House passes supplemental budget to cover some of Medicaid shortfall

The State of Alaska pays $12.5 million per week for its share of Medicaid expenses.

But in order for the Department of Health and Social Services to continue processing medical assistance payments through May 14, the department will require an estimated immediate $40 million in funds.

A partial supplemental budget was passed by the House on March 12 that included $45 million of the requested amount for Medicaid. Rep. Paul Seaton, R-Homer, said the rest of the funding to cover the program through June 30 could come through the capital budget that’s typically passed near the end of the session, according to his aide, Joan Brown. Seaton is co-chair of the House Finance Committee.

The supplemental appropriation in general funds through House Bill 321 also includes $24 million for the Alaska Marine Highway and other state programs for a total of $110.2 million.

The bill now heads to the Senate.

The Alaska Legislature was caught off-guard in December when Gov. Bill Walker’s supplemental budget request for the rest of fiscal year 2018 came in for an extra $100 million to make Medicaid’s ends meet.

A big part of the reason the state’s budget for the program ran into funding shortages is because an additional 42,500 people were added to Medicaid under the expansion Walker accepted in 2015, according numbers from the Office of Management and Budget analyst Neil Steininger.

During Senate Finance hearing talks in February, Sen. Lyman Hoffman, D-Bethel, made an inquiry to DHSS asking, “how much of the supplemental is required” by DHSS to continue processing medical assistance payments through May 14, the 121st day of the legislative session.

Shawnda O’Brien, the assistant commissioner at DHSS, wrote back to Hoffman on Feb. 23 that, “without the additional general funds, DHSS is estimating it will be unable to continue processing medical assistance payments requiring a general fund match by the week of April 16, with a caveat that this could vary by a week or two before or after based on current spending trends.”

DHSS is requesting $93 million to make payment through June 30. The total supplemental request was lowered from $100 million to $93 million after the federal Children’s Health Insurance Program, or CHIP, was extended by Congress. That covered a $7 million deficit the state would have had to fill to keep its Denali Kid Care program going, O’Brien said.

“The $93 million would cover the amount of that is being billed to us or that will be billed to us over the next several months,” O’Brien said in an interview. “Some expenses already happened that we haven’t been billed for or will be billed for as providers continue caring for individuals they serve. Projections right now show the soonest that we run out of funding would be the end of this middle month of March or the middle of April. That’s the amount we have to continue to process the payments past what we’ve currently projected money to last for.”

The big question now is what happens if funding runs out?

Short answer: DHSS would need to stop paying providers for bills submitted.

DHSS sent out a statement this week from spokesman Clinton Bennett, that “without the supplemental, the department will run out of State General Funds for Medicaid by mid-April.

“The department would then be forced to suspend payments to Medicaid providers. The suspension of payments would continue until funding for the supplemental is approved. If a supplemental is not appropriated by the Legislature, the department would pay the suspended FY18 claims at the start of FY19,” Bennett wrote in an email.

That would mean funding shortages gets kicked down the road.

“This would result in the Medicaid budget being underfunded for next fiscal year,” DHSS’s statement read.

Work requirements discussed

A few public officials have begun to question how the state’s Medicaid ranks grew so quickly. Among those were Sens. Peter Micciche, R-Soldotna, and Anna MacKinnon, R-Eagle River, in a Senate hearing earlier this year.

One effort might disqualify some Alaskans from being eligible for Medicaid. Alaska Senate President Pete Kelly is sponsoring a bill, SB 193, which would require able-bodied Medicaid recipients to work, volunteer or perform subsistence activities.

Modeled after other efforts across the nation by states wanting similar requirements, Kelly said his bill will not require new mothers, the elderly or the disabled to seek out employment. But “in pursuing a work requirement, Alaska would join 10 other states already moving forward with similar efforts.” States first received a waiver from the Centers for Medicare and Medicaid Services to make the new requirement.

Kelly’s provisions protect the most vulnerable and provide exemptions for job training, students, caregivers and others. It asks for the state to submit to CMS for the waiver.

The bill was read for the first time on Feb. 19 and referred to the Health and Social Services Committee where it hasn’t moved yet.

Meanwhile, efforts are also heating up nationally to fight against the Medicaid-to-work requirements. A letter was sent out to legislators in states this this week signed by 160 organizations including the Legal Action Center, ACLU, Southern Poverty Law Center, the American Psychological Association and the National Alliance on Mental Illness.

The letter outlines how harmful the new Centers for Medicare &Medicaid Services or CMS policy allowing the imposition of work requirements would hit vulnerable populations hardest.

Among those are people undergoing treatment programs in this time of drug addiction crises, including those relying on Medicaid to treat opioid addiction.


Naomi Klouda can be reached at [email protected].

03/14/2018 - 4:10pm