Legislature(2025 - 2026)ADAMS 519
02/09/2026 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Medicaid Rate Review Study by Guidehouse | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 263 | TELECONFERENCED | |
| += | HB 265 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 263
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making supplemental appropriations;
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for
an effective date."
HOUSE BILL NO. 265
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
^PRESENTATION: MEDICAID RATE REVIEW STUDY BY GUIDEHOUSE
1:36:48 PM
EMILY RICCI, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH,
reviewed the Medicaid program with prepared remarks:
Alaska's Medicaid program is a joint state/federal
program that provides health insurance to low income
Alaskans. As of December 2025, it provided health
insurance to over 210,000 Alaskans or one in four
Alaskans. Medicaid provides critical services an
essential revenue to healthcare providers. It is also
a very large budget component as this committee is
aware. So the budget must be carefully managed to
ensure the value of the dollars being spent align with
the outcomes that we want to see. Fundamentally,
that's what we are trying to review through the rate
methodology study.
When I started in this role in 2022, we were emerging
from the pandemic and we are moving back into business
as usual mode. But the effects of the pandemic were
very present in the healthcare sector as in other
sectors. Inflation was impacting all sectors,
workforce was and remains a critical issue that we
hear frequently from both providers and others as a
challenge, behavioral health needs were skyrocketing
across the U.S. including Alaska (particularly among
our youth), and chronic and acute conditions were
beginning to emerge and accelerate in ways that we had
not seen before.
The legislature was responsive and provided increased
rates for home and community based waiver services and
supported the department as it implemented behavioral
health rate increases, but we continue to hear from
providers that these increases were not enough and
that there were gaps in their ability to meet the
needs and provide the services that their population
was experiencing. So we needed to consider, is the
issue that there's not enough funding or is it that
how our funds are established and how they are paid
out may not reflect the realities of the system that
we want to see and the outcomes that we want to see.
Is the methodology underlying our rate structures
right? How can we be sure that further investment in
the Medicaid program aligns with the gaps in our
system that we want to close? Again, this is a
question that underlies the foundation of our Medicaid
rate methodology study. Like everything in Medicaid,
our rate structure is very complicated. We have over a
dozen different rate methodologies in our Medicaid
system. To tackle this we broke the study into two
phases and today Guidehouse will present on the first
phase of that study. We prioritize the services where
we are hearing the most concern from both our
stakeholders and our providers. These include
behavioral health services, long-term care services
(home and community based waiver services), federally
qualified health centers, and our transportation
services. Other types of rates will be addressed in
phase two, which we are building out over the next few
months.
Work on the first phase started last fall and final
reports for behavioral health and long term care
services were completed in this last fall or early
winter - about a year later. The federally qualified
health center reports were fully finalized at the end
of last week and we are finalizing the transportation
report; however, we've shared many of those findings
already with stakeholders publicly and we will be
speaking to those today.
1:40:22 PM
Ms. Ricci continued to read from prepared remarks:
These studies and recommendations are intended to
provide policymakers and appropriators with options
and structures to consider when you're evaluating
future needs and requests for the Medicaid program. We
have asked the contractor Guidehouse to provide fiscal
estimates that reflect Fiscal Year 25. The intent was
to offer a sense of magnitude of what some of these
options would be. There is no expectation from the
department that these recommendations be implemented
all at once or potentially at all. This depends on
discussions that will occur this year and the next
several years by policymakers and appropriators. Many
of the questions that the rate methodology examines
are ones that we have heard from stakeholders. We're
happy to put some context and numbers around those
discussions so that they can inform some of the future
decisions that we have to make. We know that this is
especially important given our fiscal situation. As we
work to balance the needs of the healthcare system and
Alaskans along with our fiscal constraints, we hope
that you find this useful information to consider as
we move forward into the future.
1:41:40 PM
COY JONES, PROJECT DIRECTOR, GUIDEHOUSE, introduced himself
and relayed that he led the Guidehouse rate evaluation. He
provided a PowerPoint presentation titled "Alaska Medicaid
Rate Methodology Review," dated February 9, 2026 (copy on
file). He highlighted definitions and common terms
including acronyms on slide 2. He remarked that Ms. Ricci
did a comprehensive job talking about the nature of the
Guidehouse evaluation. He stated that what the State of
Alaska was looking for in the evaluation impacted the scope
and nature of the recommendations.
Mr. Jones turned to slide 4 titled "What is a Rate
Evaluation?" He called out four words on the slide
including comprehensive, actual, standardized, and
transparent. He stated that one of the things that
distinguished the evaluation from those in other states was
that the evaluation for Alaska involved an ambitious
program to look at the many methodologies the state used
across Medicaid. Like Alaska, many states used multiple
methodologies and it could be cumbersome to look at them
together; therefore, many states looked at different
programs in different years, which had its virtues, but one
of the things that was missed was an attempt to bring them
all together to standardize the rate methodologies across
the programs to make them transparent. He stated it was an
opportunity to look at the methodologies together in a
phase one and two approach and implement changes in a
rational way when there was need for uniformity in areas
like behavioral health services and other home and
community based services.
Mr. Jones clarified that the work done by Guidehouse
reflected an evaluation rather than a rebase. He explained
that Guidehouse was given a broad scope in terms of making
recommendations on the methodology. He detailed that the
evaluation did not just look at the existing services and
recommend a rate. Guidehouse was invited to look at the
methodologies to determine whether they were supporting the
needed services and to make recommendations about
establishing new needed services or improving service
delivery. He stated that the Guidehouse recommendations
reflected the broader point of view.
1:45:30 PM
Mr. Jones turned to slide 5 titled "Who was Involved?" The
evaluation involved Guidehouse, the Department of Health
(DOH), Alaska providers (tribal and non-tribal), and
Alaskans with lived experience, and broader input from a
wide range of stakeholder groups.
Mr. Jones moved to slide 6 titled "Engagement Scope and
Phase 1 Services Categories." Guidehouse was at the point
of completing phase 1, which focused on four major types of
services including behavioral health, long term services
and supports (LTSS), federally qualified health centers
(FQHC), and medical transportation. The slide showed
different programs that fell under each category.
Behavioral health included community services - it did not
include the state hospital - for mental health and
substance use disorder services (SUD). He detailed that
behavioral health included a range of high intensity
services for people with a range of needs. The same was
true for SUD that included a range from therapy services to
major residential services. The second category was Long
Term Services and Supports (LTSS), which included home and
community based services for the elderly and physically
disabled population as well as the developmental
disabilities population. He detailed that the two key
populations had different needs even though there was
significant overlap in the types of services received. The
services could range from a personal care attendant coming
into a person's home to assisted living and major
residential services.
Mr. Jones moved to the third category on slide 6. Federally
Qualified Health Centers (FQHCs) were a form of health
clinic that provided medical and behavioral health care
serving needy populations in locations when there was often
no other provider. He noted there were FQHCs all throughout
Alaska. The Guidehouse evaluation looked at the Prospective
Payment System (PPS) and the Alternative Payment
Methodology (APM), which were various ways to reimburse the
facilities. The fourth category was medical transportation
and included everything Medicaid paid for including
emergency transportation such as air, water, and ground
ambulance; and nonemergency transportation such as taxi,
ride shares, and public transit to get people to their
medical appointments. He remarked that because it could be
a big undertaking in Alaska to get people where they need
to go, medical transportation also included lodging and
meals.
Mr. Jones turned to "Stakeholder Engagement" on slide 7.
The evaluation sought input from as many types of
stakeholders as possible. He noted that providers were a
key group, but Guidehouse also met with broader provider
and industry associations, advocacy organizations, labor
groups who delivered services, tribal health organizations,
and self-advocates and families of those with lived
experiences. Guidehouse used a number of venues to try to
get and receive as much information as possible.
1:50:44 PM
Representative Tomaszewski stated there had been a massive
amount of news about fraud happening within the community
health and transportation category in Minnesota. He asked
if it had occurred in Alaska and who was checking on all of
the people taking massive amounts of Medicaid and different
healthcare funding.
Mr. Jones answered that the main way the study intersected
with emerging issues that was important for Alaska was to
understand how services were delivered and the cost of the
services. The evaluation had looked at the costs incurred
by providers to give a sense of what costs were at present.
He noted it was not a program integrity effort, which was
not a part of the scope.
Ms. Ricci elaborated that DOH had a Program Integrity Unit
that worked with a Medicaid Fraud Unit under the Department
of Law (DOL). She stated there had been increasing activity
to publicize some of the current program integrity efforts.
She relayed that "how we pay reflects how people provide
services." There were some areas where the state needed to
make adjustments into how rates were structured because
there may be a rate that provided payments on a 15-minute
basis, which incentivized people to bill in 15-minute
increments. She stated it drove up the cost and people were
not necessarily getting better services. She suggested the
state could look at establishing a daily rate, which
provided a limit and incentive for services to occur in a
different way. She explained that those were some of the
things DOH asked Guidehouse to look at to make sure what
the state was paying for reflected services it wanted to
see from providers.
Representative Tomaszewski referenced organizations who
were not even providing services but were turning in
receipts fraudulently. He was thinking about outright
fraudulent organizations on transportation. He asked how to
ensure it was not happening in Alaska.
Ms. Ricci responded that she would be happy to update the
committee with an outline from the Program Integrity Unit
showing how it looked at unusual behavior or billings in
the Medicaid system combined with its routine random
program integrity analysis and audits.
1:54:39 PM
Co-Chair Josephson recalled that former colleague, Jay
Fayette, one of the "toughest state prosecutors around" who
led the homicide unit for years was selected to run the
Medicaid Fraud Unit for the DOL Criminal Division. He
stated his understanding that the state did prosecute
individuals.
Ms. Ricci responded, "Correct."
Representative Galvin presumed the map [of Alaska] shown on
slide 8 represented the Guidehouse focus areas. She
observed that the North Slope was not represented on the
map. She was curious about Port Heiden where there was not
a choice for the hub community. She asked about the
transportation piece of Medicaid. She had heard that the
charge [to Medicaid] for the service was only when a
patient was in the helicopter or ambulance. She asked about
remote communities and considered the possibility that a
patient may have to pay for the cost of the emergency
service to reach their rural community, while only
receiving reimbursement for one way. She thought it must
skew Alaska's rates.
1:57:03 PM
Mr. Jones commented first on the nature of strategy on
stakeholder engagement in the evaluation. He relayed that
Guidehouse wanted to talk to as many people as possible,
which explained the reason for being in Anchorage, Juneau,
and Fairbanks. Another important point was to visit all of
the major regions in the state. He highlighted that
Guidehouse included five or six regions [shown on the map
on slide 8]. He noted that Kotzebue and Southeastern Alaska
were isolated in very different ways with cultural,
logistical, and demographic constraints and
characteristics. He noted that Guidehouse wanted to be on
the ground to see the differences. Another important
motivator was to have a demographic cross section.
Guidehouse was interested in urban communities and
understanding how the hub and spoke model worked in Alaska.
Mr. Jones elaborated that Guidehouse had visited rural hub
communities as well including Kotzebue, Bethel, and
Dillingham. He noted that Port Heiden was the single
village represented. He sensed that "many folks did not go
to the village level." Guidehouse learned how difficult it
was get to the villages; it was extremely instructive
merely getting transportation to a village. He explained
that Port Heiden was the second option because the weather
had been too poor to travel to the first option. He
stressed that villages had a unique perspective that was
not the same perspective as even the rural hub communities.
Villages were served by providers based in rural hub
communities, but their perception of their needs was often
different than the vantage point in Anchorage and in the
hub communities. He would have liked to visit more villages
if Guidehouse had more time and resources. He would have
liked to visit the North Slope more. He recognized that
Kotzebue was not necessarily the only or best
representative of a very expansive area in northern Alaska.
Mr. Jones addressed the second part of Representative
Galvin's question about things that went into
transportation that were not covered in Medicaid policy. He
understood why the policy existed. He noted it was not only
a state policy; it was the way the Medicaid program and the
state/federal partnership worked. He stated that Medicaid
was a program that was created to cover medical costs and
transportation in most states was fairly peripheral to the
medical needs. The rules were built for providing medical
services so payment did not cover anything that was not
directly related or did not require the delivery of medical
services. He stated it was a constraint on the
transportation side; if people did not get to their
location or someone was waiting and it was not time actual
transportation, it was not added in or billed separately.
He expounded that providers were still incurring costs for
that; therefore, a rate was needed that would adequately
account for the fact that there were a lot of "uncliented"
minutes. For example, a plane may take off but may have to
turn back. He noted it was still a cost, but it could not
be billed. Part of the methodology used for the services
accounted for unbillable time and the cost incurred.
2:02:33 PM
Representative Hannan looked at the last bullet on slide 8
specifying that Guidehouse met with providers representing
service provision across all four work streams. She asked
if work streams were the same as service categories.
Mr. Jones replied that the four work streams were
equivalent to what was shown on the previous slide. He
remarked that it was internal jargon. There were slightly
different Guidehouse teams working on all four of the
programs.
Representative Hannan asked for the background behind the
Guidehouse. She asked if the company had worked for DOH
before and if it was work that was done for other states as
well.
Mr. Jones replied that Guidehouse was a national firm
working in healthcare and other areas of state and federal
government as well as the private sector. The company had a
particular focus in healthcare and he worked on state and
local government and state health in particular. He
explained that Guidehouse did the work in many states. He
had personally worked on several projects in Alaska in the
past and Guidehouse had some experience with Alaska but not
within the last five years. The company did rate
evaluations across the U.S. In the case of Alaska,
Guidehouse did not lean too heavily on its work in the
Lower 48 because there were some unique issues and
challenges that did not have "out of the box" solutions. In
some context the national experience was helpful because
Guidehouse could talk about the benchmarks and expectations
in other states. He noted it would show up when talking
about indirect costs or transportation costs.
2:04:56 PM
Representative Hannan referenced Mr. Jones' earlier
discussion about rate structures versus rate methodologies.
She asked if a methodology produced a rate structure or if
the terms were interchangeable.
Mr. Jones explained that the methodology generally defined
where a rate landed. There was also a rate structure that
was not decided by the methodology, which was what services
the state wanted to deliver. A rate structure would be
fitted to those services in order to determine how to pay
for the services.
Mr. Jones looked at the approach to rate-building on slide
9. Guidehouse used an independent rate buildup model for
most of the services. For services in phase 1 such as
behavioral health and LTSS home and community based
services there was typically no data unless a state
required providers to give their costs. He explained that
it had been necessary to make the data through cost
surveys. He detailed that Guidehouse asked the providers
for their costs, which worked great for Alaska because they
did not want to piggyback off of other costs seen in the
rest of the country. He elaborated that Guidehouse used the
rates given by providers and built up a rate based on the
costs. The delivery of the services required practitioner
time, administrative overhead, travel components, different
kinds of indirect costs, wages, staffing ratios, and
employee benefits. Guidehouse compiled the information in
rate models at a cost based rate what it would cost for a
provider to deliver a quality service.
2:07:49 PM
Mr. Jones moved to "Data Sources" on slide 10. He stated
that actual costs were extremely important to understand in
Alaska because the cost profile for delivering services was
unlike any other state. The costs were captured in the
survey through different cost reports for FQHCs and were
benchmarked against other publicly available data, which
drove the benchmarks around what Guidehouse thought
services should cost.
Mr. Jones moved to slide 12 titled "Behavioral Health Rate
Evaluation Findings" and discussed three key findings.
Guidehouse was recommending some overall rate increases for
service reimbursement, but the biggest issue it found was
that service reimbursement was misaligned. Many services
currently had adequate reimbursement and many services
probably paid more than benchmarks indicated was needed,
but some actual costs were significantly lower than the
service. Guidehouse was recommending that behavioral health
in Alaska needed rate equity or rebalancing. He explained
that it was not that an infusion of significantly more
money was needed. He detailed that before the dollars went
into the service there was a need to calibrate the service
to pay appropriately, otherwise it provided incentives to
over deliver a service and under deliver others.
Mr. Jones second key point listed on slide 12 related to
indirect costs, which represent the overhead costs of
delivering services. He relayed that the indirect costs
were disproportionately high for LTSS and behavioral
health. He detailed that for every dollar spent on
behavioral health about 40 cents went to indirect costs,
which was more than in other locations nationwide. The
third component was that a lack of historical standards in
the rate reimbursement contributed to misalignment of the
system and no way to drive efficiency. The state was paying
for the cost of services and the costs increased annually.
2:10:39 PM
Representative Stapp asked Mr. Jones to elaborate on the
delivery of services being so high. He asked how the 40
cents on the dollar compared to other jurisdictions. He
asked if it reflected administrative costs by providers.
Mr. Jones replied that the indirect costs reflected two
"cost buckets" including administrative costs and program
support costs. An example of program support costs was
another worker assisting and delivering services who could
not bill for the services themselves. The cost was higher
in Alaska than in other jurisdictions. He explained that 30
percent of the cost would be very high in most other
jurisdictions, while Alaska was at 40 percent. The rate was
usually between 20 and 30 percent including overhead and
program support. He did not have a strong theory about the
driver of the cost. He noted there were higher personnel
costs in Alaska, but the higher costs were direct and
indirect care costs. Guidehouse calculated the indirect
costs as a percentage of the direct care costs. He
elaborated that if there were high direct care costs, there
could also be high indirect care costs without it being
disproportionately high relative to the direct costs.
Representative Stapp thought it was odd to be spending 40
cents on the dollar for administrative costs. He stated
that on the health side the federal government required
insurance companies to spend 15 percent. He asked if
Guidehouse had been able to determine whether or not the
additional nonbillable personnel utilized in the direct
care process was more of a driver. Alternatively, he asked
if it was the paperwork.
2:13:41 PM
Mr. Jones responded that one of the ways Guidehouse
conducted its cost survey in order to make it manageable
for providers was to broadly capture the cost categories
and indirect costs but it did not ask questions about who
was in what administrative personnel role and what their
salaries were. The information was captured at a high
level. Guidehouse could identify broadly what was driving
the indirect care costs such as administrative personnel,
program support, transportation, or information technology;
however, it could not tell if there was a particular driver
(e.g., broadband being more expensive in certain parts of
Alaska).
Representative Moore looked at slide 10 and asked what
percentage of the providers responded to the provider cost
survey.
Mr. Jones answered that it was different for each program,
but generally Guidehouse was aiming at a response rate of
about 30 percent. He deferred to his colleague.
CLAIRE PAYNE, BEHAVIORAL HEALTH LEAD, GUIDEHOUSE, responded
that the response rate varied depending on the service. She
explained that for behavioral health specifically,
Guidehouse looked at the number of providers as well as the
total Medicaid dollars the providers delivered. For
example, there could be 100 providers that may only do a
little Medicaid and did not have the same labor force. On
the behavioral health side, about 60 percent of the
Medicaid dollars were responded to in the survey. She
relayed that the company Qualtrics conducted a lot of the
surveys in the U.S. and it identified a representative
sample at about 35 percent. She noted the response rate in
Alaska was almost double that figure. She believed the
other providers were similar. She relayed that the FQHC
response was quite different because it was a much smaller
provider pool.
2:16:19 PM
Representative Moore asked if the costs reported by
providers were validated.
Mr. Jones answered that Guidehouse made a distinction
between a cost report, which was usually audited and
certified, and a cost survey. For the sake of time and
expediency to get real time data that was not years old,
Guidehouse did not look at audited financials and backup
the dollars. There was an understanding they were trading
accuracy for expediency. He remarked that the survey had
seen a low response rates from air ambulance companies, but
Guidehouse did not find it concerning. He detailed that
there were many air ambulance providers and some were much
bigger than others. He estimated that the survey had
received a response from around four air ambulance
providers; however, among those providers the survey
captured about 90 percent of the volume. Generally,
Guidehouse was comfortable with the feedback it received
through the survey.
Representative Moore asked for verification that the [costs
reported by providers] were not validated.
Mr. Jones agreed.
Representative Galvin referenced that indirect costs
accounting for 30 percent of the total would be considered
high and the number in Alaska was 40 percent. She heard
from behavioral health providers that 40 percent of their
time was spent doing paperwork in order to receive
reimbursement. She noted there were several other states,
possibly including Wyoming, that were using a federal form
instead of whatever was used in Alaska. She wondered if the
issue played a big role in the cost in Alaska.
Mr. Jones clarified that total indirect cost of 40 percent
was not all overhead. He noted that especially in the case
of behavioral health, much of the cost was associated with
program support (e.g., transportation). He explained that
it was not administrative. He elaborated that it was
necessary to spend the money to provide the service, but it
was not billable. He explained there was a fee for service
structure in Alaska, which would require a certain level of
reporting and documentation. For all of the fraud
considerations, the basic documentation was needed in order
to make a claim and tie it back to the service delivered.
In some cases it was possible to leverage federal
processes, but for behavioral health, LTSS, and
transportation, there was not a standardized federal system
to streamline the process. There were potentially some
administrative rules in Alaska that could be changed, but
it was not a focal point of the study. He relayed that
there were some reforms underway in behavioral health that
would lead to clinically certified behavioral health
centers. Part of that payment methodology, which Alaska was
moving to, would address some of the administrative
overhead because it was paid through an episode that cut
down on much of the documentation. He added that it had its
own challenges but it was a potential improvement.
2:21:19 PM
Co-Chair Josephson referenced SB 45, current legislation
pertaining to Medicaid parity in mental health and
substance use disorder coverage in the state medical
assistance program. He elaborated that mental health
providers in Alaska came to the legislature to talk about
the burden of paperwork they had that other types of
physical healthcare providers did not. He thought it was
the issue Representative Galvin was highlighting. He asked
if Mr. Jones had heard the complaint around the country. He
stated that the key word was parity.
Mr. Jones replied that he was familiar with the parity
issue, but Guidehouse did not see anything strictly related
to it. Many of the services the study looked at had no
equivalent to commercial healthcare where parity was an
issue. He relayed that Guidehouse heard the complaint about
high burdens of documentation everywhere. He did not aim to
diminish the reality and truth of the situation, but
Guidehouse heard about the issue from medical and
behavioral health providers. Behavioral health providers
were newer to the world of medical claiming in the Medicaid
program, unlike hospitals and others that had been involved
for decades. He stated there was a learning curve to making
claiming more efficient and it was likely more difficult
for behavioral health providers than established medical
providers.
Ms. Payne added that the Guidehouse methodology did not
want to take the rate and move it forward based on
inflation because that would perpetuate a system that was
already out of sync. The study looked at many nuanced
pieces within the methodology including a billable time
adjuster or productivity adjuster. She detailed that it was
traditionally much higher in the behavioral health space
for record keeping. For example, therapists were supposed
to have care plans and take notes on what was supposed to
happen next. She noted that it was time consuming. She
highlighted that the rate models developed by Guidehouse
included the adjuster shown in the report appendix. She
explained that it was substantially lower, which increased
the reimbursement to account for the downtime. The study
worked to address the issue very specifically and it was
traditionally higher in behavioral health.
2:24:36 PM
Representative Hannan discussed her understanding of parity
for behavioral health services. She believed therapists
under behavioral health could refer an individual to a
medical provider to get a script and the doctor had the
individual go back to see the therapist. Under the
scenario, it was two or three sessions before there was
something to bill for. She thought it was where the bulk of
the extra time for behavioral health treatment occurred.
While in comparison a medical provider could give a person
a script and tell them to follow up in six weeks. She asked
if it was accounted for in some of the indirect cost.
Ms. Payne responded, "Not specifically." She provided a
scenario the study was aiming to address. The scenario
included a patient who received a bill for seeing her
therapist for 30 minutes. She explained that the downtime
included the therapist having to follow up with the
client's insurance, record keeping, or contacting the
client for follow up would be accounted for in the
nonbillable time. The medical component with the parity
rule was nuanced. She would have to follow up with specific
detail.
Representative Hannan looked at bullet 2 on slide 12 that
specified Alaska was spending 40 cents on the dollar as
opposed to 25 or 30 cents. She referenced the one element
of medical transportation and so much of it being non-
billable. She considered the vernacular in Alaska and
provided an example about whether a person had been
transported on a seat fare or if the plane had been
chartered. She stated the examples were two big different
costs and neither seemed to be reimbursable because they
were not ambulance costs or paratransit. She stated her
understanding that when Guidehouse concluded Alaska was
spending 40 cents on the dollar it was not concluding the
charges were invalid, but that the charges were higher. She
asked for verification that it was not merely the cost of
utilities, but that in some of the broad categories,
Alaska's situation was bizarre compared to other locations
such as Wyoming where the option was a 50 to 200-mile
drive, but in Alaska the travel included things like
chartered flights, seat fare flights, ferries, and private
transport on snow machines.
Mr. Jones responded affirmatively. Guidehouse noted that
the costs were high; however, its benchmarking did not say
that costs should not be so high. Guidehouse understood the
costs were higher in Alaska and for the most part the rates
reflected the high indirect costs. There was not any kind
of prescription on what the indirect costs should be.
Representative Bynum remarked that the current meeting
would not cover the scope and depth of the work done
running a $3.8 billion program in Alaska with $1 billion in
unrestricted general funds (UGF). He stated that the
presenters were talking about trying to find cost saving
measures and increasing efficiency, which could equate to
hundreds of millions of dollars. He noted that Alaska had
Medicaid expansion, which included receiving a 90 percent
cost share. He believed the cost sharing was about 50/50
under standard Medicare. He asked if the cost associated
with different user groups was tracked. He highlighted
behavioral health as an example. He asked who was using the
services based on the user groups.
2:29:43 PM
Mr. Jones answered that Guidehouse did know via claims for
instance what populations were using each of the different
services. For example, in the case of Alaska Native
populations Guidehouse could tell whether the rate was paid
for with high levels of Federal Medical Assistance
Percentage (FMAP) or state share. Guidehouse could identify
program by program how the state dollars were being spent
versus additional federal dollars.
Representative Bynum asked if Guidehouse was tailoring its
research to target the best return for the higher cost
expenses such as the 50/50 expenses. He noted those costs
were responsible for driving up the state's actual spend.
He was not indicating the state should not be frugal and
wise with all of its fund sources including federal
dollars. He assumed the state wanted to be able to target
where it was getting the best value and return to either
save the state money or provide better services to
Alaskans.
Mr. Jones agreed that Guidehouse noted the information in
its report. He explained that significant state investment
would get a larger return on investment (ROI), which was
very important in terms of transportation where some of the
most significant expenses were incurred in rural areas
where the federal dollar went extremely far relative to the
state spend. The fiscal impact in the report showed that
even with a relatively small investment in state dollars,
the state could get as much as $4 for every dollar spent.
He noted it was not true for every program. The
presentation would show in the fiscal impact of federal
versus state that dollars went further with some programs
than others.
Representative Bynum asked what kind of coordination was
occurring between DOH and the Alaska Mental Health Trust
Authority (AMHTA) to ensure the state was leveraging all of
its resources to achieve healthy Alaskans.
Co-Chair Josephson remarked that "they're not a department
as much as a vendor."
2:32:33 PM
Ms. Ricci replied that DOH coordinated with AMHTA and
worked together in development of different budget
scenarios. The department presented to the AMHTA board
regularly. One of the focuses was ensuring the state was
leveraging dollars between both entities to go as far as
possible. Some of the dollars the state could use to
support behavioral health services had limitations and some
of the dollars AMHTA had access to may have more
flexibilities. The entities were trying to be strategic in
determining how to weave the two together to meet existing
needs.
2:33:25 PM
Mr. Jones discussed results of the behavioral health rate
evaluation on slide 13. One of the recommendations was that
DOH adopt the methodologies that went into the Guidehouse
independent rate build up to identify rates that were more
appropriate and aligned more closely with the actual costs
of delivering particular services. The implication of
adopting the methodology transition was there would have to
be some recalibration of rates. Some rates for services
would go up significantly and some may decrease
significantly as part of the rebalancing. The second
recommendation under rates was "hold harmless." He
explained that rebalancing increased volatility for
providers. He elaborated that for a single provider some
rates may go up, and some may go down; it all balanced out.
He stated that was not always the case. He detailed that
some providers focused on the rates that were going down
rather than the rates that were going up. He stated it was
possible to put someone out of business easily if it was
not done wisely. Therefore, Guidehouse was recommending a
risk corridor to leave rates alone until there was a
natural point at which rate increases would happen. He
shared that there was a UPL [upper payment limit] ceiling
for certain services in Alaska that did not allow payment
higher than what Medicaid paid. Guidehouse included some
recommendations in its report on how to address the issue.
Mr. Jones addressed other components of the reimbursement
structure. He relayed that behavioral health rates were not
adjusted geographically. Guidehouse was proposing a
framework to have slightly different rates depending on
where services were delivered. They believed that it was
feasible because it already existed in the LTSS side in
home and community based services. Guidehouse was
recommending something similar for implementation with
behavioral health. He referenced indirect costs and stated
that it was unclear in the way things were currently
described whether rates were designed to cover
transportation and staff transportation. Guidehouse
recommended the inclusion of a specific add-on in certain
rates to address the issue more clearly. The report
included specific recommendations for the state to review
service definitions for some of the more complex services
such as SUD for adolescents versus adults to confirm
whether the state was paying for the type of service it
wanted and to work with providers to review the service
definitions. Guidehouse also recommended updates to crisis
services. The state was in the process of redesigning its
crisis service array and Guidehouse had recommended what
rates would be appropriate for new services.
Mr. Jones looked at state operations and how the rates were
implemented and monitored over time. Guidehouse recommended
that the state put together a cost reporting system, which
would require annual reporting from providers. He explained
that the reporting system would help to understand the
indirect costs. He stated there was an argument to be made
as to whether the costs should be lower, but the data was
not currently available to track what went on with the
cost. A cost reporting system would provide better
information to understand the nature of the indirect costs
and potentially establish additional reimbursement features
that incentivize efficiencies. He stated it could
ultimately be to the benefit of the payer, regulator, and
provider. He noted that the clinic UPL issue was another
component. He explained that if the state had cost
reporting, it would not have to set the ceiling at the
Medicare rate, but at the actual cost. He expounded that if
Alaska ever wanted to pay more beyond the ceiling or
rebalance the rates that fell under the clinic UPL, cost
reporting would facilitate it. Guidehouse also recommended
that the state could more easily update rates
administratively on an annual basis by putting key
inflation factors on things like wages and other indirect
costs.
2:38:57 PM
Co-Chair Josephson asked if the CMS prohibition on
exceeding the UPL could be dispensed with if the state did
cost reporting.
Mr. Jones replied it would mean there would be a new
measuring stick. He explained that the requirement would
not go away but the nature of how the upper payment limit
was decided would change. Instead of basing the ceiling on
the equivalent Medicare rate it was based on the actual
costs incurred by providers. If the costs were higher than
Medicare would pay, it was possible to pay up to those
costs, but it required having data on what it cost
providers.
2:39:41 PM
Mr. Jones turned to slide 14 titled "Annual Fiscal Impact
for BH Recommendations." The slide showed line item
estimates of what it would take to implement various
recommendations. The first recommendation to adopt the new
methodology and corresponding rates would cost an
additional $4.1 million in state spending and a total
investment of $13 million. He noted that given current
behavioral health spending, the number was not a high
amount. He explained that higher rates were being offset to
some extent by rates that would decrease. The second
recommendation was the hold harmless provision that meant
rates would not be lowered for services that would
otherwise go down. The hold harmless provision would cost
the state $1.6 million. The geographic differentials would
cost the state an additional $1.3 million to cover the cost
for the more expensive regions of the state [recommendation
three]. Recommendation four pertained to behavioral health
cost reporting and would cost the state an additional
$150,000 to $225,000 depending on how it was implemented.
Recommendation five was rate rebalancing and the cost
depended on how the state wanted to address it.
Recommendation six was for crisis services and would cost
the state $280,000+. Recommendation eight showed a small
cost for additional resources to conduct the administrative
rate review. He understood DOH was looking at a phased
implementation of the recommendations. The overall cost was
about $7.2 million to $7.5 million in state general funds
with an overall investment including federal dollars of
roughly $21 million for behavioral health.
Co-Chair Josephson asked how long the hold harmless period
should be.
Mr. Jones answered that two years was usually a good
timeframe. He explained that if it was much shorter or
longer it did not help. He stated it was designed to be
temporary to prepare providers for changes. He relayed that
two to three years was optimal.
Co-Chair Josephson asked how Guidehouse incorporated
inflation into the recommendations.
Ms. Payne replied that data got old quickly. The base
recommendations included a small amount of inflation
because the data set used was already a year behind. She
stated that 7/1/25 was the implementation date. Guidehouse
did not build in additional inflation knowing it was in the
state's regulations that it should come into effect on July
1 of every year. She explained that the state would have to
apply additional inflation based on its regulations.
2:43:34 PM
Co-Chair Josephson asked if the Guidehouse work on
behavioral health recommendations was complete.
Mr. Jones answered affirmatively.
Co-Chair Josephson directed a question to DOH. He
referenced Ms. Ricci's statement that DOH viewed the
Guidehouse findings as recommendations. He assumed the
recommendations were important but that there may be other
factors for DOH. He asked when the department anticipated
implementing the changes.
Ms. Ricci responded that DOH was working to implement the
recommendations in two different phases. The department was
currently promulgating regulations to begin implementing
the rate rebalancing and the hold harmless combined. There
was a $10 million temporary increment in the Medicaid
component. She believed the supplemental that was recently
released would extend the funding into FY 27 giving the
department time to promulgate the regulations to begin
implementing the items. The department would also look at
building out the geographic differences and crisis services
at the same time. The department was thinking about the
best way to approach establishing a system for cost
reporting. Ultimately it would be important as Medicare
continued to put pressure on entire system in Alaska. She
believed the committee would hear more about the issue in
future years. The requirement for annual cost reporting was
significant to the provider and state. The department heard
the concerns about behavioral health providers related to
administrative requirements and burden. The department did
not want to add to that, but it could not get around the
Medicare cost limit until it found a way to collect the
data. The department was not certain what that looked like
yet.
2:46:00 PM
Mr. Jones moved to slide 16 titled "LTSS Rate Evaluation
Findings." He stated that the grooves had been established
for behavioral health and there were somewhat similar
findings for LTSS. He relayed that Guidehouse did not see
the same need for rebalancing for LTSS services that it saw
for behavioral health. He elaborated that the state kept up
pretty well with costs with one important exception in
personal care services. He explained that Guidehouse saw a
need for a rate increase of about 32 percent. He stated it
was a significant part of the service array. Given the
expenditures on LTSS generally, the increase would lead to
some significant dollars even though they were not a high
proportion of current spending. The geographic rate
differentials were in place for the services, but they
depended on a framework that was over 20 years old;
therefore, Guidehouse recommended a new way to do the
differentials. He stated that Guidehouse found that about
40 cents to every dollar for LTSS services was going to
indirect costs.
Co-Chair Josephson referenced personal care services and
noted there were various acronyms such as PCA.
Mr. Jones replied that PCA was a personal care aid who came
into a person's home to help with tasks.
Co-Chair Josephson asked for verification that Guidehouse
found that the cohort in Alaska was paid 32 percent less
than it would recommend.
Mr. Jones answered that rates would need to be roughly 32
percent higher for those services to cover the costs.
Co-Chair Josephson remarked that the rates - the total
package - may reflect some other number as a wage increase,
but there was some connection between the rate and the
wage. He asked if it was a fair statement.
Mr. Jones replied affirmatively. He stated that wages were
the driver of costs.
2:48:46 PM
Mr. Jones moved to slide 17 titled "LTSS Rate Evaluation
Recommendations." Guidehouse was recommending the same
methodology, rate recalibration, and hold harmless as it
did for behavioral health. There were a small number of
services that would otherwise go down with the adoption of
the recommendations. Guidehouse was recommending updates to
the geographic adjustment and tiered service for better
capturing of acuity differences between individuals and
around administrative fees for certain services known as
the organized healthcare delivery system. Guidehouse was
recommending a new cost reporting system to track indirect
costs. Also, there were new rules coming from CMS called
the access rule, which mandated a ceiling on indirect costs
for things like personal care and the state would have to
demonstrate that its providers were not paying more. He
added that if the state did not collect the cost data it
could not be compliant with the federal regulations.
Guidehouse was also recommending additional administrative
rate updates as with behavioral health. He referenced
opportunities for drawing higher federal share and
explained that LTSS was one of the areas where the federal
share was 50/50. Guidehouse recommended looking to tribal
providers and gauging willingness to invest more in
providing the services.
Co-Chair Josephson surmised that there was not a 100
percent opportunity to reclaim for LTSS.
Mr. Jones answered it was largely non-tribal providers
delivering the services and drawing the 50/50 match.
2:50:42 PM
Mr. Jones turned to the annual fiscal impact for LTSS
recommendations on slide 18. He stated there was a fairly
hefty price tag given the size of the program and funding
personal care to the benchmark rate along with several
other rates. He noted that it was not a massive proportion
of the overall spending currently. He noted that the
general fund and total spending were in the wrong columns
at the bottom of the slide. The slide broke out the hold
harmless, geographic differentials, rate tiering
recommendations, and more. The total cost for the state was
between $24.5 million to $30 million. He noted that DOH was
looking at a phased approach of the LTSS recommendations.
2:51:45 PM
Mr. Jones moved to slide 20 and discussed FQHC (Federally
Qualified Health Center) findings. He stated it was a
narrower scope for FQHCs and came down to the small number
of FQHCs that had not moved to the alternative payment
method (APM) rate. There were currently four that were
still on the prospective payment system (PPS) rate. The
goal of the recommendations was to establish a pathway for
FQHCs still on the PPS rate to do a one-time catch-up
change in scope to look at current rate costs and establish
a pathway and recommendation for future changes in scope.
Mr. Jones turned to slide 21 titled "FQHC Rate Evaluation
Recommendations." He began with the catch-up change in
scope. He detailed that Guidehouse did an analysis of what
it would cost in order for providers and the state would
understand the potential fiscal implications, even though
it expected only one or two providers would want to
continue with PPS rates rather than move to an APM rate.
Guidehouse recommended technical assistance to help
providers needing support to update their rate methodology.
Guidehouse also recommended the creation of a policy and
process moving forward that would allow providers to update
their PPS rates.
2:53:16 PM
Mr. Jones turned to slide 22 titled "Annual Fiscal Impact
for FQHC Recommendations." The general fund cost would
range between $800,000 and $1.5 million depending on the
number of providers who moved to the PPS rate. The general
matching rate was about 75 percent with the total cost
reaching up to $5.3 million including federal funds.
Mr. Jones addressed slide 24 titled "Medical Transportation
Rate Evaluation Findings." He relayed that the report had
not been fully released and he provided preliminary
findings. He highlighted that ambulance and lodging rates
had not been increased in many years. Guidehouse
recommended that the rates be brought up in aggregate to
the equivalent of 125 percent of Medicare. He elaborated
that because rates were currently lower, getting ambulance
staffing in place was becoming a more significant issue.
There were administrative issues that prevented people from
getting needed lodging. Guidehouse made recommendations
especially around out of state lodging, transportation, and
meals (e.g., travel to Seattle) to improve the policies.
Representative Stapp asked if the air ambulance rate
reimbursement was still subject to UPL.
Mr. Jones responded affirmatively. He stated that the UPL
was different for transportation than clinic and it was up
to average commercial rates. He explained that it had not
hit a ceiling in Alaska because the ceiling was much
higher.
2:55:23 PM
Representative Stapp asked how far off the rate was from
the upper payment limit.
Mr. Jones answered that they did not know because it would
require proprietary data between commercial insurers and
providers.
Representative Stapp remarked that air ambulances were
obviously a big deal in Alaska. He stated that the primary
air ambulance company Guardian Flight had been bought and
sold many times in the past few years. He wondered if some
of the challenges the company had as opposed to other
carriers like Life Med had been reflected in the Guidehouse
findings.
Mr. Jones answered that the findings applied to most
providers and were not unique to Guardian Flight.
Generally, Medicare and Medicaid paid significantly lower
than commercial rates. The Guidehouse recommendations
reflected the public insurance programs paying more of
their share.
Co-Chair Josephson was hearing from service providers
including pilots and Guardian Flight that they were not
reimbursed when flights were in route without a patient. He
was told that 160 flights were cancelled not due to weather
in the span of one year. He found it disconcerting. He
wondered if Guidehouse had similar conversations with
providers.
Mr. Jones answered that Guidehouse heard similar feedback
from providers. He stated it was a constraint in the nature
of the Medicaid program that "you could not pay directly
for those things." However, it was possible to build into
rates the understanding there was nonbillable time and
resources that had to be covered.
2:58:07 PM
Mr. Jones turned to slide 26 titled "Annual Fiscal Impact
for Transportation Recommendations." He highlighted the big
issue was increasing rates for ambulance providers. There
were a few policy recommendations included on the slide as
well. He noted a recommendation for statewide brokerage
partnerships, which could have substantial positive effects
for non-emergency medical transportation. He noted the
issues around drawing higher federal share and highlighted
that ambulance rate increases would result in additional
state expenditures of $2.3 million to $2.4 million, which
would draw an additional $16 million total. He stated it
meant that for every dollar the state invested into the
rate increases it resulted in $4 from the federal
government. He explained that it targeted areas of
particular need in the state because it was
disproportionately positively impacted rural travel heavily
on the air and ground ambulance side. He remarked that rate
increases for lodging was a similar picture. The need for
lodging was higher for individuals coming into Anchorage
from rural areas. Guidehouse made some estimates around
potential savings for a public transportation partnership
or the use of a brokerage. He noted it depended on
implementation whether there would be an increase or yield
potential savings.
Co-Chair Josephson thought the industry term was "loaded"
versus "unloaded" planes.
Mr. Jones replied affirmatively.
3:00:16 PM
Representative Stapp looked at the term "prior
authorization fee increase" on slide 26. He asked what was
meant by fee increase.
Mr. Jones replied that TMOs [tribal management office]
served as a kind of broker arranging transportation. In
order to go through the prior authorization process TMOs
charged a fee. The fee was set many years back. He
explained that because transportation needs changed fairly
regularly sometimes it could be administratively complex;
therefore, Guidehouse recommended increasing the fee for
working the prior authorization system.
Representative Stapp asked what was meant by brokerage and
government-to-government partnerships [slide 26].
Mr. Jones responded that they were called government-to-
government partnerships because some of the elements of the
brokerage happened through TMOs. He explained that it was
not technically a brokerage, but a government-to-government
agreement. He detailed that it would not cover all of the
travel needs and Guidehouse was looking at a statewide
broker that did not involve tribal travel.
3:02:06 PM
Representative Stapp asked for further clarification on the
statewide broker. He did not know of any third party
vendors that would do that. He asked if Guidehouse was
suggesting the state would take the responsibility on
instead of how tribal entities already did the work
themselves.
Mr. Jones responded that for non-tribal Medicaid members it
would involve bringing in a transportation broker to
arrange the travel needs for the non-tribal population.
There were TMOs for the tribal populations but there was
currently no broker. He remarked that it could be a helpful
thing for Alaska. He clarified that the state would not be
doing the arranging.
Representative Hannan asked if the broker was akin to a
travel agency.
Mr. Jones answered affirmatively.
Representative Hannan referenced seasonal lodging rates.
She stated her understanding that currently there was no
variation in the rate. For example, if the lodging rate was
$100, it did not change if it was peak travel season in
Juneau where hotel rates doubled overnight in the summer or
in the middle of winter.
Mr. Jones agreed. Guidehouse was recommending seasonal rate
differences and increases generally. He stated that even if
the state did not opt to do a seasonal increase, a general
increase in the current rate was needed.
Representative Bynum was excited to see the last slide with
two line items showing financial savings. He looked at the
overall $43 million of additional recommendations and $110
million in federal match. He understood that increasing the
rates would help the service providers. He thought it was
good overall that providers would get the reimbursement
rates necessary to provide the services. He relayed that he
had people come to his office highlighting there were many
areas where it was possible to move the continuum care to
the left to provide better care sooner while saving money
in the long-term. He was trying to get a better
understanding how the recommendations would accomplish that
goal. He stated that nothing in the evaluation about the
rates gave a recommendation or reflection showing that the
state could save money by moving the continuum of care to
the left. He only saw an additional $43 million in spending
to provide care. He asked for comments.
Ms. Ricci answered that the study was focused on the
underlying rate methodology and buildups and whether it
produced the desired outcomes. She noted it was focused on
specific workstreams. She reiterated her earlier statement
that there was no expectation from the department that the
recommendations would be implemented all at once or ever
depending on the policy considerations and the fiscal
situation facing the state. The department had been asked
many of the questions by providers and constituents since
it started in 2022. The Guidehouse review started to give a
little shape to what the answers to some of those questions
may mean and the magnitude. She agreed any consideration
had to align with what the state wanted to see in the
outcome of the system, which she believed was more of an
emphasis on prevention and on better aligning services to
meet the risks and acuity of the population being served.
She did not believe the healthcare system or insurers did a
great job of doing that currently. She explained that it
would be a focus area for the department in the next
several years. The department had some ideas on where to
start and what to look at. She noted those things were not
included in the Guidehouse studies.
3:07:33 PM
Representative Bynum stated that one of Alaska's senators
talked extensively FMAP)and the fight they underwent to
change the 50/50 [state/federal] split to 30/70. He asked
if there had been any consideration given to what the
impact would be for Alaska if the congressional delegation
had success in changing the FMAP percentage.
Ms. Ricci answered that it was not part of the request to
Guidehouse as part of the rate methodology study. The
department had been closely watching the issue,
particularly the implications for Alaska as debate on
Medicaid funding at the national level had played out over
the past 13 months. She shared that the state's FMAP was
over 50 percent - it had previously hovered at about 50
percent - and the state was seeing a decrease of just over
1 percent beginning in October of the next federal fiscal
year. She relayed that it translated into an additional
$10.8 million the state would have to provide in general
funds beginning in federal FY 27. She explained that the
information gave a sense of what a 1 percent change in FMAP
means in relation to the general fund match in any given
year for the Medicaid program. The state tried to leverage
opportunities to draw down federal match as much as
possible. She noted that the department would talk about
its operating budget with the committee on Wednesday and it
would discuss that it was finding ways where it could claim
additional federal dollars for IT enhancements or
associated positions. She relayed that other states had
been doing those things and the department was making sure
to do the work on its end.
3:09:49 PM
Representative Hannan stated that her question was spurred
by Representative Bynum's question about continuum of care
because she had come to a different conclusion. She looked
at slide 16 and referenced Mr. Jones's statement that
personal care services remained low and rates needed to
increase by up to 32 percent to reflect actual cost. She
stated her understanding that the whole nature of that was
keeping someone with care in their home was at the far left
of continuum of care and saved the state money. She
remarked that even if it was a substantial rate increase of
32 percent, it would save the state money by not putting
someone into a hospital or nursing home with more intensive
care and cost. She asked if her conclusion was incorrect.
Ms. Ricci replied that she did not believe Representative
Hannan was incorrect. The challenge was how to make sure
the cost resulted in lower overall cost of care for the
individual compared to what they may have received versus
additional cost that would not have otherwise been
incurred. She thought it was sometimes where they struggled
to see some of the investment returns. If there was a
desire to move forward with some of the rate
recommendations regarding personal care services, DOH knew
it was an area that required careful monitoring and
crafting to ensure services were appropriate and being used
as directed. There had been problems with the issue in the
past in Alaska and other states were experiencing it as
well. The state needed to be very thoughtful before moving
forward and take into consideration items that were not
necessarily considered in the study but that the state
would want to make sure were in place from the Medicaid
side. The same was true for autism services. She heard
concerns consistently from parents whose children needed
autism services that were not available in the state. The
study also found there were insufficient autism services.
She highlighted a large rate recommendation increase for
autism services. She relayed that it was an area that could
be prone to misuse. She stated it was necessary for DOH to
be thinking about how to address the need while building in
the correct barriers to care for it from the beginning.
3:12:44 PM
Co-Chair Josephson asked if there were any connections
between any of the Guidehouse recommendations such that
"thing A must happen before things B and C happen" in terms
of reform of the methodology and payment structure.
Mr. Jones answered that the main dependency was around the
rate increases in the four different areas. Many of the
latter policy recommendations could be implemented
independently. For the recommendations that had a strong
financial impact there was a basic adoption of the
methodology and recalibration. The hold harmless and other
pieces depended on moving forward.
Co-Chair Josephson asked if CMS would have concerns with
the Guidehouse recommendations that would result in denial
of a state plan adjustment.
Mr. Jones replied that he did not see it would be a
significant issue. He stated the recommendations were
accepted methodologies from CMS and in many cases they were
preferred.
3:14:06 PM
Co-Chair Josephson referenced a statement by Ms. Ricci
about whether changes would ever be made depending on the
state's fiscal situation. He was having a hard time
discerning who would make the ultimate decision. He
recognized that DOH was central to the decision making. He
wondered if the reimbursement rate was inadequate if the
state allowed to let it erode or if the state would be
required at some point to "play ball" with some
recommendations.
Ms. Ricci answered that DOH worked with its allocated
budget including the Medicaid program. Any sort of changes
to the rate or rate methodologies went through the
appropriations process. She explained that it was
complicated because there were annual inflationary
increases that were outlined in regulation and rebasing
that occurred every four to five years. She detailed that
the state did not want to end up in a position where the
funding available for the Medicaid component conflicted
with the required regulatory adjustments. Ultimately, the
Medicaid program functioned within the budget allocated by
the legislature. She stated it would be presumptuous of
anyone in the department to put forward substantial rate
increases that were not supported through appropriations.
Co-Chair Josephson asked if the department could give
providers who may be listening a sense of how the
department would be engaging with the recommendations over
the next couple of years.
Ms. Ricci responded that DOH had a clear vision for
behavioral health services. She stated it was an area with
very strong interest and focus by the department, the
legislature, and federal entities. She remarked that it was
a critical piece that needed to be done right. The plan
included promulgating regulations and leveraging the $10
million increment proposed in the supplemental to extend
into FY 27. She believed more discussions were needed on
the other rate methodologies accounting for the state's
fiscal situation and the realities of the existing needs
that frequently exceeded the state's means and how to
prioritize what the state was able to invest in. She noted
that she did not currently have the answer to that
question.
3:17:25 PM
Co-Chair Josephson asked what the regulations required as a
timeline on the other three elements of the plan. He asked
if the DOH regulations were in Title 7 of the Alaska
Administrative Code. He asked if there was a deadline of
January 1, 2028.
Ms. Ricci replied that she did not know that anything in
the study changed what was in existing regulations.
Co-Chair Josephson used the medevac company Guardian Flight
as an example and asked when he could tell the company to
expect the department would take action.
Ms. Ricci answered that the department was considering all
of the recommendations and it needed to evaluate how to
implement them within the context of the [state's] fiscal
situation. The department had identified a path forward
with behavioral health rights, but she did not know that
there was the same clarity on the other rights.
Representative Bynum considered the premise for the
evaluations and observed there were estimated expenditures.
He remarked that the recommendation was for a change in
rates that resulted in additional cost. The rates were to
reimburse providers for services they were providing. He
asked if there was consideration given to how increasing
the rates translated into better care. He asked if
increasing the rates would lead to additional costs that
were not reflected in the presentation. For example, he
asked if certain services would be utilized more frequently
because there may be an increase in providers as a result
of more money being provided for the service.
Ms. Payne replied that if people had proper access to
services it could result in an increase in service
utilization. She highlighted transportation in particular.
She noted that it got into the cost avoidance question
Representative Bynum had mentioned. She explained that if a
person went to their standard office visit or therapies,
perhaps they would not end up in the hospital. She stated
that it was a chain reaction that was hard to quantify the
overall impact five to ten years in the future. She
elaborated that it was desirable to get people access to
services for better care for the desired outcomes.
Representative Bynum asked if the estimates in the
presentation reflected only current services that would be
provided under the new rate model and did not take into
account potential higher uses of services.
Ms. Payne responded affirmatively. The information was
based on historical utilization with updated rates applied
to the cost.
3:20:43 PM
Ms. Ricci shared that one area the department was focusing
on, especially with behavioral health, was access to care.
She highlighted situations where individuals showed up at
an emergency room in need of immediate care and were unable
to get follow up care in the community as fast as they
needed. Additionally, there were individuals who ended up
seeking higher levels of care than they otherwise would
because they did not have community access to care. She
noted it was one of the reasons DOH focused on the
behavioral health rates to start with. She elaborated that
there may be an increase in utilization of community
providers but ideally over time there would be a decrease
in individuals needing acute care.
Representative Galvin stated her understanding that DOH
determined it would start with behavioral health. She
thought it was a great presentation helping committee
members understand that transportation equaled access to
care, which was another cost. She referenced long-term
care, specifically the 32 percent for care providers. She
believed it seemed very important for access to care. She
asked if all of the recommendations should be considered if
the legislature identified funding. She wondered if the
governor would consider it. She asked if there was only one
piece they were ready to put forward.
Ms. Ricci answered that the department had been focused on
the behavioral health rates. She relayed that the
recommendations reflected a series of different
considerations the legislature could make. She elaborated
that if a specific area had gaps and people were unable to
get services (e.g., personal care assistants), it may be a
conversation to have in the future where changes could be
made to improve gaps. There was a series of different
options that the legislature could combine or take
depending on the available funding and need. She asked
Guidehouse specifically if it had seen any state that had
implemented recommendations all at once or in their
entirety. The answer was no because it was complex and
every state had different budgetary needs at a different
time. She had been hearing about concerns in some of the
areas [included in the recommendations] for a long time and
the recommendations could help provide numbers and sense of
magnitude for policymakers and appropriators.
3:24:08 PM
Representative Galvin asked the committee to remember the
multitude of personal care providers it had heard from in
the past couple of years. The committee heard repeatedly
from personal care attendants who loved their jobs but
could not continue doing what they were doing because they
could not earn a living wage. She appreciated it was an
area impacting the health and wellness of all of Alaska.
Co-Chair Josephson referenced the situation that took place
with the caregivers a couple of years back [referred to by
Representative Galvin]. He asked if it would give the
department the confidence that the legislature was serious
about making the broader policy part of its budget and
would move to adjust the rates. He would have to think
about whether those increases, if appropriated, would be
part of the base budget. He asked if the rates would be
important to the legislature at that point. He thought the
questions may be more appropriate for the Legislative
Finance Division.
Ms. Ricci responded that the department had spent
significant time considering the implementation of the
behavioral health recommendations. The department had not
spent as much time thinking through the implications of
some of the other reports. Given the history of the state,
especially related to personal care assistant services and
the magnitude of the dollar impact, the department would
want to spend considerable time thinking through what would
be appropriate. The department was not currently at that
point.
Co-Chair Josephson thanked the presenters.
HB 263 was HEARD and HELD in committee for further
consideration.
HB 265 was HEARD and HELD in committee for further
consideration.
Co-Chair Josephson reviewed the schedule for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HFIN Guidehouse Medicaid Rates Presentation 020926.pdf |
HFIN 2/9/2026 1:30:00 PM |
|
| Alaska Medicaid Rate Evaluation - Federally Qualified Health Centers.pdf |
HFIN 2/9/2026 1:30:00 PM |
|
| Alaska Medicaid Rate Evaluation - Long Term Support Services - Home and Community Based Waiver Services.pdf |
HFIN 2/9/2026 1:30:00 PM |
|
| Alaska Medicaid Rate Evaluation - Behavioral Health.pdf |
HFIN 2/9/2026 1:30:00 PM |