Bill to partly roll back hefty Pioneer Homes rate hikes advances in Senate

A bill passed by the state House that would roll back some of last year’s sharp increases in rates at the state Pioneer Homes is now in the Senate Finance committee. The Senate Health and Social Services Committee, which is chaired by Mat-Su Sen. David Wilson, a Republican, reported House Bill 96 out of that committee last week, on Feb. 14 and sent it on to the Finance Committee.

It is now one stop away from action on the Senate floor and final approval by the Legislature. Rep. Zack Fields, an Anchorage Democrat, is the prime sponsor. Sen. Cathy Giessel, president of the Senate, has signed as as a cosponsor, giving the bill political heft in the Senate.

As now written the bill restricts the ability of the Department of Health and Social Services in adjusting rates at the Pioneer Home to the annual rate of inflation made in social security. The thinking is that since elderly Pioneer Home residents are on social security the cost adjustments at the Pioneer Home would match increases in residents’ social security.

Last year the department moved to adjust rates for several years of inflation, which resulted in increases of 100 percent to 140 percent for some residents. But while HB 96 would bring costs down for resident they would still be 15 percent above the previous rates.

Previously the health and social services department set the rates through regulation but had not done so frequently enough to keep up with inflation. This had the effect of increasing the subsidy to the homes from the state treasury. The sharp rate hikes last year were part of Gov. Mike Dunleavy’s efforts to reduce a huge deficit in the state budget.

However, the rate increases had the effect of causing some Pioneer Home residents to move out but leaving many with health problems, many of them serious, as residents. This reduced revenue but left the homes providing high-cost services to those with health issues.

At the same time there was more demand on a special assistance fund set up to aid seniors having trouble paying the higher fees. That caused the assistance fund to risk being depleted.

The net result of that was the department’s request this year for a $5 million supplemental appropriation.

Wilson said he is unhappy over certain aspects of HB 96 as it came out of his committee, as he said he would seek changes, through amendments, when the bill comes up for action in the Finance committee.

“I’m not in favor of rates being set in statute. That should be done in regulation,” which gives the department more flexibility, Wilson said in an interview. “Also, linking increases to the CPI (Cost of Living Index used in social security) does not relate to increases in actual medical cost increases.

Since medical cost inflation typically outpaces the general CPI over time the Pioneer Home losses will steepen, creating more of a drain on the state budget.

Wilson said the rates for assisted living in the Pioneer Homes are comparable to rates in private assisted living the homes’ services to residents needing more care are below those now charged in skilled nursing home, which offer similar services. The senator advocates giving the department more flexibility in the rate structure to reduce losses.

However, the state pays the tab one way or another at least for those residents on Medicaid in addition to social security. Medicaid is a state-federal health care program for lower-income people, and many residents in the Pioneer Homes will have depleted their assets, making them eligible for Medicaid.

Wilson also said the bill needs a “sunset” provision for the law where it automatically ends after a few years, typically five years. That forces the Legislature to review the and make changes if needed, he said.