State proposes $225 million reduction in Medicaid spending

Effort is part of broader cost-saving measure by Dunleavy administration

State health officials are proposing rate reductions for some Medicaid service providers as part of a broader effort aimed at cutting costs.

Gov. Mike Dunleavy’s administration is pursuing a $225 million reduction in state Medicaid spending, about $95 million of which Health and Social Services Commissioner Adam Crum sees as achievable for the coming fiscal year as part of an initial phase.

Details of the second phase are being worked out but would involve seeking special permission from the federal Centers for Medicare and Medicaid Services for more flexibility in the state program and legislative approval to pursue some of those avenues, Crum said.

Crum said he is not anticipating changes to Medicaid eligibility. Medicaid is a government program that provides health care to lower-income Alaskans. More than a quarter of the state’s population is covered by Medicaid.

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Dunleavy’s budget came out Feb. 13, and officials are now providing a bit more detail on how the administration seeks to hit its budget reduction target.

The initial phase calls for Medicaid provider rate reductions for a broad range of service types, including certain inpatient and outpatient hospital and specialty physician services. Crum said the proposed rate changes would not affect primary care providers, obstetrics and hospitals deemed as critical access facilities in smaller or more remote communities.

“The initial shock when the budget came out was that there was a threat of multiple hospitals closing, lack of access, items like that. And that is not the case, as you can see,” Crum said.

The first phase seeks to implement a 24-hour nurse hotline, cut in half the time allowed for a provider to file a claim, limit the annual number of adult visits for physical, occupational or speech therapy and more closely scrutinize non-emergency air travel for Medicaid recipients.

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The department also says it has expanded agreements for federal reimbursements when Alaska Native patients are referred from a tribal health organization to a non-tribal provider, among other things. The department previously said it planned to eliminate adult preventative dental services, which is an optional service, but maintain emergency dental care.

At a budget hearing last month, Republican Sen. Natasha von Imhof asked why adult preventative care was targeted for elimination, saying she has heard from providers that this service often will bring people into a clinic where they can be asked if they have other medical needs.

“It’s one important thing that brings people into clinics. So if we lose that, we might lose that access point to people,” she said, suggesting another optional service could alternately be looked at.

The Legislature is more than halfway through the constitutionally allowed 121-day regular session. Voters approved a 90-day session limit though legislative leaders don’t consider that a doable target this year.

• This is an Associated Press report by Becky Bohrer.