2016 Medicaid reform bill generates huge savings

Gov. Mike Dunleavy’s administration has made cutting Medicaid spending one of its top priorities and state Health officials briefed lawmakers on the progress of reform initiatives approved in 2016 that, once fully implemented, have saved the state more than $160 million per year.

Division of Health Care Services Director Renee Gayhart told members of the House Health and Social Services Committee during a Jan. 9 hearing in Anchorage that one of the simplest directives in Senate Bill 74, the 2016 Medicaid reform legislation, has already saved the state more than $210 million in less than four years.

According to Gayhart, efforts to make sure Alaska Natives receive more Medicaid-reimbursed care at Tribal health facilities are on pace to save the state more than $100 million of general funds in fiscal year 2020 versus pre-SB 74 Medicaid spending levels.

In early 2016, as SB 74 was being debated in the Legislature, the federal Centers for Medicare and Medicaid Services expanded what the federal government would fully reimburse to include services “received through” Indian Health Service Facilities and Tribal health organizations for Alaska Natives.

Capturing the higher reimbursement rate requires care coordination agreements between Tribal and non-Tribal health organizations. While health costs for Alaska Natives are generally 100 percent covered by Indian Health Services, travel and other arrangements made through non-Tribal care providers had previously been covered half by the state and half by the feds.

Gayhart said as soon as CMS changed its regulations in 2016 the state started to shift its internal procedures to maximize the capture of federal Medicaid funding.

“In the beginning, we started out with, where are the high dollars going out of the Tribal system because they either just don’t provide those (services) or Medicaid beneficiaries are going to non-tribal settings,” Gayhart said. “Those were in high-dollar areas, residential psychiatric treatment centers, long-term care and transportation.”

The state has since been meeting its savings targets set out in SB 74, she added, in large part because partnering with Tribal health facilities has been successful.

According to Gayhart, the Department of Health and Social Services has signed roughly 1,700 care coordination agreements with Tribal health organizations and providers that allow health care services received by Alaska Natives at non-Tribal facilities to be 100 percent reimbursed by the federal government.

She said some challenges with referrals and the electronic exchange of medical records between Tribal and non-Tribal facilities still exist. Also, the fact that Medicaid forms ask for a recipient to identify their race but do not require it can mean that Alaska Natives who do not identify themselves as such will have their care reimbursed at the general 50-50 state-federal rate, according to Gayhart.

“We’ve done quite a bit of education with the Tribal health organizations and with the Medicaid beneficiaries through our Medicaid handbooks so we’re working on those,” she said.

Still, those savings have grown substantially each year since the passage of SB 74.

According to DHSS figures, Tribal health reclaiming efforts saved the state nearly $35 million in 2017 and those savings increased to $72 million in fiscal year 2019. Through the first half of 2020, the state has saved more than $57 million as a result of that work.

“The fact that we’ve saved over $200 million to-date and we’re on track to save over $100 million in (general funds) this year for the State of Alaska is incredibly commendable,” said committee chair Rep. Ivy Spohnholz, D-Anchorage.

Gayhart said a steady increase in the use of the state’s telehealth system, which allows providers to evaluate patients remotely, has also helped the state avoid costly Medicaid transportation bills for recipients that historically needed to travel to receive care.

The long list of Medicaid reform directives in SB 74 and other initiatives combined to save the state more than $166 million in fiscal year 2019, according to the department’s annual Medicaid Reform Report.

According to the Legislative Finance Division, overall spending on Medicaid in Alaska has increased from $1.7 billion to more than $2.3 billion since fiscal year 2015, but the state’s portion of that has actually gone down from $724 million in 2015 to $677 million, overall.

According to DHSS, expenditures for the state’s telehealth system increased approximately 35 percent from 2016 to more than $6.8 million in 2019. More than 60 percent of the telehealth Medicaid claims have been for treating mental, behavioral health or neurodevelopment disorders, according to DHSS, which Gayhart said is not surprising.

“As you see people discharged, say, from a higher level facility or in-patient care, as they go back home particularly to outlying areas, they can use telehealth with someone at an office in any of the hub areas or even in other states,” she said. “So that’s been a really good thing for behavioral health.”

Spohnholz noted that utilizing telehealth is a way for Alaska patients to receive care from — sometimes out-of-state — providers who otherwise would not have the patient base to support a medical practice in sparsely populated areas of the state.

“We’re now learning it actually isn’t a substandard level of care,” Spohnholz said of telehealth services. “For many people it is absolutely an appropriate level of care.”


Elwood Brehmer can be reached at [email protected].

01/15/2020 - 9:35am