332 waiver preparation in other states because some state insurance departments have large actuarial staffs, but other states do not. Each state’s 1332 waiver is different and obtaining an estimate on multiple scenarios makes it more complicated to provide an accurate cost;

Kansas Legislative Research Department 9 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● With regard to whether the cost of the 1332 waiver would be intertwined in the cost of the Medicaid expansion bill or would need to be a direct appropriation when KID appears before the House and Senate budget committees, Mr. Modesitt indicated he was unsure because KID is a fee-funded agency and the use of the fee funds is restricted to those items intended. If the Legislature passes legislation requiring KID to apply for a 1332 waiver, funds should be appropriated to KID for that purpose; and

● Mr. Modesitt responded that, in order to apply for a 1332 waiver, KID would first have to do an actuarial study. Based on conversations with colleagues in other states, assuming the Legislature authorizes and directs KID to apply for a 1332 waiver and after KID either amends the existing actuarial contract or submits a new RFP for the actuarial work, it would probably be six months before the 1332 waiver application would be submitted to CMS.

Senator Denning stated he spoke with accounting companies that provide actuarial work for 1332 waivers and the fiscal note would approximately be $150,000 on the high end since KID does not have experience with 1332 waivers. He noted 2019 HB 2066 passed the House with no fiscal note, which later came in at $121 million. He further stated fiscal data would be available when the bill comes forward.

Senator Denning requested the following KID data from Ms. Holmes, who agreed to provide the information requested, unless otherwise noted:

● Historical data for 2014 on individual covered lives by type: Ms. Holmes believed the first data call was in mid-2015 or 2016, but agreed to check whether the information was available;

● Data call on Farm Bureau plans: These plans are not under KID’s jurisdiction because the legislation states these plans are not health insurance;

● Ask the Commissioner whether legislation will be required to make a data call to obtain information on Farm Bureau’s market share or whether the Farm Bureau request can be made without legislation;

● How the State’s FFM is funded, and whether the funding is for commercial only or self-insured as well. This information would help determine whether it makes more sense to bring the exchange back to Kansas instead of paying for the FFM;

● The total number of commercial claims paid by dollar amount in Kansas: A Kansas Health Insurance Information System query can be made for that information; and

● the average annual increase in health insurance rates since 2014 in a format like that of slide 29 of the presentation.

The Chairperson requested Ms. Holmes provide information on the effects on the Kansas private insurance market of removing individuals in the 100 to 138 percent of FPL from the private market and moving them to Medicaid expansion.

Kansas Legislative Research Department 10 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 The Chairperson also requested anyone who might be involved in the 1332 waiver attempt to provide an estimate of the cost of the waiver.

Overview of State Innovation (Section 1332) Waivers

Linda Sheppard, Senior Analyst, Kansas Health Institute, provided information to the Committee about 1332 waivers, which are in Section 1332 of the ACA titled Waiver of State Innovation. Section 1332 provides a state with the ability to apply to HHS for a waiver to develop and implement state-specific approaches and strategies to health reform and coverage to provide citizens with access to affordable health care. To apply for and implement a 1332 waiver, states may use broad existing statutory authority to enforce the ACA and issue a regulation or executive order or enact new state law authorizing the waiver. Once approved, 1332 waivers may remain in effect for five years and may be extended. A 1332 waiver is not related to Medicaid. The 1332 waivers are intended to allow a state to implement programs that will impact the state’s private health insurance market, typically the individual market. There are specific requirements that must be met for 1332 waiver approval. Examples of what can and cannot be waived were provided. A timeline for the 1332 waiver application was also provided.

Ms. Sheppard noted, in March 2017, HHS issued a letter to state governors encouraging states to submit 1332 waiver applications to address cost and coverage issues in their individual health insurance markets and, specifically, to consider implementing a high risk pool or state- operated reinsurance program to lower marketplace premiums. HHS issued new guidance in October and November 2018 intended to provide increased flexibility in the design of 1332 waivers. HHS also identified “five principles for a high-preforming health care system” that would be considered when reviewing waiver applications. The new guidance also provided four “waiver concepts” for states to consider: account-based subsidies, state-specific premium assistance, adjusted plan options, and risk stabilization strategies.

Ms. Sheppard explained how a reinsurance program can help stabilize the market and reduce premiums by reimbursing insurers for some portion of their incurred claims for the high- cost enrollees and how a reinsurance program is typically funded. If a state’s approved waiver results in savings to the federal government for premium tax credits or small business tax credits, the state can receive those savings as pass-through funding and use them to help fund the cost of implementing the state waiver program or the reinsurance program. She presented additional information regarding premium tax credits and coordinated waiver application. States may submit a single coordinated waiver application to the Secretary of HHS under Section 1332 and under other existing waiver processes (e.g., Section 1115), which are evaluated independently according to applicable federal law (Attachment 6).

Ms. Sheppard also provided the Committee with a table containing a description of 1332 waivers and their status for states with approved and proposed 1332 waivers. She noted much of the work on 1332 waivers is done in advance, with conversations with CMS throughout the process that allow for negotiations prior to submission of the waiver application and expedite approval (Attachment 7).

Kansas Legislative Research Department 11 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 Ms. Sheppard provided the following responses to questions from Committee members and Senator Denning:

● If the state’s premiums offset the federal tax credits, the waiver is considered budget neutral. HHS provides a template to the state setting out the steps the state needs to follow to submit a 1332 waiver application;

● Legislation must be enacted before a state may submit a 1332 waiver application. In some states, preliminary work in preparation for the application was completed prior to the enactment of legislation authorizing the submission of a 1332 waiver if the governor’s office or the insurance department believed they had the authority to begin such preliminary work; and

● Having a FFM does not prevent a state from filing a 1332 waiver application; a state-based exchange is not required.

Senator Denning suggested Scott Abbott, Office of Revisor of Statutes, look into whether the Legislative Coordinating Council (LCC) would have the authority to provide $150,000 to KID to begin actuarial work.

Senator Denning noted, in the Minority Report for the Senate Select Committee, Senator Hensley stated Colorado’s 1332 waiver application was approved in 75 days. Ms. Sheppard stated during the current calendar year, 1332 waiver applications have been approved quickly because some of the work was done in advance and the submission of the application to HHS was more of a formality.

Ms. Sheppard confirmed the actuarial data was needed before a 1332 waiver application could be submitted.

The Chairperson recessed the Committee meeting for lunch until 1:45 p.m.

Afternoon Session

The Chairperson called the Committee back to order at 1:53 p.m.

Update on Texas v. United States Lawsuit

The Office of the Attorney General provided written-only testimony regarding the State of Texas, et al. v. United States of America, et al. in the U.S. Court of Appeals for the Fifth Circuit. The case involves health insurance provider fees. Written informational testimony was provided (Attachment 8).

Presentation on Senate Select Committee on Healthcare Access Information

Vice-chairperson Suellentrop, who served as Chairperson of the Senate Select Committee on Healthcare Access, (Senate Select Committee) provided a summary of the draft committee report created for the Senate Select Committee, which met October 22-23, 2019.

Kansas Legislative Research Department 12 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 The Senate Select Committee charge was to consider solutions to improve access to healthcare in Kansas. The Senate Select Committee report was to be provided to the Special Committee on Medicaid Expansion at its meeting November 12-13, 2019.

The Vice-chairperson reviewed the recommendations of the Senate Select Committee listed in the summary of conclusions section of its draft report (Attachment 9).

Copies of the proposed Senate bill draft 20rs1873 and the Minority Report were included in the testimony (Attachment 10 and Attachment 11).

Mr. Abbott presented a memorandum comparing the provisions in the Senate bill draft (20rs1873) to those of 2019 HB 2066, as amended by the House Committee of the Whole, on an issue-by-issue basis. Additionally, the memorandum compared HB 2066, as amended by the House Committee of the Whole, with 2019 SB 54 (Attachment 12).

Mr. Abbott responded to questions, with additional clarification from Senator Denning as follows:

● No current provision in Kansas statutes establishes a health insurance coverage premium assistance program like that set out in Section 5 of the proposed Senate bill, 20rs1873. Section 5 is a new program. References to a premium assistance program are found in policy but not in statute. Senator Denning noted under Section 5, the word “or” should be changed to “and”;

● Other states have used a similar approach to charging a co-pay in circumstances described as non-urgent emergency care found in Section 4 of the proposed Senate bill. Mr. Abbott will look into other states’ laws for guidelines on a definition and provide a response. Senator Denning noted the language in question was requested by KHA and would require another waiver approval if it remains in the bill. KHA has reconsidered and requested the provision be removed from the bill when worked;

● Senator Denning responded to the difference between 2019 HB 2066 and the proposed Senate bill with regard to the termination of the Medicaid expansion program if the FMAP becomes lower than 90 percent. He stated both plans provide for termination over a 12-month period. However, the proposed Senate bill would cease new enrollment after the FMAP drops below 90 percent. HB 2066 does not address a stop in enrollment and would allow continued enrollment after the drop in the FMAP until the end of the 12-month period;

● Senator Denning provided an explanation of New Section 12(a) of the proposed Senate bill, clarifying the intent is to continue a policy in place that provides for coordination between the Kansas Department of Corrections (KDOC) and county sheriffs to ensure Medicaid is in place to cover inmates immediately upon release or when an inmate has a hospital procedure requiring a 24-hour inpatient stay. With expansion to the population ages 18-64, the volume of potentially eligible individuals would be larger and coordination would allow county sheriffs to take advantage of the KDOC system in place;

Kansas Legislative Research Department 13 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● The reference in New Section 12(a) to “any time period that the inmate is eligible for coverage” clarifies Medicaid-eligible individuals become ineligible upon incarceration (with the exception of a 24-hour inpatient stay at a hospital), but would be eligible upon release if they meet Medicaid qualifications;

● New Section 12(a) would allow county sheriffs to take advantage of the Medicaid eligibility process in place at the KDOC. County inmate medical costs are paid by the county through funds generated by local property tax. This section would provide property tax relief to the counties that participate; and

● Under LCC Policy 33, committees are prohibited from sending correspondence to the congressional delegation without prior authorization from the LCC.

A Committee member drew the Committee’s attention to the Minority Report of the Senate Select Committee.

Selected Revenue Topic

Mr. Abbott stated he had covered the mechanics of the FMAP Stabilization Fund bill, 2019 SB 2, during his presentation of the comparison memorandum. The provisions of the bill are included in Section 16 of the Senate bill draft.

In response to a Committee member question, Senator Denning stated he did not know whether any other state has established an FMAP Stabilization Fund. He noted the impact a change in the FMAP can have on the state budget. The FMAP Stabilization fund is intended to help offset such changes.

Comments on Medicaid Expansion

April Holman, Executive Director, Alliance for a Healthy Kansas (Alliance), provided testimony regarding the Senate bill draft and data regarding the people who are currently in the health insurance coverage gap.

Ms. Holman noted the Alliance is concerned for the people in the coverage gap who make too much money to qualify for Medicaid, but not enough to qualify for subsidies to purchase private health insurance through the exchange. The majority in the coverage gap (64 percent) are working, but do not have insurance through their work, either because the employer does not offer it or the employee cannot afford the premiums. The Alliance is focused on two overarching principles in relation to Medicaid expansion: it should be free of barriers to participate, and the implementation should take place without unnecessary delays. She stated the Alliance believes the most efficient approach would be a straight expansion of Medicaid eligibility to 138 percent of FPL.

Ms. Holman discussed several areas of concern with the proposed Senate bill. She stated premiums create a barrier to participation for low-wage people. While the Alliance is glad to see no mention of work requirements, it believes the work referral process proposed should be as streamlined and seamless as possible for beneficiaries to comply. She commented another area of concern is lockouts, which create a barrier to participation. While the Alliance

Kansas Legislative Research Department 14 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 believes lockouts should be avoided, at the very least the policy should allow the consumer to reapply in a reasonable amount of time and provide administrative flexibility to prevent loss of coverage for consumers facing catastrophic illnesses and for other reasons.

Ms. Holman noted waivers to provisions of federal law are not always negative; however, the preparation and approval process for a waiver can create significant delays. The Alliance would prefer a bifurcated process that allows for implementation of expansion through a State Plan amendment at the same time the waiver process is under way.

Ms. Holman stated one of the benefits of being one of the last states to expand is the ability to learn from the experiences of states that have already expanded. The Alliance suggested several ways to measure the success of expansion policies (Attachment 13).

Ms. Holman responded to questions from Committee members as follows:

● In response to a Committee member who asked why there was such resistance to work requirements if 78 percent of Kansans work and have benefits taken out of their wages, which could easily be tracked and reported by the Department of Revenue (KDOR), Ms. Holman stated she did not think anyone in the advocacy community wanted to discourage work. However, no state has found a work requirement formula that does not result in punishing individuals for things that are out of their control. She noted difficulties faced in Arkansas with a requirement individuals report hours of work online through a portal that was open only certain times of the day, which made compliance difficult for individuals with limited to no access to computers. Additionally, she noted persons working in low-wage jobs do not necessarily have control over the number of hours worked, and a reduction in work hours by the employer could result not only in a loss of income, but also health insurance. With regard to the tax withholding information available, she was uncertain whether the number of work hours was tracked or whether there were restrictions on the type of information that could be shared between state agencies. She recommended asking the access-to-work- information questions of experts in the area;

● In response to a statement that individuals at 100 to 138 percent of FPL are eligible to purchase on the exchange and are paying premiums, Ms. Holman stated not everyone eligible to purchase on the exchange is participating and one reason is they cannot afford their contribution. Additionally, payments on the exchange are based on 2 percent of household income, as opposed to 5 percent of household income for those from 100 to 138 percent of FPL under the proposed Senate plan. Individuals at these poverty levels struggle to pay bills and even a $50.00 premium could keep these individuals from participating;

● Ms. Holman provided clarification on the 6 percent of adults in the Medicaid population who were not working because they are attending school. These individuals are receiving training or attending college. She stated she assumed the individuals were paying for college through student loans, but she would need to research this information;

● Some courts have enjoined states from implementing work requirements while lawsuits are pending;

Kansas Legislative Research Department 15 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● With regard to the inclusion of children enrolled in coverage as a measure of the success of expansion when children are not in the expansion group and are covered up to 240 percent of FPL in Kansas, Ms. Holman stated there is a correlation between parents being covered and children in the household being covered. Some parents are not aware that, although they are not able to get insurance coverage, their children could be eligible; and

● In providing clarification on child care barriers and work requirements, Ms. Holman stated having a child under school age at home can be a barrier to a parent working. There is a shortage of high-quality day care in the state, particularly in rural areas, and it is also very expensive.

Senator Denning responded to questions about the essential nature of both the 1115 and 1332 waivers being pursued together. He stated the intent is to have the waivers evaluated separately, but look at the impact on the federal government savings as one formula. If the State can show, with reinsurance, the federal government can save advance tax credits paid under the ACA plans and it is budget neutral to the federal government to leave the 100 to 138 percent of FPL population on the exchange, Kansas could be the first state to receive approval from the federal government for partial expansion. For this reason, he is of the opinion it is essential the two waivers are submitted together. In response to why the State could not just pursue straight expansion first to avoid delays, Senator Denning indicated the intent of the proposed Senate bill is not to delay. If funding can be provided to KID to begin the 1332 waiver process early, Kansas should be able to replicate the short time frame for approval of the 1332 waiver experienced by Colorado.

There was discussion between Senator Denning and a Committee member as to what each believed was the best way to proceed with expansion.

Ms. Holman resumed responses to Committee members’ questions as follows:

● The number she heard quoted as the cost for partial expansion is $221 million per year, which would include those individuals between 38 and 100 percent of FPL for which the State would receive the general state FMAP, not the enhanced 90 percent federal match;

● With regard to an increased number of jobs if Kansas expands Medicaid, Ms. Holman noted data are available from other states that have expanded as a comparison to what might be anticipated in Kansas. She also mentioned a recent report from a Kansas State University economist that predicted, in the first full year of expansion, approximately 13,400 new jobs would be anticipated. The report also indicates between $31 million and $38 million in new sales and income tax revenue would be generated because of new federal dollars and the effect on the economy throughout the state. With regard to whether any one hospital would receive a specific dollar amount, that would be difficult to guarantee. Ms. Holman noted economic analysis has been done to show the economic impact of expansion to the state; and

● A Committee member requested concrete information to substantiate the economic impact of Medicaid expansion. Ms. Holman indicated reports are

Kansas Legislative Research Department 16 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 available from other states that have expanded Medicaid, which she can provide to the Committee.

The Vice-chairperson added clarification regarding the essential nature of having the 1332 waiver in place from the start. He stated a valuable aspect of the 1332 waiver is the potential 20 percent reduction in rates on the exchange, a reduction that would allow more individuals to buy insurance. He stated a concerning aspect of Medicaid expansion is when doctors wanting expansion were asked whether they will add patients, the answer was no. Allowing individuals between 100 and 138 percent of FPL to remain on the exchange with private carrier coverage and a 20 percent reduction in premiums is a significant factor to health care access and supports the importance of the 1332 waiver.

Ms. Holman responded to additional questions from Committee members as follows:

● When asked about a reasonable period of time for a lockout, Ms. Holman responded the Alliance does not believe there should be a lockout if the intent is to have more individuals insured and reduce uncompensated care and the uncertainty for providers and consumers. Flexibility should be a part of the policy to allow for extenuating circumstances. Ms. Holman said she would come back with a proposal regarding what might be a reasonable lockout time;

● In response to Alliance’s support of the checklist pertaining to employment and barriers to employment, Ms. Holman stated support for work referral. She does not fully understand what the checklist would contain, but because it would be used at the beginning of the application process, there is less concern with that process;

● With regard to whether patient migration for health care services in rural areas, the number of hospitals operating in the state at a loss, and some hospitals operating with low daily inpatient numbers were considered in her economic impacts of expansion, Ms. Holman indicated the list was a proposal for ways to measure the success of expansion and those items could be measures to consider. She stated Medicaid expansion will not solve the rural health care issues, but is one important piece of the solution to health care access; and

● A Committee member requested additional information regarding what other states are doing with regard to prenatal, labor, and delivery services, as facts available indicate the availability of such services is key to reducing patient migration. Ms. Holman will provide information on this topic.

Dr. Lee Norman, Secretary of Health and Environment, confirmed a Committee member’s statement the 1115 and 1332 waivers each must achieve budget neutrality on their own without relying on the other waiver.

Senator Denning requested clarification from Ms. Holman regarding the number of additional children who would be insured if the parents get insurance. Ms. Holman responded 40,000 children would become insured based on a Kansas Health Institute (KHI) report. Senator Denning stated KDHE’s fiscal note does not address the woodwork effect of the children who would come into Medicaid under the regular match, and KDHE needs to include this factor.

Kansas Legislative Research Department 17 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 Senator Denning asked about the cost of partial expansion. Ms. Holman reiterated partial expansion would cost the state $220 million. Senator Denning clarified the proposed Senate bill is interested only in a 90-10 federal-to-state match. If CMS does not approve a 90-10 match for partial expansion, the State would not pursue partial expansion.

In response to the inclusion of language in the proposed Senate bill regarding a 90-10 match, Mr. Abbott stated the proposed bill references federal law regarding who is in the expansion population and, if the FMAP falls below 90 percent, the entire program is voided. He noted the language is clear, but could be improved.

A Committee member asked if the 90-10 match for partial expansion had ever been approved. The Vice-chairperson noted, on November 4, 2019, Georgia applied for expansion for those earning less than 100 percent of FPL, with a work requirement and at 67 percent reimbursement.

Senator Denning noted if Kansas proceeds with the proposed Senate bill, it will be the only state to have two waivers that are budget neutral. Utah and Idaho submitted similar applications, but they were not budget neutral.

Overview of KANSASWORKS, Workforce System, Barriers to Work

David Soffer, Legislative Director, Kansas Department of Commerce, provided testimony regarding the KANSASWORKS program. KANSASWORKS links businesses, job candidates, and educational institutions to ensure employers can find skilled workers. This is done through an integrated, demand-driven statewide network in which workers receive job-specific training so Kansas employers can find well-trained employees. Employment services are provided through 27 workforce centers, online or virtual services, and the mobile workforce center.

Mr. Soffer stated the program grants universal access to all employers and Kansans. Intensive training and related services are provided. Specialized placement and job location assistance is also available. There are programs that service all ages and varying job needs, including youth, veterans, displaced employees, and seniors (Attachment 14 and Attachment 15).

Mr. Soffer and Shelly Thompson, State Operations Director for KANSASWORKS, Kansas Department of Commerce, responded to Committee members’ questions as follows:

● With regard to the Reemployment Services and Eligibility Assessment (RESEA) chart indicating zero participants served, Ms. Thompson stated those entries were only for those particular barriers to reemployment under the RESEA program for program year 2018. Information similar to that provided for the RESEA program is available for some of the programs described, including the Older Kansans Employment Program, the Senior Community Services Employment Program, and the Kansas Health Profession Opportunity Program. Some programs, such as Rapid Response and Work Opportunity Tax Credit, are not tracked in the same manner;

● KANSASWORKS programs are federally funded, with no state matching funds; and

Kansas Legislative Research Department 18 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● In response to whether current structure of KANSASWORKS could handle an influx of new participants, Mr. Soffer stated it would depend on the number of participants. If there were 40,000 to 50,000 new participants, only a handful of additional staff would be needed, based on adding 25 percent capacity to the 200,000 individuals currently served. Salaries plus benefits would be approximately $50,000 per employee. The KANSASWORKS website would need some work and would need to receive data from KDHE. The cost for the website improvements could range from $50,000 to $100,000, depending on the need to restructure the website.

A Committee member asked whether clarification was available on the definitions of lockout versus dis-enrollment and whether the LCC could provide funds to KID to begin preliminary work on the 1332 waiver. Mr. Abbott stated neither 2019 HB 2066 nor the proposed Senate bill address lockout versus dis-enrollment. Some states have tried to address the differences. Most recently, Indiana requested CMS approval for a lockout for non-renewal for all income levels, which was denied by CMS. The LCC question is complicated and is still being researched.

Recess

The Chairperson recessed the meeting at 4:00 p.m.

WEDNESDAY, NOVEMBER 13 Morning Session

The Chairperson called the Committee to order at 9:05 a.m.

Written-only Testimony from Individuals, Providers, and Organizations

The Chairperson noted the Committee had welcomed written testimony from individuals, providers, and organizations. The Chairperson stated she appreciated the input from fellow Kansans.

The following submitted written-only testimony:

● Kari Rinker, American Heart Association ( Attachment 1 6 );

● Brenda Sharpe, REACH Healthcare Foundation ( Attachment 1 7 );

● Marcillene Dover, Private Individual ( Attachment 1 8 );

● Nick Wood, InterHab ( Attachment 19 );

● Steffany Stern, National Multiple Sclerosis Society ( Attachment 2 0 );

Kansas Legislative Research Department 19 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● Sara Prem, American Lung Association in Kansas and Greater Kansas City ( Attachment 2 1 );

● Adrienne Olejnik, Kansas Action for Children ( Attachment 2 2 );

● Susan G. Komen Kansas and Western Missouri ( Attachment 2 3 );

● Donn Teske, Kansas Farmers Union ( Attachment 2 4 );

● Ann Feil, Salina Family Healthcare Center ( Attachment 2 5 );

● Kendra Burgess, The Whole Person ( Attachment 2 6 );

● Christie Appelhanz, Children’s Alliance of Kansas ( Attachment 2 7 );

● Scott Anglemyer, Kansas Association of Community Action Programs ( Attachment 2 8 );

● Jordan Feuerborn, American Cancer Society Action Network ( Attachment 29 );

● Stuart Little, Behavioral Health Association of Kansas ( Attachment 3 0 );

● Jason Wesco, Community Health Center of Southeast Kansas ( Attachment 3 1 );

● Denise Cyzman, Community Care Network of Kansas ( Attachment 3 2 );

● Venus Lee, GraceMed Health Clinic ( Attachment 3 3 );

● Amy Falk, Health Partnership Clinic ( Attachment 3 4 );

● Dr. Dena Hubbard, Kansas Chapter, American Academy of Pediatrics ( Attachment 3 5 );

● Mitzi McFatrich, Kansas Advocates for Better Care ( Attachment 3 6 );

● Rachel Sweet, Planned Parenthood Great Plains Votes ( Attachment 3 7 );

● Sean Gatewood and Barb Conant, KanCare Advocates Network (Attachment 3 8 );

● Tanya Dorf Brunner and Christi Wells, Oral Health Kansas ( Attachment 39 );

● Fred Logan, Midwest Cancer Alliance Partners Advisory Board ( Attachment 4 0 );

Kansas Legislative Research Department 20 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● Joyce Grover, Kansas Coalition Against Sexual and Domestic Violence ( Attachment 4 1 );

● Kevin Walker, Overland Park Chamber of Commerce ( Attachment 4 2 );

● Tania Hewett-Mader, Health Forward Foundation ( Attachment 4 3 );

● Dr. Maren Turner, AARP ( Attachment 4 4 );

● Dana Bacon, Leukemia and Lymphoma Society ( Attachment 4 5 );

● Chuck Weber, Kansas Catholic Conference ( Attachment 4 6 ); and

● Rabbi Moti Rieber, Kansas Interfaith Action ( Attachment 4 7 ).

Medicaid Expansion Outcomes (Written-only)

Jon Hamdorf, Executive Director, Kansas Association of Medicaid Health Plans, provided written-only testimony to the Committee ( Attachment 4 8 ).

Medicaid Expansion in Other States

Roy Lenardson, Government Affairs Director, Foundation for Government Accountability (FGA), provided testimony to the Committee. Mr. Lenardson opened his comments by stating he believes Kansas is at an advantage regarding Medicaid expansion by being able to learn from the many states that have adopted expansion. One area of concern is the estimate only 130,000 Kansans would enroll in the expansion. He commented that, based on history in other states, this number is dramatically underestimated and, nationally, more than twice as many able-bodied adults have signed up as state officials had expected. Expansion enrollees’ per- person costs have been 76 percent higher than predicted by CMS. He suggested anticipating approximately 250,000 new able-bodied adults who would enroll, at a potential cost to taxpayers of more than $10 billion over the next decade, including at least $1 billion in state funds. Much of the focus is on able-bodied adults, which Medicaid was never intended to serve.

Mr. Lenardson noted the generous Medicaid benefits provided by the State, with more than 400,000 Kansans enrolled in Medicaid and CHIP, including children, pregnant women, and individuals with disabilities. He stated an issue with expansion is resources would be siphoned away from those truly needy individuals. Mr. Lendardson state Kansas has approximately 6,000 individuals with physical and intellectual/developmental disabilities on waiting lists for home and community based services, and those numbers will continue to grow with expansion.

Mr. Lenardson stated approximately 54 percent of able-bodied adults expected to be made eligible for Medicaid expansion already have private insurance through their employer or through the individual market. He commented a major concern is expansion will push people off private insurance, that federal tax credits also would be stripped for Kansans currently buying coverage through HealthCare.gov, forcing them onto Medicaid, which pays rates that are lower than rates for private insurance. He explained hospitals would be impacted because

Kansas Legislative Research Department 21 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 uncompensated care would decrease but the number of Medicaid consumers covered at lower rates would increase, resulting in higher operating losses for hospitals ( Attachment 49 ).

Mr. Lenardson provided the Committee with additional resource information on Medicaid work requirements. He encouraged Kansas to consider work requirements as the State moves forward with Medicaid expansion, and quoted support for work requirements ( Attachment 5 0 ).

The Chairperson requested Mr. Lenardson provide the data resources he offered during testimony.

Mr. Lenardson responded to Committee members’ questions as follows:

● A Committee member asked whether a provider would have a smaller loss by having an uninsured individual covered under expansion and collecting some payment as compared to no payment when uninsured. Mr. Lenardson responded having many Medicaid expansion individuals coming in at the lower rate (approximately 40,000 to 50,000 of whom may have had private insurance) results in an aggregate loss to the provider. This is reflected in the Illinois and Colorado expansion plans. He noted New York just announced it had a $2 billion to $3 billion shortfall in Medicaid costs. He will provide the information on other states;

● With regard to the recently submitted Georgia partial expansion plan, Mr. Lenardson did not want to speculate on its outcome, but he noted partial expansion plans submitted by Utah and Idaho have been rejected. There is a high probability the Georgia plan will be rejected;

● Expansion states have not seen the level of economic impact predicted;

● For hospitals operating at a loss, expansion would mean adding hundreds of thousands of individuals who do not pay the actual cost of care in a struggling system and there would be a premium shift resulting in a private pay premium cost increase;

● There is no evidence expansion saved a hospital in a state. However, hospital closure cannot be attributed to one variable; and

● The following data will be provided to the Committee at a later date:

○ Bureau of Labor Statistics dat indicating the percentage of the 40,000 jobs available in Kansas with health insurance benefits; ○ The financial impact of expansion on hospital emergency room reimbursement; ○ CMS data on the estimated number of Medicaid expansion enrollees and the actual expansion enrollment. He stated the estimates were significantly off in every state, and there is not a sole reason for the increased enrollment. Based on the FGA model, Kansas enrollment numbers would likely exceed 250,000. A Committee member stated more

Kansas Legislative Research Department 22 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 recent expansion adopters have better estimated enrollment and costs than earlier adopters; ○ A report on a Colorado study regarding the effects on rural hospitals under expansion. He noted there has been a slight increase in rural hospital closures in Colorado, but it is unfair to assign it to Medicaid expansion because there are multiple variables. Every state is worried about rural hospitals. The sources of the Colorado data referenced were CMS, the Kaiser Family Foundation, and the State of Colorado website; and ○ The percentage of hospitals operating at a loss in expansion states prior to their expansion; and

● Data showing no appreciable difference in improved health outcomes has been identified for the Medicaid expansion population. Mr. Lenardson does not believe Medicaid expansion will result in healthier individuals because many providers do not accept Medicaid, resulting in reduced access to care. A Committee member noted the KanCare program has seen much improvement in health outcomes, and people who have no access to preventive care and regular health care are worse off.

A Committee member asked KHA what evidence it is relying on to support Medicaid expansion.

Audrey Dunkel, Vice President Financial Advocacy, KHA, responded to a Committee member question regarding KHA’s reasons for supporting Medicaid expansion. She commented in Kansas, there are twice as many people who do not have any coverage and for whom hospitals do not expect to recoup any payment for services rendered than coming off private health insurance. Another issue is private coverage deductibles have become so high that individuals cannot afford to pay the deductibles, resulting in bad debt for hospitals. KHA believes expansion is just one of the tools in the toolbox to address rural hospital concerns. Information received by KHA from sister associations in other states do not support the notion hospitals are closing more rapidly in states with expansion.

The Chairperson noted statements have been made that expansion will save rural hospitals. There is concern these statements are giving rural communities a sense of false security. She noted expansion will not resolve the issue some rural hospitals are filling only one or two beds a day.

Ms. Dunkel responded KHA has worked with KDHE and consultants to determine one- third of the funding from expansion would go to hospitals. Some hospitals would not see a benefit from expansion. KHA is not trying to engender false hope and has asked hospitals to review their own data to determine the impact of expansion on their particular hospital. KHA has been working for five years on developing an alternative rural model to better address the needs of rural hospitals. KHA is waiting on HHS for approval of the model.

The Chairperson asked whether KHA has data on the impact on hospitals of individuals leaving private pay. Ms. Dunkel stated KHA does not have that level of data.

Kansas Legislative Research Department 23 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 Mr. Lenardson resumed responding to Committee members’ questions as follows:

● CMS is not opposed to work requirements and would prefer not to have individuals and groups use the legal system to modify Medicaid; and

● Data will be provided on the following topics:

○ Impact on hospitals if more individuals switch from private insurance to Medicaid than hospitals were writing off in uncompensated care; ○ Impact of increasing deductibles on unpaid hospital debt; ○ The use of extra funds from Medicaid expansion by hospitals to free up funds in other areas and allow for innovation; ○ Improved health outcomes with Medicaid expansion, including an Oregon study; and ○ Effective state systems that track Medicaid expansion health outcomes results for specific populations, including the Florida system used for the existing Medicaid population.

Tobacco Tax Collections

Kathleen Smith, Director of Research and Analysis, KDOR, provided the Committee with testimony regarding the three different excise taxes on tobacco or smoking products: cigarettes, other tobacco products, and consumable materials. A brief history regarding the timetables for each of the categories was given with graphs and tables reflecting changes in the tax rates over time.

Ms. Smith noted KDOR was requested to provide estimated fiscal impacts of increasing the tax on cigarettes and taxing consumable materials comparable to cigarettes. A table was provided reflecting increases of $0.50, $1.00, and $1.50 in the cigarette tax. A separate table reflected the estimated increases in consumable material tax based on no change in the cigarette tax. A third table provided estimated increases in the consumable material tax, assuming a $1.00 increase in the tax on cigarettes ( Attachment 5 1 ).

Ms. Smith responded to Committee members’ questions as follows:

● She did not know why the tax on other consumables had not increased;

● In response to whether the reduction in cigarette receipts was due to people reducing consumption or purchasing cigarettes out of state, Ms. Smith stated it was a result of a combination of factors; and

● The increase in the cigarette tax is causing a decrease in consumption, as compared with consumables where the usage is skyrocketing because of their recent creation. With the recent evidence on risks with the use of consumables, a reduction in that revenue may occur.

Kansas Legislative Research Department 24 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 Fiscal Implications of Medicaid Expansion Proposals

Larry Campbell, Director of the Budget, provided an informational briefing regarding the fiscal impact of Medicaid expansion. A brief explanation was given as to the workings of the Division of the Budget (DOB). Director Campbell stated the DOB considers its staff fiscal analysts, not policy advisers. The fiscal numbers are calculated by the state agencies and analyzed by the DOB. The information provided in his testimony was derived from numbers provided to DOB by KDHE.

Director Campbell provided information regarding the cost of 2019 HB 2066 to the State General Fund (SGF). He provided a list of various offsets included in the estimate. The estimate did not take into account the approximately $3 million in savings within KDOC. The estimate also does not include offsets generated by economic growth. Director Campbell stated he felt confident in the fiscal note created for HB 2066.

Director Campbell stated the budget impact of the Senate Select Committee proposal is more challenging to assess. The complex nature of the proposed bill and the lack of guidance from KID does not allow for a formal fiscal note. KDHE identified rough estimates of how some of the key provisions of the proposed Senate bill would impact the overall cost. The provisions listed include partial expansion, premiums, and tiered benefit plans with enhanced benefits for individuals who demonstrate healthy behaviors.

Director Campbell stated, from a budget perspective, attaching the reinsurance program to the proposed bill raises the most concerns. He outlined the following financial risk factors: unknown price tag, includes no definitive pay-for, and financial risk is always greater when complex policies move forward too hastily.

Director Campbell provided the “big picture” impact by listing data points to illustrate why Medicaid expansion is fiscally responsible ( Attachment 5 2 ).

Director Campbell responded to questions from Committee members and Senator Denning as follows:

● A response will be provided in writing regarding the costs to the State with reinsurance provided by KHI;

● A response will be provided in writing as to Senator Denning’s concern the testimony provided contained misleading information concerning partial expansion at the regular FMAP rate when the proposed Senate bill contemplates only a 90-10 match;

● A comparison with Colorado on the increase in Medicaid enrollees with expansion and the impact of the budget would be difficult because Colorado’s budget is twice the size of the Kansas budget;

● It is fair to say there is no way to gauge the economic growth for Kansas as a result of Medicaid expansion;

Kansas Legislative Research Department 25 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● With regard to a soundbite circulating that the State is forfeiting $1 billion a year by not expanding Medicaid, Director Campbell stated he did not know where that number came from, but he has used $3.7 billion since 2014 in his testimony;

● Per Kansas statute, a fiscal note is written when a bill is formally filed. Fiscal notes are required only for original bills, but DOB can assist with estimates provided by state agencies. The Chairperson stated there is a real need for more information and a cost estimate to effectively proceed due to the complexity of Medicaid expansion; and

● KDHE provided the enrollment estimate used for the fiscal note on 2019 HB 2066.

A Committee member provided clarification on fiscal note for 2019 HB 2066 regarding the intent to create a group to find non-SGF funds and not to use SGF to fund the program.

A Committee member noted some frustration with the testimony reflecting facts in some points while other areas reflect estimates. The suggestion was to either use fact or use estimates. Director Campbell stated every estimate is a best guess.

Overview of Current Medicaid Program and Expansion Proposals, Fiscal Implications of Medicaid Expansion Proposals, Overview of Medicaid Demonstration (Section 1115 ) Waivers

The Chairperson stated, given time restraints for information requested from KDHE with regard to the proposed Senate bill, testimony provided by KDHE subsequent to the meeting would be included in the report record.

Adam Proffitt, State Medicaid Director, KDHE, provided testimony to the Committee on the current Medicaid program in Kansas. He provided an overview of the populations covered, the services covered, the number of Kansans served, and the expenditures for the program. The income eligibility limits for adults in non-expansion states were presented to show the various eligibility thresholds. The eligibility guidelines for expansion were presented reflecting parents and childless adults make up the entirety of the expansion population. Childless adults are categorically ineligible in Kansas.

Mr. Proffitt referenced a KLRD FMAP memorandum from February 15, 2019, detailing the FMAP process ( Attachment 53 ).

Mr. Proffitt presented the federal financing component of Medicaid, primarily focusing on the following key assumptions from 2019 HB 2066: 150,000 newly eligible adults, $625 per member per month capitation payment, offsets to reduce the total cost, and looks only at the KDHE budget without accounting for other economic benefits realized across the state. After all offsets, the net cost to KDHE is expected to be approximately $34-$35 million, with a 90 percent federal match. Savings to be realized by KDOC are not included.

Mr. Proffitt provided a comparison of the actual and forecast state cost of Medicaid expansion for Ohio and the projected cost for Kansas. The effects of expansion on MediKan and KDOC were presented. The latter would reflect $2 million in savings to the State.

Kansas Legislative Research Department 26 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 Mr. Proffitt provided information regarding the impact on the State of imposing premiums on the expansion population; states are required to return 90 percent of the premiums to the federal government. When the federal share of the premiums and the administrative cost to operate the program is accounted for, the impact is expected to be between negative $900,000 and positive $900,000.

A list of the coverage-related waiver proposals that have been turned down by CMS on policy or legal grounds was provided by Mr. Proffitt, among which was eligibility for an enhanced match for partial expansion. A review of the financial estimate of a partial Medicaid expansion was provided. Mr. Proffitt noted if Kansas were to expand to 100 percent of FPL and not receive enhanced federal funding, the cost to the State would be $221 million more than full expansion while covering 50,000 fewer lives. Information was provided regarding the multi-tiered expansion plan adopted by Utah, which included partial expansion options and was denied by CMS.

Mr. Proffitt provided a review of the various types of waivers (1115, 1915(c), and 1332) and their cost and budget requirements, the timelines to approval, and the authorities that are responsible for authorizing the waivers. Current waivers were described, what was entailed to amend them, and the timeline to approval associated with the amendments. He noted an 1115 waiver application or amendment is a standalone application that cannot assume any potential impact from a 1332 waiver submission. The discussion around the proposed Senate bill would require a 1332 waiver. It was noted a 1332 waiver is not a Medicaid waiver. The 1332 waiver application must meet four guardrails to be deemed complete. Details of the 1332 waiver submitted by Idaho were presented.

Mr. Proffitt concluded his presentation with a review of the Health Care Access Improvement Program (HCAIP). Certain hospitals pay a provider assessment tax equal to 1.83 percent of 2010 net inpatient revenue. These funds bring in approximately $47.9 million per year in state funds and are matched with federal dollars for a net of approximately $108.8 million per year. The revenues are dispersed back to hospitals and physicians through various avenues. The revenues and expenses are tracked by KDHE and reported to the HCAIP Panel. A list of pending changes to the HCAIP was provided. The changes included an increase in the provider assessment from 1.83 percent of net inpatient revenues to 3.0 percent of net inpatient and outpatient revenues and a change in the base tax year to 2016. The pending change in the assessment would bring in approximately $163.6 million in SGF for a total of approximately $381.5 million all funds. The increase in the HCAIP fund requires amending the 1115 waiver to account for the new moneys in the budget neutrality calculations. The new program cannot be implemented without CMS approval. Negotiations are under way with CMS to gain that agency’s approval, but a decision could still be several months away. The hospital surcharge in the proposed Senate bill would be on top of the current HCAIP (Attachment 54).

Mr. Proffitt responded to questions from Committee members and Senator Denning as follows:

● In response to whether pregnant women would come into the expansion program, newly eligible individuals must not have been eligible as of Medicaid policy in place on October 1, 2009. He has discussed this topic with other state Medicaid directors;

Kansas Legislative Research Department 27 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● The expansion number could increase. Mental health and substance use disorder are covered in the Medicaid expansion population, and states that have expanded have seen an increase in these services;

● The Appriss Inc. system used to coordinate information on Medicaid eligibility between KDHE and incarceration is available only to county jails. The state facilities have their own tracking mechanism;

● With regard to administrative costs in the fiscal analysis, Mr. Proffitt will verify the numbers, but he cannot speak to Director Campbell’s testimony;

● KDHE used a conservative estimate for the Medicaid expansion enrollment numbers, based on other states’ more recent experience;

● The MediKan population would likely be in the expansion group, with a 90 percent federal match instead of 100 percent SGF;

● The broad range in the administrative cost of collecting the premiums is a result of several variables, such as the number of individuals not paying premiums on a regular basis and capitation avoidance. A point could be reached where the collection of premiums becomes detrimental to the program because it costs more to collect than is collected;

● Per a CMS letter, a per capita cap would be a partial expansion and would not qualify for the 90-10 match;

● The 1115 and 1332 waivers would be done sequentially;

● Individuals on a Home and Community Based Services (HCBS) waiver already have Medicaid benefits. HCBS waivers are not part of the State Plan;

● Savings from one waiver cannot be used to attain budget neutrality in another waiver;

● Nationally, there has not been an increase in commercial rates as a result of expansion;

● It would be difficult to calculate the potential increase in the number of children enrolled as a result of parents being covered under Medicaid expansion; and

● HCAIP rates would not change with Medicaid expansion.

The Chairperson recessed the Committee for lunch.

Kansas Legislative Research Department 28 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 Afternoon Session

The Chairperson called the Committee back to order at 2:06 p.m.

Discussion and Recommendations for the Committee Report to the 2020 Legislature

The Chairperson stated the intention of the Committee is not to advance a bill, but to submit a report with recommendations for consideration regarding the proposed Senate bill.

Senator Masterson moved and Representative Carpenter seconded the report from the Senate Select Committee on Healthcare Access be a part of the recommendation. Due to confusion as to the wording of the motion, Senator Masterson withdrew his motion. Representative Carpenter, who seconded the original motion, agreed.

The recommendations are as follows:

● The Committee includes the Senate Select Committee bill draft 20rs1873 and the final Report of the Senate Select Committee to the 2020 Kansas Legislature for reference, but makes no recommendations as to the bill draft proposal. Motion by the Chairperson and second by the Vice-chairperson; the motion passed;

● The Committee requests the KDOC initiate a rural health care task force, in the vein of the model established in Tennessee, to investigate the health care issues in rural Kansas. Motion by Senator Masterson and second by Senator Baumgardner; the motion passed;

● The Committee requests the KHA develop a transparency plan to analyze any current cost shifting to commercial insurance plans and a transparency plan to measure in detail uncompensated care (e.g., charity, bad debt, in-kind donations) on an allowable, not a gross charge, perspective net of DSH payments. Motion by Senator Masterson, second by the Vice-chairperson; the motion passed;

● The Committee recommends the KDHE correspond with the CMS to inquire whether CMS would consider a reinsurance program under a 1332 waiver in conjunction with a 1115 waiver in order to offset any cost of the 1115 waiver to meet federal budget neutrality requirements. Motion by Representative Kelly, second by Representative Wolfe Moore; the motion passed;

● The Committee requests KHA provide patient census information for those hospitals in Kansas that have a daily average of 10 or fewer patients and include information on the other services those hospitals provide to their communities. Motion by Senator Baumgardner, second by Senator Masterson; the motion passed;

● The Committee requests the Kansas Department of Commerce provide data on the RESEA program for the previous five years and requests data on the other programs offered by the agency under KANSASWORKS. Motion by Senator Baumgardner, second by Senator Berger; the motion passed;

Kansas Legislative Research Department 29 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 ● The Committee recommends any Medicaid expansion legislation considered by the Legislature contain a provision prohibiting coverage or reimbursement for any abortion services beyond those currently provided in the Medicaid and CHIP programs. Motion by Representative Carpenter, second by Senator Masterson; the motion passed;

● The Committee recommends any Medicaid expansion legislation considered by the Legislature contain a provision to include religious and professional conscience protections for healthcare institutions and individuals. Motion by Representative Carpenter, second by the Vice-chairperson. Division was called. On a vote of 7 ayes, 3 nays, the motion passed;

● The Committee recommends any Medicaid expansion legislation considered by the Legislature contain a provision requiring 20 hours of work per week or 15 college credit hours per semester. Motion by Representative Carpenter, second by Representative Waymaster.

○ Senator Baumgardner made a motion to amend the original motion from 15 hours to 12 college credit hours, as this is considered full time. Representative Waymaster seconded. ○ Concerns were expressed regarding work requirements for persons with severe medical issues, such as cancer. Comments were made that CMS has already approved work requirements in several states and there are persons already on Medicaid who are disabled. Mr. Proffitt stated both statements are true; CMS has approved work requirements and no states are currently operating expansion with a work requirement. There are legal challenges to states who have included them in their expansion programs. ○ Representative Murnan noted there is added cost with work requirements and unintended consequences, and she would not be supporting the recommendation.

Representative Carpenter closed on the motion, as amended. T he motion as amended passed ;

● The Committee requests the DCF provide information related to high school graduation rates of foster care children over the past ten years and the programs and partnerships, other than the Jobs for America’s Graduates-Kansas (JAG-K) program, that are currently utilized to provide services to foster care children in the state. Motion by Senator Baumgardner, second by Senator Berger; the motion passed;

● The Committee recommends any Medicaid expansion legislation considered by the Legislature waive premiums for persons with severe mental illness (SMI) or families with a child with a serious emotional disturbance (SED). Motion by the Chairperson, second by the Vice-chairperson; the motion passed;

● The Committee recommends any Medicaid expansion legislation considered by the Legislature provide an exemption for lockout from the Medicaid program for

Kansas Legislative Research Department 30 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 persons with SMI or families with a child with SED. Motion by the Chairperson, second by the Vice-chairperson; the motion passed;

● The Committee recommends any Medicaid expansion legislation considered by the Legislature waive premiums for persons with severe, chronic, life-limiting illnesses (e.g., cancer, multiple sclerosis). Motion by the Senator Bollier, second by the Chairperson; the motion passed;

● The Committee recommends any Medicaid expansion legislation considered by the Legislature provide an exemption for lockout from the Medicaid program for persons with severe, chronic, life-limiting illnesses (e.g., cancer, multiple sclerosis). Motion by Senator Bollier, second by the Chairperson; the motion passed;

● The Committee requests KDHE provide information on the DSH payments to individual hospitals for the previous three calendar years. Motion by the Vice- chairperson, second by Representative Kelly; the motion passed;

● The Committee requests the LCC approve one additional meeting day per quarter for the Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight (Bethell Committee) to monitor any Medicaid expansion progress and review requested reports (e.g., payments made to hospitals, pathways to work, budget projections, and health outcomes). Motion by the Vice-chairperson, second by Representative Carpenter.

○ There was clarification the added meeting days would start in 2020 to allow the process be monitored. The Chairperson commented a letter be drafted to the LCC to request an additional meeting day per quarter be granted for the Bethell Committee.

The m otion passed ;

● The Committee requests KDHE provide a separate fiscal note related to the number of children that would potentially join the Medicaid program when their parents become eligible for Medicaid expansion. Motion by the Vice-chairperson, second by Representative Waymaster; the motion passed;

● The Committee requests KHA provide information related to the hospital surcharge contemplated by Senate bill draft 20rs1873 and any considerations related to the timeline for collection of such surcharge. Motion by Representative Kelly, second by the Chairperson; the motion passed;

● The Committee requests a technical correction to the Senate bill draft 20rs1873 (New Section 5(a)(1), from “or” to “and”). Motion by the Vice-chairperson, second by the Chairperson; the motion passed; and

● Representative Kelly moved, and Representative Wolfe Moore seconded, the Committee request a cost analysis of the cost of the reinsurance program. The motion failed.

Kansas Legislative Research Department 31 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019 Ms. Deckard asked for clarification from the Chairperson as to what was to be included in the Committee report as she understood it. Chairperson Landwehr agreed with all Ms. Deckard had noted.

The Vice-chairperson remarked the next step would be for the Committee Report to be made available to the House Committee on Health and Human Services and the Senate Committee on Public Health and Welfare.

Adjourn

The Chairperson acknowledged the assistance of Caroline Fuss, Legislative Intern, KLRD, with providing the Committee with all of the papers from all of the contributors to the Committee discussion. The Chairperson also thanked the Committee members for their participation.

The Chairperson adjourned the meeting at 4:05 p.m.

Prepared by David Long Edited by Amy Deckard, Iraida Orr, and Whitney Howard

Approved by the Committee on:

January 20, 2020 (Date)

Kansas Legislative Research Department 32 Special Committee on Medicaid Expansion – Minutes for November 12-13, 2019