Dunleavy team unveils $95 million 'Phase 1' reduction to Alaska's Medicaid programs

Published: Mar. 19, 2019 at 3:13 PM AKDT
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The Alaska Department of Health and Social Services, under Governor Michael Dunleavy, R - Alaska, is proposing a "Phase 1" reduced spending plan to strip $95 million from the state's Medicaid budget. The department will present its program recommendations to the House Health and Social Service Subcommittee Tuesday afternoon.

"As we put together this plan our main goal was to make sure that we maintained access for Alaskans as well as took a responsible look at the budget," DHSS Commissioner Adam Crum told reporters during an embargoed briefing Monday.

He said "Phase 1" reductions are things that can be accomplished swiftly, achieved through regulatory change, administrative work or amendments to state contracts with the federal Centers for Medicare and Medicaid Services

Dunleavy's FY20 operating budget calls for $250 million in cuts to the state's $2.3 billion Medicaid program, total spending for which represents a mix of state and federal revenue sources. The state implemented Medicaid Expansion in 2015, which has increased insurance coverage for thousands of Alaskans.

In Phase 1 of the cuts, eligibility would not be affected, Crum said.

But limiting service options, reimbursement timelines, reimbursement rates, and restricting travel are being considered, senior DHSS staff told reporters Monday during the briefing. Those changes include but are not limited to:

  • Eliminating the adult dental Medicaid benefit
  • Limiting adult occupational, speech and physical therapy visits to 12-per-year, unless a provider indicates a medical need for more visits
  • Possibly denying travel for rural students to obtain sports physicals, as it is not an emergency medical need
  • Clustering family travel so that parents and children are attending multiple appointments in one trip (meant to prevent multiple trips, which increase costs)
  • A 5 percent rate reduction in what Medicaid pays to providers (primary care providers, federally qualified health clinics, and critical care hospitals would not receive a rate cut)
  • Withholding inflation payments
  • Requiring providers to submit for reimbursement within six months instead of 12 months; DHSS staff said this is to eliminate "aberrant" billing
  • Moving some fixed reimbursement rates to a cost-based methodology
  • Capturing more of the 100% federal reimbursement that is supposed to occur when a tribal health organization refers someone to a non-tribal provider
  • Ensure proper use of money collected by assisted living facilities
  • Care management: will ask some 3,200 individuals who tend to doctor shop for treatment of the same ailments to select one provider they like and stick with them
  • More nimbly react to fluctuating costs for prescription medication
  • Establishing an around-the-clock nursing hotline to ensure people "get the right level of care at the right time."

Alaska health providers are nervously watching the cuts unfold.

"Slashing the the health care budget and denying tens of thousands of Alaskans access to health care will devastate the progress made over the last few years with Medicaid reform and expansion," Benjamin Shelton, president of the Alaska Chapter of the American College of Emergency Physicians said in a March 12 letter to members of the House Health and Social Service Subcommittee.

The Alaska Dental Society has also weighed in. "Adult Preventative serves a valuable function by preventing greater - and more expensive - dental problems, restoring dignity and appearance to Medicaid recipients and helping them to transition away from public assistance," David Logan, the society's executive director, wrote to the subcommittee on March 4.

"Because of its significant role as an insurer, Medicaid is critical to the overall structure, operation, and funding of Alaska's healthcare system," Becky Hultberg, President and CEO of the Alaska State Hospital and Nursing Home Association, said to the subcommittee in a letter dated March 12. "Cuts contemplated by the Governor could dramatically change the scope of health care services offered in Alaska, affecting all Alaskans."

Hulberg explained the relationship between expanded Medicaid coverage and reductions in uninsured care -- a benefit to all Alaskans, she said, as it prevents hospitals from passing on the uncompensated costs to commercial insurance.

The House Finance Health and Social Services Subcommittee begins at 3:30 p.m.