State officials warn Medicaid money will run out by month’s end

Alaska’s Medicaid health insurance program will run out of money as soon as the end of March, state officials are warning.

Unless the Alaska Legislature appropriates additional money, the Department of Health and Social Services says it will be unable to pay Alaska’s share of the joint federal-state program. Medicaid payments will be suspended.

“To our providers, it’s very catastrophic,” said Shawnda O’Brien, assistant commissioner of the Alaska Department of Health and Social Services, by phone on Friday.

Any interruption in Medicaid payments would have major effects on Alaska’s health care system. According to the latest available state figures, 200,000 Alaskans — one in four of the state’s residents — are covered by some form of Medicaid. While the state’s big hospitals have some kind of cash reserves to make up the gap — at least temporarily — the state’s smaller clinics, doctor’s offices and independent nursing homes do not have big reserve accounts.

“For small Medicaid providers, not getting paid may mean they go out of business,” said Becky Hultberg, president of the Alaska State Hospital and Nursing Home Association, in a phone interview Friday. “Most of those would be individual practices, not necessarily my members. But this could be a significant issue.”

Without Medicaid payments, hospitals and clinics may be forced to delay treatment for Medicaid patients or turn them away entirely.

The source of the problem is two-fold, O’Brien said. As previously reported by the Empire, the Legislature underfunded Medicaid last year. Then, after the session ended, more Alaskans enrolled in Medicaid than expected.

To compensate, Gov. Bill Walker requested $93 million in additional funding for Medicaid. That amount is in the state’s supplemental appropriations budget, within the state’s capital construction budget. That budget is typically passed by the Legislature as one of its last actions of the regular session.

This year, it can’t wait. In a Feb. 22 letter to Sen. Lyman Hoffman, D-Bethel, the Department of Health and Social Services said the program is expected to run out of money “by the week of April 16th, with the caveat that this could vary by a week or two before or after based on current spending trends.”

O’Brien said it’s best to think of the funding as running out at the end of March.

The Legislature has a stopgap appropriations bill, House Bill 321, intended to cover funding shortfalls like the one afflicting Medicaid. So far, HB 321 includes millions for the Alaska Marine Highway (which runs out of money April 16) and other programs, but nothing for Medicaid.

“We’re very cognizant of that date, and it’s not our desire to make sure providers don’t get paid or people don’t get Medicaid,” Senate President Pete Kelly, R-Fairbanks, said in a Friday interview with reporters.

HB 321 is expected to come to a vote of the full House of Representatives on Monday. Rep. Paul Seaton, R-Homer and co-chairman of the House Finance Committee, said that vote will include some kind of Medicaid fix.

He cautioned that the fix will not be a complete one: Instead of funding Medicaid through June 30, the end of the state’s fiscal year, it will merely fund the program through the end of April, allowing the Legislature to pass the supplemental appropriations budget on its normal schedule.

He said the coalition House Majority was willing to fully fund Medicaid, but there are “philosophical differences” among the co-chairs of the Senate Finance Committee. Neither of those co-chairs, Hoffman and Sen. Anna MacKinnon, R-Eagle River, were available for interview in the Capitol on Friday morning.

In 2017, lawmakers didn’t pass a state operating budget until late June, and they didn’t pass a capital construction budget until late July.

Chuck Bill, CEO of Bartlett Regional Hospital, said the hospital has financial reserves to cope with an interruption in Medicaid. (Medicaid patients make up 40-50 percent of the hospital’s customers.)

He said the situation does demonstrate something critical to Juneau residents.

“They need to know that the state is not meeting their obligations in a timely manner when it comes to the Medicaid care that is being delivered,” he said by phone.

“That, over time, could end up being a problem for the whole community or the whole state.”


• Contact reporter James Brooks at jbrooks@juneauempire.com or call 523-2258.


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