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Alaska Medicaid report offers recommendations for cost savings

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By Anne Sutton -- Associated Press

JUNEAU, Alaska (AP) - Tribal health care reform may be a key to controlling the mounting costs of Alaska's Medicaid program, according to a report commissioned by the Alaska Legislature.

The report, penned by the Pacific Health Policy Group and presented to House and Senate committees on Feb. 6, offers recommendations that its authors say could save the state between $80 million and $100 million a year while improving health care services to Alaska Natives and others.

Andrew Cohen, a director of the group, said Alaska Natives

account for nearly 40 percent of the state's more than 100,000 Medicaid beneficiaries - by far the largest American Indian segment of any state Medicaid program.

''So anything that is done by way of a structural reform of Medicaid that would leave the tribal health system aside is a reform that would be only half-done,'' Cohen said.

State lawmakers are increasingly worried about rising Medicaid costs that have grown from less than 10 percent of the state's operating budget 10 years ago to 38 percent of this year's $3.6 billion budget.

Senate President Lyda Green, R-Wasilla, warned a joint hearing of the Senate Finance and Health and Social Services committees that state Medicaid matching funds, approaching $500 million this year, are expected to grow fourfold over the next two decades.

''That's pretty sobering to think that in 2025 we will be spending $2 billion of our funds on Medicaid,'' Green said.

Alaska's rapidly growing population of seniors and a large uninsured population are among the main factors driving the growth of the Medicaid program.

The report lists several opportunities for additional savings, including changes in pharmacy practices and long-term care.

For example, it recommends a tiered pricing system be used to secure discounts from larger chain drug stores in urban areas. The report also suggests the state explore lower cost community-based services for seniors who might otherwise be sent to a nursing home.

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However, the biggest opportunity for savings and improved service lies in the area of tribal health, according to the report.

It recommends the state apply for a waiver from the federal government to restructure the tribal system so all Medicaid-eligible services would be fully funded by the federal government.

The tribal health system is under increasing strain, according to the report, which cites sagging federal funds for IHS and disproportionate health problems among Alaska Natives, many living in remote rural areas.

Though the federal government reimburses 100 percent of Medicaid expenditures at tribal facilities, Alaska Natives also use nontribal services where the federal Medicaid match is only 58 percent. That cost the state more than $90 million last year.

Under the waiver program, the state in collaboration with tribal providers would negotiate with the federal government to reorganize the tribal health care delivery system as a managed care entity.

The system would continue to operate the same, but Medicaid funding would be based on the full range of Medicaid-eligible services for eligible Alaska Natives.

Cohen said the savings could then be used to improve the tribal health care system, making the idea more attractive to tribal groups.

''They would have an opportunity to take some ownership and have some resources available to invest in getting care to Native Alaskans which is really not available today,'' Cohen said.

Valerie Davidson of the Alaska Native Tribal Health Consortium, which runs the Native health center in Anchorage, said members are still reviewing the report but they are encouraged by the state's interest in providing better tribal care.

''The conversation has been going on for a few years. As a result of this report, more conversations will continue about how to build capacity in the tribal health system and at the same time be part of a solution for the state in finding savings to the general fund,'' Davidson said.

Davidson warned that developing a managed care entity would be challenging, and she said other options should be explored as well, including enhancing services with federally approved demonstration projects.

Green warned legislators that a fix must be found for a Medicaid system that is not only costly but increasingly complex and frustrating for its beneficiaries and providers.

''I sympathize with how complex Medicaid is for clients, health care providers, program managers, as well as employees. We also find it difficult as legislators to find a legislative fix for most of these problems,'' Green said.