House Finance digs into details of Medicaid expansion

The House Finance Committee dug into Gov. Bill Walker’s plan to expand Medicaid for several days beginning April 7.

Committee co-chair Rep. Mark Neuman, R-Big Lake, cleared the committee’s agenda of most bills so its members could focus on House Bill 148, which makes cost-cutting reforms in the state-managed Medicaid program as well as expanding it.

The bill was reported out of the House Health and Social Services Committee April 1 with changes that strengthened the reform parts of the bill.

Republican leaders of the House and Senate say the program must be reformed, or changed to reduce costs, before expansion can be considered.

Health and Social Services Commissioner Val Davidson said about 42,000 Alaskans without adequate health care coverage would be eligible under Medicaid if it were expanded, although projections are that about 20,000 would actually enroll.

The expansion would save the state $6 million in its first year, mostly money now spent for medical services to prisoners, and savings would increase to about $20 million per year after four to five years as savings in the Department of Corrections are fully realized and other cost-savings kick in, Davidson said.

In the House Finance hearings, Reps. Dan Saddler, R-Eagle River, and Tammie Wilson, R-North Pole, emerged as the chief critics of the expansion, voicing concerns they had expressed earlier in budget subcommittee meetings for the Health and Social Services Department.

Wilson wanted know more about who would be covered by expanded Medicaid and whether there were other options such as state-assisted private insurance.

Saddler said he was concerned about data showing a decrease in health care providers accepting Medicaid patients and whether health care providers have the capacity to handle the increased load under an expansion.

Rep. Les Gara, D-Anchorage, said he waned to be sure that the cost savings are “real” as well as the projections of increased employment in health care that would accompany an expansion.

“We’re facing the risk of a real recession,” because of state budget cuts, Gara said. “You say there will be 4,000 new jobs. Are the numbers accurate?”

Davidson said the job estimates are from studies by Northern Economics, an Anchorage-based consulting firm, but that they are not all health care workers.

“Some are health care jobs but the indirect jobs are included,” she said.

Addressing Saddler’s question about capacity among care providers, Davidson said there are indeed concerns about capacity in some sectors of health care, particularly in behavioral health where there are already shortages.

The governor’s bill partly addresses this, she said, by giving the department needed flexibility in qualifying behavioral health providers than exists in current law and regulations. One requirement that is obsolete, she said, is a rule that a behavioral health provider must have received previous grants. The bill would change that to being a Medicaid provider.

“The bill also gives us the ability to approve alternative types of providers in behavioral health,” Davidson said, which should ease the shortage.

Answering Wilson’s question as to who the newly-covered Medicaid people would be, Davidson said the expansion covers single individuals between 19 and 64 years of age who earn less than 138 percent of the federal poverty level, an income maximum that works out to $9.52 per hour for a single adult.

Currently, Medicaid covers only adults with children up to 100 percent of the federal poverty level, which for a single adult works out to $7.07 per hour, which is below the state minimum wage. Single adults without children cannot be covered under the current Medicaid program, however.

Of about 42,000 Alaskans who would be eligible for expanded Medicaid under the higher income guidelines, a study by Evergreen Economics, a Seattle-based health consulting firm, estimates that 44 percent of these are currently employed and another 29 percent are registered as unemployed and looking for work, Davidson told the Finance Committee.

Given that, about 73 percent of the eligible population could, in theory, be brought under employer health coverage, assuming the unemployed found jobs. However, the reality is that most jobs in Alaska, as elsewhere, are in small businesses, many which are unable to offer health coverage to employees or their families, Davidson said.

Wilson pressed the point: “My concern is that if we expand Medicaid it will give many employers an excuse to stop providing coverage,” so the government winds up paying for health costs that could have been at least partly paid for under conventional health insurance.

“Why can’t we have an option to provide health insurance at a discount? That’s really what the (federal) Affordable Care Act does.” Wilson said.

Davidson acknowledged that option was not in the current bill.

Following on Wilson’s line of questioning, Neuman asked if the federal Medicaid money can be used to buy private insurance for an expansion population.

“Yes, that’s possible,” Davidson said. “That’s being experimented with in Arkansas and there are others interested in it. However, we feel it will be cheaper for us to provide the payments directly (for service by providers) than to purchase insurance on the market.”

Going back to Wilson’s questions about who the newly-enrolled will be, Davidson said the Evergreen Economics study indicated that 54 percent of the eligible population (the 42,000) are male and that 70 percent of these are younger males between 19 and 34 years of age.

“This population is less expensive to cover. That’s partly because men don’t get pregnant,” Davidson said.

The ratios could change for the percentage of people who actually enroll, however, because at least some of the single, younger men would be those who are employed, possibly for firms that offer health benefits.

Meanwhile, the House Health and Social Services Committee, chaired by Rep. Paul Seaton, R-Homer, had previously tightened up many of the Medicaid reform provisions in the governor’s original HB 148.

One section requires the health and social services department to institute a managed-care primary health program for Medicaid recipients who are “super-utilizers” of hospital emergency rooms.

Jon Sherwood, deputy commissioner of the department, said there is already a program like this underway, which began in January, for a selected group of identified people who frequent the emergency rooms, but the language in HB 148 would expand and make it mandatory.

Another new section requires one or more demonstration projects to be done with new payment procedures, he said. These could be modeled on a new initiative underway for a “global payment structure” on Medicaid by providers in one region of the state, he said.

Another section gives the department the authority to issue fines to providers for violations of rules. Currently the agency can only initiate audits, which are expensive.

“In many cases issuing a fine for a violation or noncompliance is more efficient for both the department and the provider, and this language will give us more flexibility,” Sherwood said.

Yet another section streamlines the auditing requirements for the department, which is to help providers who are already burdened by increasingly-complex federal and state Medicaid audit rules. The current version of HB 148 would require the department to do 50 audits a year, down from 75.

The language in the bill also directs the agency to avoid audits that are duplicate with federal audits or other state audits, Sherwood said.

Updated: 
11/20/2016 - 7:55am

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