High hurdles remain on efforts to control health care costs

  • High hurdles remain at the state and federal level to containing the growth of health care costs. (Photo/Rick Bowmer/AP)

State health officials are promising better communication with their private sector counterparts while national lawmakers struggle to advance seemingly popular health care reforms.

Alaska Department of Health and Social Services Commissioner Adam Crum and Sen. Lisa Murkowski recalled recent challenges and discussed their views on the future of health care policy Oct. 2 at the Alaska State of Reform health care conference held each fall in Anchorage.

Crum acknowledged that the first 10 months of Gov. Michael J. Dunleavy’s administration was marked by “constant challenges and constant change.”

While a sometimes-lengthy adjustment period is common when leadership turns over, the administration’s desire to quickly and drastically cut the state budget seemed to exacerbate the usual transition speed bumps.

Crum said the department has asked a lot of those it works with in the health care industry over the past year.

“We’re working to implement some significant reforms to address Alaska’s fiscal challenges and it hasn’t gone as smoothly as any of us would’ve liked,” he said.

Crum vowed that over the coming year DHSS officials will work to improve health outcomes for Alaskans. The department will also be more responsive and hold monthly meetings with stakeholders on Medicaid initiatives.

Alaska holds the dubious distinction of having the highest health care costs in the country, which is generally regarded as having the highest health care costs in the world.

Recalling an administration mantra, Crum said, “We do like to say ‘Alaska is open for business,’ but the sad truth is that the high cost of health care is a weight holding back our businesses, our schools and a drain on our government.”

At the same time, he noted that the industry was one sector of the state economy that continued to grow through the recent, roughly three-year recession, and state officials need to do their best to protect that growth while trying to cut costs.

Across all industries Alaska has lost approximately 8,300 jobs since state’s labor force peaked in 2015. Those losses would be worse if not for the health care sector, which added nearly 4,000 jobs over the past four years and now accounts for more than 10 percent of total employment in the state, according to Alaska Department of Labor statistics.

In February the Dunleavy administration proposed cutting upwards of $270 million from the state’s Medicaid budget in one year, which was approximately $680 million at the time. Provider groups said such a quick, steep cut could result in up to 8,000 job losses statewide, as the state’s Medicaid funding is also tied to large sums of federal matching funds.

In March, when it became clear that most legislators were opposed to such a drastic reduction, DHSS officials said they could cut $102 million from the Medicaid budget over the coming year.

Most of those savings were to come from 5 percent provider reimbursement rate reductions and getting more care for Alaska Natives fully covered by the federal Indian Health Service.

The administration also chose to eliminate Medicaid coverage for adult preventative dental procedures against the urging of many lawmakers and providers who said the preventative coverage, which cost the state roughly $8 million per year, ultimately saves money by avoiding more serious and costly procedures down the road.

DHSS also on Oct. 2 announced the settlement of a lawsuit brought against the department by the Alaska State Hospital and Nursing Home Association.

ASHNHA filed the suit in July, arguing DHSS officials arbitrarily declared an emergency in order to implement the provider rate reductions quicker than can be done through the normal state regulatory process.

The settlement calls for the department to pay back the 5 percent reduction to most providers for services rendered between July 1 and Sept. 30. Medicaid mental health providers can file claims for services offered between July 1 and Oct. 30, according to a statement from ASHNHA.

Longer term, Crum said the state can save Medicaid dollars by addressing health more holistically, calling Medicaid the “engine” of health care reform in the state.

As of August, more than 220,000 Alaskans, or nearly 30 percent of the state, were enrolled in Medicaid, according to DHSS figures.

“We cannot cut, grow or change Medicaid without thinking about the other factors that determine our health as well as the impact that Medicaid has on the ecosystem of health care as a whole,” he told conference attendees.

On the positive side, Crum highlighted the recent approval by the Center for Medicaid and Medicare Services of the state’s behavioral health Medicaid 1115 demonstration waiver.

The waiver, approved Sept. 3, will provide the state more flexibility in what can be done to help Medicaid recipients in need of mental health and substance abuse treatment. The Legislature directed the department to draft the demonstration waiver program in the omnibus Medicaid reform package passed in 2016 as Senate Bill 74.

Crum said the benefits of the behavioral health demonstration waiver will reach to Public Safety and other aspects of the state by reducing drug and mental health-related crimes, among other things.

He also announced DHSS has contracted with Rich Albertoni of the national policy research firm Public Consulting Group to be a Medicaid advisor and strategist.

The department hired Public Consulting Group for $100,000 in June to examine the feasibility of major proposed Medicaid program changes, including shifting some enrolled adults to private insurance plans that would be paid with Medicaid funds.

Public Consulting experts found the private-Medicaid concept could work and gain federal approval, but the costs associated with implementing such a major shift are unclear.

On the federal side, Murkowski said that while the Affordable Care Act, or Obamacare, focused on getting insurance coverage to as many Americans as possible, it didn’t address costs, and insurance premiums continue to be prohibitively expensive for many, particularly those in the individual market.

“We know we have to address the drivers of cost,” Murkowski said. “We have to address the cost of care. We have to recognize that there is no simple fix; there is no silver bullet.”

She praised the Lower Health Care Costs Act, sponsored by Health, Education, Labor and Pensions chairman Tennessee Republican Sen. Lamar Alexander and ranking committee Democrat Sen. Patty Murray of Washington as a means by which Congress can start getting to the roots of the problems in the nation’s health care system.

Murkowski serves on the Senate HELP Committee.

The 444-page bill attempts to address “surprise medical billing” for services rendered by out-of-network providers by limiting what can be charged for out-of-network care to the median price paid for a similar, in-network procedure.

The Alexander-Murray bill also works to improve transparency around medical procedure pricing and increase prescription drug competition. Murkowski said it also includes provisions to limit the cost of air ambulances, which are a regular but often extremely expensive facet of life in Alaska.

“It’s one of the first steps, I think, we’ve made at least on the Senate side in focusing on real substantive reforms that can be made when we’re talking about overall cost,” she said.

Murkowski is a co-sponsor to Wisconsin Democrat Sen. Tammy Baldwin’s Fair Accountability and Innovative Research Drug Pricing Act. In spite of its alphabet soup-like title, the bill is rather simple; it would require prescription drug manufacturer’s to justify wholesale price increases of more 10 percent per year or 25 percent over three years to Food and Drug Administration officials on drugs with a wholesale cost of more than $100 for a month’s supply.

The health care cost legislation moved out of the HELP Committee in early July on a bipartisan 20-3 vote, Murkowski noted in a subsequent Oct. 2 meeting with the Journal and Anchorage Daily News.

“Lamar says, he says, ‘the only people that voted against it were (Sens.) Bernie Sanders, Elizabeth Warren and Rand Paul, so I figure we’ve got a pretty good product,’” Murkowski recalled from the July HELP vote.

The bill is now up for consideration by the full Senate.

The prescription drug legislation is still in the HELP Committee.

“When it comes to affordability we’re making some headway but we’ve got a lot more work to do,” Murkowski said.

She conceded, however, that even if the Senate is able to pass some bipartisan health care reforms in this Congress the impeachment proceedings of President Donald Trump in the House could make passing even popular legislation difficult for the next several months.

There is hope that Alexander’s bill could pass towards the end of the session given he is retiring from the Senate and lawmakers often try to “send off” well-liked members of Congress, such as Alexander, by passing a bill of theirs, Murkowski added.

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Elwood Brehmer can be reached at [email protected].

Updated: 
10/09/2019 - 9:31am

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