State of Alaska
Fiscal Note
Bill Version: CSHB 86(HSS)
2020 Legislative Session
Fiscal Note Number: 1
(H) Publish Date: 3/11/2020
Identifier: HB086-DHSS-API-2-28-2020 Department: Department of Health and Social Services
Title: MENTAL HEALTH HOSPITAL: CONTRACTS/BIDS Appropriation: Alaska Psychiatric Institute
Sponsor: FIELDS Allocation: Alaska Psychiatric Institute
Requester: (H)HSS OMB Component Number: 311
Expenditures/Revenues
Note: Amounts do not include inflation unless otherwise noted below. (Thousands of Dollars)
Included in
FY2021 Governor's
Appropriation FY2021 Out-Year Cost Estimates
Requested Request
OPERATING EXPENDITURES FY 2021 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Personal Services 5,298.5 5,298.5 5,298.5 5,298.5 5,298.5 5,298.5
Travel
Services (5,298.5) (5,292.7) (5,292.7) (5,292.7) (5,292.7) (5,292.7)
Commodities 913.0 514.0 514.0 514.0 514.0 514.0
Capital Outlay
Grants & Benefits
Miscellaneous
Total Operating 913.0 0.0 519.8 519.8 519.8 519.8 519.8
Fund Source (Operating Only)
1037 GF/MH (UGF) 913.0 519.8 519.8 519.8 519.8 519.8
Total 913.0 0.0 519.8 519.8 519.8 519.8 519.8
Positions
Full-time 57.0 57.0 57.0 57.0 57.0 57.0
Part-time
Temporary
Change in Revenues
None
Total 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Estimated SUPPLEMENTAL (FY2020) cost: 0.0 (separate supplemental appropriation required)
Estimated CAPITAL (FY2021) cost: 0.0 (separate capital appropriation required)
Does the bill create or modify a new fund or account? No
(Supplemental/Capital/New Fund - discuss reasons and fund source(s) in analysis section)
ASSOCIATED REGULATIONS
Does the bill direct, or will the bill result in, regulation changes adopted by your agency? No
If yes, by what date are the regulations to be adopted, amended or repealed? N/A
Why this fiscal note differs from previous version/comments:
Refreshed to SLA2020 form; updated figures to represent current FY2021 Governor's Request, and the backing out thereof.
Prepared By: Noel Rea, Chief Executive Officer Phone: (907)269-7105
Division: Alaska Psychiatric Institute Date: 02/28/2020 10:30 AM
Approved By: Sana Efird, Administrative Services Director Date: 02/28/20
Agency: Office of Management and Budget
Printed 3/11/2020 Page 1 of 4 Control Code: SBvTC
 CSHB 86(HSS) - Fiscal Note 1
FISCAL NOTE ANALYSIS
STATE OF ALASKA BILL NO. HB086
2020 LEGISLATIVE SESSION
Analysis
This bill has two main components: (1) creates laws that prohibit the use of certain State of Alaska procurement methods
for services and supplies; and (2) detailing department duties to run a state psychiatric hospital.
This bill requires the state to run an inpatient psychiatric hospital, and prohibits the state from delegating or contracting
for ownership, operation, management, or maintenance for the hospital. If this legislation were to pass this new law
would be retroactive to March 1, 2019. The bill's language is expansive and would encompass all types of contractual
services; including security, transportation, janitorial, and contracted doctors and nurses.
Should this bill be enacted, API would no longer have clinical staff to serve patients because API could not contract for
professional services. Due to ongoing recruitment and retention issues, API would not have sufficient psychiatrists,
physicians and advanced nurse practitioners to evaluate and treat patients. Currently, the hospital has Locum Tenens in
place to address these staff shortages. The impact would be that the state could not operate the Alaska Psychiatric
Institute (API) and API could be closed indefinitely due to myriad of issues outlined in the remainder of the note.
API does not have staff to provide regulatory compliance support needed to maintain licensing and certification
standards. The regulatory support is currently provided through contract. It is anticipated that the state could not find
replacement services in time to avoid negative care and compliance consequences.
API does not have staff to complete the Medical Coder Review for Billing; this is currently contracted out with Alaska
Health Care Billing Service.
Currently, the hospital contracts with Signal 88 to provide security; API would not be able to safely operate until the state
established a state-run security plan.
The hospital currently contracts with Snow White Inc. to provide linen cleaning services for the patient's clothing, bedding,
and towels. The equipment onsite is not sufficient to accommodate full capacity; industrial machines would need to be
acquired as well as an industrial scale, which is a requirement of the Centers for Medicare & Medicaid Services (CMS) Cost
Report to document the total pounds of linens used.
Food service for patients is currently provided through a contract with Nana Management Services. Although the facility
contains a kitchen and equipment, it does not have the federally mandated staff to provide these services.
The Federally Required Cost Reporting has been contracted out for many years with Public Consulting Group Inc.
(Revised 10/22/19 OMB/LFD) Page 2 of 4
HB086-DHSS-API-2-28-2020 Page 2 of 4 Control Code: SBvTC
 CSHB 86(HSS) - Fiscal Note 1
FISCAL NOTE ANALYSIS
STATE OF ALASKA BILL NO. HB086
2020 LEGISLATIVE SESSION
Analysis
The following positions would be needed to absorb work historically performed through contractors.
For an additional 57 positions, the one-time and ongoing costs are listed below:
Services: Office space, phone, reimbursable service agreements for position support costs: $535.8 annually
Commodities: Office supplies: $114.0 annually
One-Time Commodities Cost: Computer, software, and office equipment: $399.0
With the food service not being contracted out, there would be an additional cost to purchase food supplies prepare
onsite. The estimated amount for food supplies annually would be approximately $400.0.
(Revised 10/22/19 OMB/LFD) Page 3 of 4
HB086-DHSS-API-2-28-2020 Page 3 of 4 Control Code: SBvTC
 CSHB 86(HSS) - Fiscal Note 1
FISCAL NOTE ANALYSIS
STATE OF ALASKA BILL NO. HB086
2020 LEGISLATIVE SESSION
Analysis
In the event that API is not able to contract out for services or be able to fill necessary positions, API could potentially
close. If API were to close, the state would remain responsible for the patients and other obligations for commitment. In
order to meet those obligations, the state would have to immediately find placements for all patients and would likely be
housed in inpatient units throughout the state or in out of state placements. This could have a large fiscal impact on the
State of Alaska.
In addition, there would be high costs due to ligation including legal challenges by contractors and potential sanctions in
courts for both civil and forensic cases. Initial litigation costs for a simple contract case before the Office of Administrative
Hearings can range from $15,000 to $30,000 depending on the complexity of the case. This does not include the cost of
damages, if awarded. The cost of prolonged and/or complex litigation based on contract termination would exceed that
amount prior experience has shown a single case may exceed $2 million in damages, attorney fees, and expert/court
costs.
The department cannot estimate at this time what the legal fees and fines would be regarding legal challenges based on
the states statutory mental health care obligations and the impacts of defaulting on existing contracts.
(Revised 10/22/19 OMB/LFD) Page 4 of 4
HB086-DHSS-API-2-28-2020 Page 4 of 4 Control Code: SBvTC


Statutes affected:
HB0086A, AM HB 86, introduced 03/06/2019: 36.30.300, 47.30.660, 36.30.310, 47.30.915, U.S.C
HB0086B, AM CSHB 86(HSS), introduced 03/11/2020: 36.30.300, 47.30.660, 36.30.310, 47.30.915, U.S.C