Medicaid has been a divisive topic in Alaska since Gov. Bill Walker announced his plan to expand the federal insurance program in the state early last year, but the Medicaid reform package that unanimously passed the Senate March 11 seems to be something lawmakers and health care leaders can agree upon.
Sen. Pete Kelly’s Senate Bill 74 that was sent to the House after a 19-0 vote combined parts of the administration’s Medicaid reform and expansion bill with an earlier version of Kelly’s bill, both of which were introduced last session.
The Department of Health and Social Services estimates the changes to the Medicaid system in SB 74, as it is currently constructed, would save the state more than $31 million right away in fiscal year 2017. Those savings are expected to increase to nearly $114 million per year by 2022 as the programmatic reforms are fully implemented.
Kelly, a Fairbanks Republican and co-chair of the Senate Finance Committee, said the savings estimates are very conservative in discussion on the Senate floor before the vote on the bill. He also said prior attempts at Medicaid reform “missed the point” in trying to change patient behavior and therefore didn’t achieve meaningful savings.
“(SB 74) is a reform bill that goes after the system, not after the recipient,” he said.
Walker said in a statement to the Journal that he typically does not comment on legislation until it reaches his desk, but that he is committed to working with the Legislature on Medicaid reform.
Medicaid expansion funded
The state’s Medicaid expense has grown more than 70 percent in the last decade, from less than $400 million in 2006 to nearly $700 million this fiscal year at a time when the state is running $3.5 billion-plus annual budget deficits. The federal government is contributing more than $1.1 billion to Alaska’s Medicaid program this fiscal year.
The ballooning cost of the program has been oft cited by legislators opposed to expanding it to a new group of beneficiaries, which Walker did last summer via executive order after the Republican-led majorities in the Legislature chose not to last year.
A lawsuit against Walker by the Legislative Council challenging his authority to expand the program without the Legislature’s approval was dismissed in state Superior Court earlier this month. Republican leaders in the Legislature have said they intend to appeal the decision to the Supreme Court.
The cost of the new class of Medicaid beneficiaries was fully covered by the federal government in fiscal year 2016, which allowed Walker to take the money without legislative approval, but will eventually require a 10 percent state match of about $20 million per year after 2021, based on DHSS enrollment estimates.
The federal government’s 100 percent match ends at the end of 2016, meaning the state must begin contributing a match for the last half of fiscal year 2017, which runs through June 30 of that year.
The state’s first payment for the new Medicaid recipients, estimated at $3.8 million based on enrollment projections, was funded in the operating budgets passed by House and Senate earlier this month, according to the offices of the Finance Committee chairs in each body.
House Bill 227, a Medicaid reform package introduced by Rep. Paul Seaton, R-Homer, passed from the House Health and Social Services Committee to Finance March 9.
Federal dollars make up savings
By far the most of the forecasted savings to be wrung from SB 74 — $29 million in 2017 growing to $97 million in 2022 — would come from getting more Medicaid services for Alaska Natives fully covered by the federal government. Care received by Alaska Natives enrolled in Medicaid from IHS and Tribal health providers has long been fully funded by the federal government.
Changes to federal rules within the last year expand what the feds consider to be received through an Indian Health Services or Tribal health facility.
“The policy changes basically broaden what’s considered a service delivered through a Tribal facility to include the related transportation costs and also to include referrals out to other providers from the Tribal system when certain conditions are met,” DHSS Deputy Commissioner Jon Sherwood said in an interview.
Federal funding will also now cover 100 percent of the Medicaid expense for Alaska Natives in long-term care facilities outside of a Tribal network.
Previously, the match for all care received by Alaska Natives from non-IHS and Tribal facilities was 50 percent, similar to the match for Medicaid services to the broader public.
SB 74 would also require DHSS to implement a primary care case management system to push Medicaid enrollees towards primary care first and away from potentially unnecessary and more expensive specialty provider and emergency room visits.
Alaska Primary Care Association Executive Director Nancy Merriman said she doesn’t know what the case management system would look like yet, but hopes it “takes the form of a primary care health home for Medicaid enrollees where that practice has the ability to provide comprehensive and coordinated care for patients.”
Included in the optimal system model would be services across the provider spectrum and care coordinators, particularly for individuals with chronic issues, to assure critical health information reaches from one provider to another and help in managing everything from prescriptions to appointments, according to Merriman.
Overall, Merriman said she spent a substantial amount of time following the formation of SB 74 and commended the Senate Finance Committee for undertaking a “really thorough process of learning about all the different facets of Medicaid and then really listening to people and putting together a pretty good bill.”
The bill also directs the Health Department to partner with a statewide hospital organization in developing a hospital-based approach to reduce over-utilization of emergency services.
Sherwood said he expects to start talking with the Alaska State Hospital and Nursing Home Association about the directive if the bill is passed, as the idea was first floated by the organization.
Also among the department’s duties would be establishing a medical assistance reform program that would, among other things, reduce travel expenses paid through Medicaid by requiring recipients to obtain care in their home communities whenever possible and expand the use of telemedicine for primary, behavioral and urgent care.
Outside telemedicine allowed
To make telemedicine providers as accessible as possible, the Department of Commerce, Community and Economic Development is directed to establish a business registry of telemedicine providers in the state.
Telemedicine providers are required to be licensed in Alaska but do not have to be located in the state under the bill.
Sen. Peter Micciche, R-Soldotna, a Finance Committee member, said on the Senate floor that telemedicine costs about a third of an in-person visit and one-tenth of most emergency room visits.
“We are one of only two states that does not allow telemedicine to be practiced across state lines, this bill will change that,” Micciche said.
Coinciding with the push to expand the use of telemedicine, the State Medical Board is also tasked with adopting guidelines for physicians who provide treatment or prescribe drugs without an in-person examination that are consistent with national guidelines for administering telemedicine.
Also added to the state Health Department’s duties would be the management of a behavioral health system that integrated into the broader primary care system. In partnership with the Alaska Mental Health Trust Authority, the department would develop a plan for community-based behavioral health services that addresses related housing, employment and criminal justice issues.
Mental Health Trust CEO Jeff Jesse said in an interview that the focus of the behavioral health reform is an attempt to elevate the treatment of behavioral, or mental, health issues to the primary care level.
“We really want to integrate care so that the whole person is being looked at in as many settings as possible,” Jesse said.
Prioritizing behavioral health treatment can address minor depression or substance use early on and prevent what can become extremely harmful and costly issues down the road if left untreated, he said.
Sherwood echoed what others have said in regards to behavioral health reform, that everyone knows the cost savings are there, but they are hard to quantify because they stretch far beyond medical costs.
“We know that when behavioral health issues are not addressed appropriately and quickly we see increased pressure on the criminal justice system, law enforcement, our courts, our correctional system. We see increased pressures on our child protection system; we see increased use of inappropriate services like emergency room services and other kinds of hospitalization,” Sherwood said.
The Mental Health Trust’s role in reforming Medicaid goes beyond changing behavioral health practices for in the state to that of a funder, according to Jesse.
The trust is in the process of considering a list of requests from DHSS to fund the drafting of federal waivers, provider assistance programs and consulting contracts for studies; “all those one-time expenses that, particularly in this fiscal climate, are pretty hard for the department to come by and hard for the Legislature to appropriate,” he said.
In all, he said the self-funded trust could end up contributing several million dollars to the reform effort, which would likely require a restructuring of its current operations but also be worth the extra effort, Jesse said.
He, like Merriman of the Primary Care Association, commended the committee for its thorough work on the far-reaching bill.
Among the studies the bill calls for is a look at privatizing the Alaska Psychiatric Institute and the six state-run assisted living Pioneer Homes for elderly Alaskans. The original Pioneer Home in Sitka was a converted U.S. Marine barracks that first provided housing, meals and basic medical care to indigent elderly men in 1913, according to the Health Department.
Pioneer Home residents applying for payment assistance would also have to show proof of a Medicaid application on the basis that Medicaid eligible individuals could have care partially paid for through the federal Medicaid match, a possible savings approaching $1 million annually, Micciche said.
Health plans, opioid monitoring, fraud enforcement
Additionally, the bill directs the Department of Administration to analyze the feasibility of establishing a health care authority to consolidate all state employee and retiree health care plans with local school district employee plans to maximize market purchasing power in an attempt to achieve lower insurance rates for the state.
Beyond just Medicaid, SB 74 also requires providers and pharmacists to register with the state Prescription Drug Monitoring Program. The prescription drug database was established in 2008 as a voluntary program in an attempt to reduce the over-prescription of opioids and other addictive and controlled substances.
Sen. Cathy Giessel said before the Senate vote that setting up the program was the first step of progress and “this inclusion in the Medicaid reform bill is the other half step.”
Physicians and pharmacists would be required to search for a patient in the database before prescribing a controlled substance to see if the patient had also been prescribed the medication by another provider and could be “doctor shopping” as Giessel described it.
The bill has an allowance for physicians and pharmacists to authorize a designee access to the database who would also register with for the program.
Making participation in the Prescription Drug Monitoring Program mandatory will benefit all Alaskans, not just Medicaid beneficiaries, she said.
Medicaid fraud is addressed in SB 74 through increased enforcement by the Department of Law and formation of the Alaska Medicaid False Claims Act. Largely in-step with federal law, the Medicaid False Claims Act would set civil penalties between up to three times the damages incurred by the state plus attorneys fees, but not less than $5,500 or more than $11,000 for each count. It would also set a statute of limitations of 10 years for any action to be brought against a provider or beneficiary accused of Medicaid fraud.
Stricter fraud monitoring is expected to save the state up to $900,000 per year, according to the Law Department.
The department requested $365,000 for two full-time positions to focus on Medicaid fraud for one year until the lawyers can pay for themselves.
Criminal Division Director John Skidmore called the request a “put up or shut up” scenario in testimony to Senate Finance March 7.
“If we collect the money, we’ve paid for ourselves and if we don’t, we’re not asking you to increase our budget, only to increase our authority to spend if we collect the money,” he said.
Implementing the many changes in the bill — if it passes the House with a similar look — will also require seven new Health Department positions in 2017 and nine new staff in 2018. The department projects that number will decrease to five permanent positions once the transition period is complete in 2020.
Elwood Brehmer can be reached at [email protected]