Without legislative action, state could suspend Medicaid payments to providers in April

Becky Hultberg, president and CEO of the Alaska State Hospital and Nursing Home Association, gives a presentation about Medicaid expansion at the Alaska Capitol in March 2015. She is concerned about whether the state will make Medicaid payments on time this year. (Photo by Skip Gray/360 North)

Whether the state pays health care providers on time for Medicaid recipients is in question. The state has requested that lawmakers include money for it in a bill making its way through the Legislature. But concerns over the amount the state has spent on Medicaid this year led to the funding not being included so far.

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Since Gov. Bill Walker expanded Medicaid eligibility in 2015, it’s grown from 123,000 people covered by Medicaid and Denali KidCare before the expansion, to 200,000 today.

That has led to costs growing faster than projections. This year, the state added $100 million in additional Medicaid expense after the Legislature passed the budget.

If the Legislature doesn’t include at least $40 million of that money in a bill that the House is considering, then the state will suspend Medicaid payments to providers as soon as mid-April. And for smaller hospitals, that may prevent some from paying contractors or making payroll.

Becky Hultberg is president and CEO of the Alaska State Hospital and Nursing Home Association.

“Many of our small hospitals rely significantly on Medicaid,” Hultberg said. “If Medicaid suspends payment, they will not have sufficient reserves to last until the end of the fiscal year. Some of them may only have sufficient reserves to last a number of weeks.”

Hultberg sent a letter to lawmakers last week telling them that some hospitals and nursing facilities have less than 30 days’ cash on hand. She wrote that providers were concerned at the lack of urgency around the issue.

“We don’t want to be alarmist,” Hultberg said. “But we felt an obligation to point out that there are very real consequences to suspending payments to Medicaid providers.”

The bill that could be used as the vehicle to make the payment is House Bill 321, known as the fast-track supplemental. It’s a bill that’s meant to provide funding that is more urgent than the rest of the budget.

Generally, the four co-chairs of the House and Senate finance committee must agree on what’s in a supplemental.

Senate Finance co-chair Anna MacKinnon said Medicaid is a source of contention because of the size of the request. She noted that the state is spending down its savings due to a gap of at least $2.5 billion between what it spends and what it raises in revenue.

“The Department of Health and Social Services is spending a lot of money on Medicaid and is not living within their means, so it’s a concern,” MacKinnon said.

MacKinnon said lawmakers are listening to health care providers.

“If we have a problem, as Alaskans, we will face that problem together, and we understand that there would be concern from organizations, general-practice providers, hospitals if the department did not have the ability to pay for the services that have already been utilized,” MacKinnon said. “So, we get it. But what does the Legislature do when the department is spending outside of its budget authority?”

State Department of Health and Social Services Assistant Commissioner Shawnda O’Brien said the need for additional funding has come from enrollment by those who would have been eligible for Medicaid before Walker expanded it.

“We believe that … the economy is the largest driver in why that is,” O’Brien said. “And so, we knew last year that we were going to have a need for additional funding and we were on record saying that last year, that the amount of money we were asking for in the budget wasn’t going to be sufficient for what we thought we were going to need.”

O’Brien said the uncertain direction of the federal Medicaid policies also made it difficult to budget for this year.

“Lots of discussions took place over this summer with our congressional delegates,” O’Brien said. “And so, we weren’t certain how some of those things would impact our budget in addition to what we were already seeing in growth.”

O’Brien said she expects that the state’s Medicaid projections for next year’s budget will be accurate and the state won’t need to ask for another large supplement next year.

Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.

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