- Associated Press - Tuesday, April 7, 2015

JUNEAU, Alaska (AP) - The House Finance Committee on Tuesday began digging in to Gov. Bill Walker’s proposal to expand and reform Medicaid in Alaska.

Walker has made expansion a priority and his administration sees expansion as going hand-in-hand with efforts to reduce and contain costs within the current Medicaid program. But some lawmakers have raised concerns with the potential impacts of adding more people to a system widely seen as currently unsustainable. Medicaid comprises about 60 percent of the state health department budget and is a driver of the state operating budget.

With the scheduled end of the 90-day session looming on April 19, a big question is whether consensus can be reached on a way forward.

The bill, among other things, would require a contract or system for managing primary care cases in which certain individuals - including so-called “super-utilizers,” Medicaid users who account for a sizable chunk of emergency room expenses - would have to seek approval before receiving certain services.

It calls for a proposal by January aimed at authorizing a provider tax to help offset Medicaid costs. It also calls for the department to pursue demonstration projects to test different payment or delivery methods and for the department to apply for a waiver geared toward increasing the level of Medicaid services by tribal health providers.

Medicaid services provided at or through tribal health facilities to eligible Indian Health Service beneficiaries are 100 percent reimbursed by the federal government.

Under the federal health care law, states can expand their Medicaid programs to provide health care coverage for individuals with incomes up to 138 percent of the federal poverty level. For states opting for expansion, the federal government is to pay 100 percent of the costs of the health care costs of newly eligible beneficiaries through the calendar year 2016. The federal contribution is to step down after that, to 90 percent by 2020.

Deputy health department commissioner Jon Sherwood in a response to questions told the committee that tribal entities the state would consult with cannot veto state proposals. But for a partnership to move forward, he believed an agreement would be needed.

Health commissioner Valerie Davidson said tribal health organizations have long been interested in pursuing this type of waiver with the state. The federal Centers for Medicare and Medicaid Services has approved these types of waivers in other states, she said.

The president and CEO of the Alaska Native Health Board, in written testimony submitted last month when the bill was before another committee, said tribes are ready to work with the state and federal government on ways to better utilize the Alaska tribal health system.

Another concern that’s been raised with expansion - though not at Tuesday’s hearing - is with Alaska’s system for paying Medicaid providers.

Last year, the state filed an administrative complaint against Xerox State Healthcare LLC, the vendor hired to implement the system. Among other things, the state complained about providers being paid for services they didn’t render and pricing errors. The state made about $150 million in advance payments to providers who requested them, said Margaret Brodie, director of health care services for the health department.

But Brodie, in an interview, said the July target to begin enrolling newly eligible recipients should the state expand Medicaid is doable. The state is working closely with Xerox and expects for remaining defects in the system to be corrected this month, she said.

There remains a backlog of claims that had been processed incorrectly, which is expected to take a couple months to get through, she said. About one-third of the advances made to providers have been repaid, she said.

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