State has started delaying Medicaid payments to some hospitals

Becky Hultberg responds to a health care question last year @360 in Juneau. Hultberg is the president and CEO of the Alaska State Hospital and Nursing Home Association. She has expressed concern about Medicaid funding. (Video still courtesy 360 North)

State Medicaid money will run out before the end of June. That means many hospitals and other health care providers won’t get paid until July.

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The state budget includes $20 million less for Medicaid than state officials say they’ll need. That’s to cover services provided through June 30.

Hospital advocates criticized the Legislature’s decision against fully funding what’s known as a supplemental. They include Becky Hultberg, president and CEO of the Alaska State Hospital & Nursing Home Association.

“We are very disappointed with the Legislature’s decision on the Medicaid supplemental,” Hultberg said. “Full funding of the supplemental was obviously tied up in end-of-session negotiations and ultimately, Medicaid was short-funded. That’s going to be a significant problem for many of our members.”

Normally, the state Department of Health and Social Services pays Medicaid bills within a week. But starting this week, department officials are delaying some payments to large providers that don’t rely on Medicaid money to keep the lights on.

Shawnda O’Brien, department assistant commissioner, is in charge of the department’s finances.

“We’re trying to do the least amount of harm possible to the smaller providers who are reliant on Medicaid funding,” O’Brien said.

That means department staff are going through each provider bill and sorting them by category. So community health centers and behavioral health clinics are receiving top priority for payment.

“Those entities tend to be in communities where they’re maybe the sole provider for that service, and so it’s detrimental for them if we don’t continue to provide them with the resources they need to keep their doors open,” O’Brien said.

Not all Medicaid bills are treated the same. Patients eligible for the Indian Health Service are having their bills paid without delay. That’s because the federal government is picking up 100 percent of the bill. And people who joined Medicaid due to the expansion three years ago also are having their bills paid now, since the federal government pays 94 cents of every dollar. But the feds only pay 50 percent of the cost for others on Medicaid. The payment for some of those bills are those ones that are being delayed.

All of this is happening because Medicaid costs are higher than projected. State officials say this is primarily due to the recession. But Soldotna Republican Sen. Peter Micciche noted that the state has built up a backlog of applicants for social services. He said this has been made worse by the increase in the number of people receiving Medicaid.

“We’re going to work with the department to make sure we’re going to meet those needs, but we also need the department to prioritize services for the most needy, as opposed to expanding services,” Micciche said early Sunday morning, after the legislative session ended.

State officials said the backlog in applications is the result of funding cuts.

The House originally supported paying the full amount for Medicaid that Gov. Bill Walker’s administration requested. But it agreed to reduce the funding in a compromise with the Senate.

Anchorage Republican Rep. Gabrielle LeDoux said the state should follow through on its commitment to pay Medicaid providers.

“The bottom line is, we got Medicaid here. And … we got Medicaid expansion,” LeDoux said. “And when you hire somebody, like a doctor, like a hospital, and you tell them that they’re going to get paid, you really ought to pay them in a timely manner, regardless of what you think about, you know, the philosophy of Medicaid.”

The state is looking to take steps to reduce Medicaid costs, following up on a bill the Legislature passed two years ago. That includes hiring contractors to help patients who use health care the most.

For example, it’s cheaper to remind patients about doctor’s office appointments than to pay for an emergency room visit after they miss the appointment.

Micciche said he wants the state to lower unnecessary use of health care. He also wants the state to be more aggressive in shifting people eligible for the Indian Health Service to IHS billing. This is expected to save the state $20 million over the next year.

But Hultberg, the hospital advocate, said efforts to control Medicaid costs are a separate issue from the state following through on its commitment to pay for services.

“We support efforts to address Medicaid utilization and to ensure appropriate utilization of health care services. Unfortunately this does not move us any closer to doing that,” Hultberg said.

Health care providers can look forward to a similar problem next year. To pay for the short funding next month, the Legislature may be short funding June 2019.

On top of this, the Legislature included $10 million less for Medicaid in the new budget than the administration said it would need.