Proposed housing facility at ANMC will cut Medicaid costs


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The Alaska Legislature passed Senate Bill 88 to authorize up to $35 million in funding to build a residential housing facility at the Alaska Native Medical Center in Anchorage. The 170-bed facility would help the state cut Medicaid expenses for the nearly 60 percent of patients who are from outside Anchorage and need a place to stay.

Photo/Courtesy/Alaska Native Tribal Health Consortium

Anchorage could see another major construction project in the near future if the Gov. Sean Parnell approves a plan to add a residential housing facility at the Alaska Native Medical Center.

Senate Bill 88, which passed the legislature in just a few weeks but has not yet been signed into law, would authorize the Department of Administration to enter into a lease purchase agreement with the Alaska Tribal Health Consortium, or ANTHC, to build the medical center addition.

The state would provide $35 million in funding. ANTHC would cover any costs beyond that, including one floor of the building, as well as operate the new facility.

And according to proponents of the project, both the state and the health consortium would benefit in the long run.

The project has two missions: reduce state spending on Medicaid, and improve health care.

The 170-bed facility would have skybridge access to the medical center, or ANMC.

Patients who are seeing a specialist, but don’t need to be hospitalized, would have a convenient, comfortable place to stay, said ANTHC Chief Executive Officer Roald Helgesen.

About 58 percent of the patients at ANMC come from outside the Anchorage area, Helgesen said. Housing has been one of the largest obstacles for care.

“Access to care includes a place to stay when you get here,” Helgesen said.

At times, finding a place for a patient to stay is more difficult than booking the actual appointment, although there are 80 rooms reserved in the community.

The patients using the new facility will be “across the entire spectrum of health services,” Helgesen said.

They could be moms-to-be facing complex deliveries, children needing to see an ear, nose and throat specialist, a person waiting for ontological care or someone having cataract surgery.

By providing ANMC patients with a place to stay, the state should see a savings in its Medicaid spending, said Sen. Pete Kelly, R-Fairbanks, who helped see the process through the legislature.

That’s because right now, when a Medicaid patient who is eligible for Indian Health Services is seen at a tribal facility, the federal government reimburses the full cost of their care. When the same patient visits a different facility, the federal government covers half the cost, and the state covers the other half.

That means the state is paying half the cost of certain visits to Providence and Alaska Regional for Medicaid recipients who are IHS beneficiaries, but if the same procedures were done at ANMC, the federal government would cover them.

Right now, there’s almost $30 million of care at Alaska Regional and Providence that could be captured by Alaska Native Medical Center, based on fiscal year 2012 information, Kelly said. The ANTHC business plan is to capture about 30 percent of that, or about $8.8 million yearly.

While IHS-eligible Medicaid patients will still have a choice of where to go for care, the new facility should make ANMC a more attractive option.

The business plan, which is laid out in detail in SB 88, uses conservative estimates. It’s possible that ANMC will capture a larger chunk of the care than just 30 percent, and the state will see greater savings.

Starting in fiscal year 2015, the business plan says that the state will reduce its Medicaid spending by at least $3.849 million a year.

The jobs created in constructing and operating the facility are another benefit, said Heather Shadduck, staff in Kelly’s office.

But it’s really about the health care outcomes.

“This is about improving healthcare,” Shadduck said.

Helgesen said that providing a culturally-sensitive place for patients to stay should also improve care.

That was a selling point for others, including Sen. Kevin Meyer, R-Anchorage, who Helgesen credited with helping guide the bill through the legislature.

“One of the most critical components of medical recovery is a strong support system including strong cultural values,” Meyer wrote in a statement about the project. “This bill creates more of a community atmosphere by keeping families together during this critical period. It also brings cultural values into the recovery process because it allows Native foods to be served and offers other programs that provide strong ties to home.” 

Medicaid cost control

Kelly said the project, which ANTHC and the State’s Department of Health and Social Services have been working on a for a few years, is a solution to a long-standing issue with Medicaid costs.

Kelly was co-chair of the finance committee 10 years ago when budget problems plagued the legislature.

“The first and biggest problem we had every year was Medicaid,” he said.

The program was growing about $70 million each year. At its peak, the growth hit $100 million in a year.

Cutting the budget in light of those increases was especially difficult.

More recently, Alaska Department of Health and Social Services Commissioner Bill Streur has worked on “taming Medicaid” to help reduce the state’s budget, Kelly said. In 2011-2012, through Streur’s efforts, and work by others, growth has been contained to a much lower level.

So when he and ANTHC’s Val Davidson helped put together a funding package for a new facility at ANMC that would save the state money, Kelly said he had faith in their idea.

“It’s a big answer for me when I look at these budgets,” Kelly said.

Every year, Kelly said he looks at the budget and wonders how to cut it. This building will help, he said.

He also noted that ANTHC has already worked to cut its own costs, in part through telehealth.

ANTHC uses telehealth services when possible, enabling patients consult with doctors from their own communities, or even have certain procedures done in a local clinic and supervised by a doctor in Anchorage.

“Our goal is to be able to serve people in their own home community,” Helgesen said.

Despite the that goal, and the growth of telehealth, the population ANTHC serves is expanding such that an increased demand for housing at the medical center is assured.

“We believe we’ll be full fairly soon,” Helgesen said.

The project has to clear a few more hurdles before the ANTHC breaks ground on the expansion. Once Senate Bill 88 is transmitted to the governor, it’ll need his signature. And the capital budget, containing a piece of the project, will need to be funded.

As of May 14, SB 88 had not yet been transmitted to the governor’s office. Press Secretary Sharon Leighow said the appropriate agencies would review the bill once it had been transmitted.

Then the state will have to sell certificates of participation to fund it.

So far, the project has received a significant amount of support, Helgesen said. That came from everyone involved — leadership at the health consortium and tribal governing body, Streur, Deputy Commissioner Angela Roddell, and the legislature.

Once ANTHC has the cash in hand, the project will likely take about 24 months, Helgesen said.

The first step will be getting the exact plans for the facility.

The business plan lays out some of the details, but Helgesen said the project needs to be approved before the construction plan is finalized.

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