Medicaid expansion is taking on a partisan edge in Juneau, to no surprise.
Hearings on the plan by Gov. Bill Walker opened Feb. 16 in a House Finance subcommittee. Department of Health and Social Services Commissioner Valerie Davidson made the case for expansion, citing improved health care for Alaskans, lower near-term costs to the state budget, and lower costs for many employers if workers have better access to health care.
Republican Reps. Dan Saddler, R-Eagle River, and Tammie Wilson, R-North Pole, were the lead skeptics in the debate, asking pointed questions mainly over long-term state cost worries.
Rep. Bryce Edgmon, D-Dillingham, a strong supporter of expansion, complained the subcommittee was spending too much time on negatives in the far future with little discussion of near-term benefits like cost reductions in the departments of Corrections and Health and Social Services, where federal funds would replace state dollars now being spent on health care.
Rep. Les Gara, D-Anchorage, said, “I’ve never heard of Alaskans turning down 90 percent federal funding for a program. We wouldn’t dare do that for highways,” also 90 percent federally-funded.
Davidson handled it all with grace and poise.
“We all want Alaskans to be as healthy as possible and contributing to the economy, but without improved access to heath care many can’t work and can’t hunt and fish. Medicaid expansion will reduce the number of Alaskans without health insurance by half, from about 20 percent of our population to 10 percent,” Davidson said.
“We know our mortality rates will drop. A recent study by Harvard showed that for every 830 individuals gaining health coverage, one death per year is prevented. That means there would be 30 fewer deaths per year in Alaska with expansion, according to the Harvard study.”
Also, Medicare expansion and Medicaid “reform,” a restructuring of services in both the current and proposed expanded program, go hand-in-hand, the commissioner said. The department already has several reform initiatives underway aimed at lowering costs and these will be continued and expanded, she said.
Davidson acknowledged that changes to even the present program are needed. The Department of Health and Social Services budget is $2.7 billion per year and Medicaid is $1.7 billion of that, although the federal government is picking up 50 percent of Medicaid costs.
“The current Medicaid program is not sustainable,” and reforms are needed, she said. “Efficiencies, improvements and innovations are critical to bend the cost curve.”
That prompted Wilson to ask whether the expansion should be done if the current program can’t be sustained. Davidson said reforms are needed for both the current program and an expansion but there are still many benefits from the expansion.
Saddler posed a question about the possibility that the federal government may someday shirk its promise to pay 90 percent of the cost of the expansion, leaving Alaska stuck with the tab.
“Does that concern you?” he asked Davidson.
Davidson replied, “We must plan for the future but we must also live for today.”
She pointed to the federal government paying 90 percent of major state highway and airport projects with no guarantees this level of funding will continue.
“We still maintain our roads and runways, and we use them. Having roads and runways allows our businesses to continue. We need to think of health care in a similar way, like infrastructure. We can build roads and highways but unless we have healthy people our economy will be thwarted,” she said.
“There are a whole range of programs where we are heavily dependent on the federal government. We can’t spend all of our time worrying about the feds. We have bigger problems.”
Medicaid expansion will also bring near-term economic benefits from the infusion of new federal funds, she said.
“We will see $145 million in (fiscal year) 2016, increasing to $224 million per year in 2021. That’s a billion dollars of new federal money in six years,” Davidson said.
Expansion will also reduce uncompensated care paid out by Alaska hospitals, which amounted to $90 million in 2011, Davidson said. Federal law requires hospitals to treat all who appear at emergency rooms regardless of ability to pay, and the losses hospitals incur wind up being spread through the rates paid by all others using the facilities.
“Arizona saw a 30 percent drop in hospital uncompensated care within six months of expanding Medicaid. We know we will see a reduction here, although we don’t know how fast it will occur,” Davidson said.
Edgmon said the biggest immediate benefit he sees in expansion will be in making continuing treatment, for alcohol and substance abuse for example, available to prisoners once they are released.
“There is no treatment available now, and these people return home to the same environments they left,” he said.
The likelihood of their returning to prison is high, he said.
Committee members questioned Davidson about other aspects of the expansion. Rep. Tammie Wilson, R-North Pole, said she worries whether the state’s health care workforce will be able to accommodate an expansion of medical services. Wilson said she has constituents now who find it difficult to get certain types of service.
Several legislators had questions about the level of payment by the state to health providers under Medicaid, at rates higher than most other states. Health and Social Services Deputy Commissioner Jon Sherwood said Medicaid is paid in Alaska at rates, on average, about 130 percent of what Medicare pays.
However, Medicare, the federal health program for senior citizens, pays at about 70 percent, on average, the usual and customary rates charged by Alaska health care providers, Sherwood said. If Medicaid is 30 percent above that it brings the Medicaid rate near parity with health providers’ typical charges.
Sherwood appeared with Davidson at the House Finance subcommittee meeting.
In other states, Medicare rates are closer to what providers typically charge and Medicaid rates are below that, so that in many states, for general physician services, senior citizens are treated by most providers while some Medicaid patients are turned away because of insufficient reimbursement.
In Alaska the situation is the reverse. Alaska seniors in larger cities like Anchorage have difficulty seeing physicians because of the low Medicare reimbursement. Because the Alaska reimbursement for Medicaid is higher, those patients are accepted by most care providers.
Rep. Cathy Munoz, R-Juneau, asked Davidson and Sherwood to provide a comparison between Alaska and other states on Medicaid reimbursement.
Medicaid reform efforts already underway would be expanded along with an expansion of the overall program, Davidson said.
She identified several initiatives:
One is to reduce “super-users” of hospital emergency rooms by those now covered by Medicaid, by people who don’t have access or don’t choose to use primary or other care providers.
“We have identified about 5,000 ‘super-users’ of emergency rooms and this is costing our program about $29 million yearly,” Davidson said.
The department has now initiated a program, so far voluntary for patients, to receive counseling and assistance in lining up care providers other than the emergency rooms. This has the potential of saving $7 million per year near-term, she said. The department is considering making it mandatory for Medicaid recipients, although that would require adoption of new regulations.
A bigger potential savings, $15 million per year, could come from new initiatives to reduce fraud, waste and abuse of the system by providers, she said. There have particularly been problems among personal care attendants licensed, and paid, by the department.
In these cases the department is focusing on closer scrutiny of billed hours and billed locations.
“We know there are 24 hours in a day. If we see excessive hours being billed, we want to take a look. Also, if we see services billed at more than one location, and even more than one community, it’s a red flag,” Davidson said.
Another savings, about $24 million per year, involves an expansion of community-based services so that state dollars are replaced by federal funds. These require obtaining waivers, or permission, from the federal Center for Medicaid Services, a process that can take two to three years, she said.
Yet another initiative is a “medical home” plan where patients are assigned to a single care provider, such as a clinic, for coordinated care. This would have patients received almost all care in one place rather than going, ad hoc, to several locations, which drives up costs.
A pilot program for this is underway with the Alaska Primary Care Association, Davidson said. Studies show that it could save between $78,000 and $165,000 per 1,000 patients enrolled in Medicaid being served in such a coordinated fashion.
Another savings, about $15 million per year, could come through closer coordination with Tribal health providers to ensure that Alaska Natives who are eligible for Medicare enroll in the program.
The federal government will now pick up 100 percent of those costs if the Alaska Natives receive care in Tribal health facilities, Davidson said. The state now pays 50 percent of those costs, she said.
The department will also be looking closely at reform efforts underway in other states. Colorado, Minnesota and Vermont are now experimenting with various alternative payment strategies aimed at lowering costs, and lessons can be learned from those states, Davidson said.