A new lawsuit over Alaska’s Medicaid backlog asks a judge to order faster processing

A mostly empty hospital hallway
A hospital hallway is seen on April 7, 2020, in Juneau, Alaska. (Photo by Rashah McChesney/KTOO)

Just days into his life, Sierra Ott’s infant son Liam took a turn for the worse. His doctors thought he might need surgery. He took an emergency flight from Fairbanks.

“While he was there, they determined that he had hemophilia based on a heel prick that never stopped bleeding,” Ott said in a phone interview Friday. “He was diagnosed with severe hemophilia A, and from there, the hospital encouraged us to apply for TEFRA.”

TEFRA is a form of Medicaid, the federally funded, state-run insurance program, set aside for children with disabilities. It’s named for the Tax Equity and Fiscal Responsibility Act of 1982, the law that created the program.

So Ott applied on her son’s behalf in October. She was told it would be processed within 90 days.  

But those 90 days ran out six months ago — in January. Every so often, she’d call the Division of Public Assistance to check on her application. She said they’d tell her to check back later, or that it’s in the hands of another agency. 

Thousands of Alaskans are facing a similar struggle. Last month, state officials told Alaska Public Media more than 15,000 Medicaid applications were caught in a backlog that the state blamed on the expiration of pandemic-era requirements that prevented states from removing people from the insurance program. The Department of Public Assistance said the state’s outdated computer systems made it difficult to comply with new federal requirements preventing children from being kicked off Medicaid, leading the state to temporarily pause application processing.

Today, Liam is an 11-month-old getting ready to crawl.

“He does really well with the medication he does have to take, even though it’s an injection,” Ott said. “He handles it like a champ.”

But it’s not cheap. Hemophilia treatments are notoriously expensive. Ott estimated she’d be paying something like $8,000 per month out of pocket.

Ott said she’s lucky. Her husband is a retired veteran with coverage through the federal program for servicemembers, and that covers most, but not all, of her son’s medical expenses.

But Ott knows not everyone is so fortunate. And that’s left her to wonder.

“If we didn’t have our insurance, what would we be doing? We would have to have the conversation every week of, are we paying for this, or are we paying for my son’s medication?” Ott said. “If we’re having this conversation, I know that there’s families who are living this conversation out.”

So she filed a class action lawsuit demanding the state adhere to the deadlines in state and federal law surrounding Medicaid.

In most cases, the state is required to act on an application within 30 days, and for people like Liam who require a disability determination, the state has 90 days.

Internal data shows the state processed just about 40% of new and renewing Medicaid applications on time in the fiscal year that ended last June.

Ott’s case involves a disability determination, and the Department of Health said through a spokesperson that the agency has a limited amount of control over how long that process takes. Disability determinations are split between the federal Social Security Administration and the state Department of Labor, the spokesperson said. The Department of Labor did not return a call by Friday afternoon asking for more details.

And state-run Social Security disability determination offices across the country are backed up. As of November, new applicants had to wait an average of more than seven months to hear whether their disability claims were approved, according to government data aggregator USAFacts.

Division of Public Assistance Director Deb Etheridge told Alaska Public Media last month the state is working on its side of the issue. She said the division is hiring new staff, working overtime and upgrading the computer system issues that were one reason for the division’s backlog. And new internal data shows the state has made some progress. For the year ending June 30, the state has processed 45% of new applications on time, and 55% of renewals. But still, roughly half are not meeting legal deadlines.

Medicaid coverage can be retroactive once it’s approved.

“Even if we haven’t provided an eligibility determination, Medicaid will go backwards and pay those medical expenses back to the date of application,” Etheridge told Alaska Public Media last month. “And in some circumstances, we can look retroactively an additional three months if you had medical expenses.”

But that falls short of allowing people to actually access health care, said Ott’s lawyer, James Davis, a partner at the civil rights firm the Northern Justice Project. Davis said he’s been getting calls about this issue for months, and he said telling Medicaid families to beg doctors to wait months for payment — or float the bills themselves— is not a workable solution.

“That’s why they’re applying for Medicaid. They don’t have that kind of money,” he said by phone Thursday. “The retroactive coverage pretends that the person is going to get health care in the meantime. But … the fact of the matter is, the person won’t get health care coverage in the meantime.”

It’s just the latest in a long string of issues preventing low-income families from accessing benefits they are entitled to by law, Davis said. 

Thousands were caught in backlogs in the state’s Supplemental Nutrition Assistance Program as recently as this year, spurring a separate lawsuit from Davis’s firm. And the Alaska Beacon reported in March that the state has also struggled to stay up-to-date on its heating assistance program. 

Davis said the families hit the hardest are the ones who can least afford it.

“All I have to tell you is that if the people in Turnagain, or on the Hillside in Anchorage, didn’t get their Permanent Fund dividends on time, and they had to wait months and months and months, holy hell would come down,” Davis said. “Heads would roll.”

In cases where payment is needed ahead of time, DPA director Etheridge told Alaska Public Media that folks can ask for their application to be expedited and approved in a matter of hours. Many applicants can also be automatically approved online at Healthcare.gov if they meet income requirements.

But Ott never asked for her application to be expedited. She didn’t know it was an option. People applying for benefits shouldn’t have to say a couple of magic words, like “expedite my application,” to get their coverage, Davis said — the state should just follow the law.

Eric Stone covers state government, tracking the Alaska Legislature, state policy and its impact on all Alaskans. Reach him at estone@alaskapublic.org.

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