Legislature(2025 - 2026)ADAMS 519
02/13/2025 09:00 AM House FINANCE
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| Audio | Topic |
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| Start | |
| Presentation: Medicaid 101 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
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HOUSE FINANCE COMMITTEE
February 13, 2025
9:02 a.m.
9:02:58 AM
CALL TO ORDER
Co-Chair Josephson called the House Finance Committee
meeting to order at 9:02 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Andy Josephson, Co-Chair
Representative Jamie Allard
Representative Jeremy Bynum
Representative Alyse Galvin
Representative Sara Hannan
Representative Nellie Unangiq Jimmie
Representative DeLena Johnson
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
Representative Calvin Schrage, Co-Chair
ALSO PRESENT
Emily Ricci, Deputy Commissioner, Department of Health; Deb
Etheridge, Director, Division of Public Assistance,
Department of Health; Tony Newman, Director, Division of
Senior and Disabilities Services, Department of Health;
Tracy Dompeling, Director, Division of Behavioral Health,
Department of Health.
SUMMARY
PRESENTATION: MEDICAID 101
Co-Chair Josephson reviewed the meeting agenda.
^PRESENTATION: MEDICAID 101
9:04:07 AM
EMILY RICCI, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH,
introduced herself. She noted that she would be joined at
other points in the presentation by her colleagues. She
introduced the PowerPoint presentation "Medicaid 101:
Understanding Alaska's Medicaid Program" dated February 13,
2025 (copy on file).
Ms. Ricci continued on slide 2 and explained that Alaska's
Medicaid program was a critical component of both the
state's healthcare delivery system and its broader economy.
Each year, Alaska Medicaid paid approximately $2.8 billion
in combined state and federal funds to support health
services throughout the state. The funds were disbursed
across the health care system, including hospitals,
community clinics, primary care providers, pharmacies, and
emergency room physicians. She relayed that Medicaid also
supported services that helped seniors remain in their
homes and communities, which reduced seniors' reliance on
institutional care.
Ms. Ricci stated that the Division of Healthcare Services
(DHS) distributed approximately $252 million in provider
payments each week, which amounted to roughly $8.5 million
in annual claims paid to more than 31,000 providers. She
emphasized that Medicaid coverage extended to over 246,000
Alaskans and was a significant contributor to Alaska's
economic vitality. In 2023, the state's health care sector
generated $3.4 billion in wages and accounted for 11
percent of the workforce. She thanked the committee for
spending time on Medicaid and hearing the presentation.
9:06:20 AM
Representative Hannan asked how much of the $2.8 billion in
annual Medicaid expenditures was derived from federal funds
as compared to state funds.
Ms. Ricci responded that the breakdown would be discussed
further on upcoming slides. She stated that approximately
$700 million came from the state's general fund, while the
remaining amount was covered by federal contributions.
Ms. Ricci continued to slide 3 and relayed that Medicaid
was one of the largest public health insurance programs in
the country. She shared that nearly 79 million individuals
across the United States were enrolled in Medicaid as of
October of 2024, which represented roughly one in four
Americans. In Alaska, the figure was closer to one in
three.
Ms. Ricci advanced to slide 4 and explained that Medicaid
played a particularly essential role in long-term care,
accounting for 44 percent of all payments for long-term
care services nationwide. The program also represented
nearly 18 percent of national health care expenditures. She
noted that Medicaid was a joint federal and state health
insurance program designed to serve low-income individuals
and families. Eligible groups included pregnant women,
children, the elderly, individuals with disabilities, and
other low-income adults. While Medicaid was federally
regulated, states retained flexibility in Medicaid program
design including which populations were covered, what
services were included, and how the program was
administered. She explained that Alaska operated under a
fee-for-service model, where providers were reimbursed
individually for each service rendered. Many other states
used a managed care model, in which the state contracted
with insurance companies to administer care through a
network of providers.
9:08:54 AM
Representative Tomaszewski asked for clarification
regarding the cost comparison between fee-for-service and
managed care models. He asked which model was generally
less expensive and asked about the pros and cons of each.
Ms. Ricci responded that managed care systems more closely
resembled commercial or employer-sponsored insurance. In
those models, the states paid a contracted insurance
company to establish a provider network and deliver
services. In contrast, Alaska's fee-for-service system
meant that DHS paid providers directly upon submission of
claims. She explained that Alaska was paying physicians and
health care systems directly for Medicaid services.
Representative Tomaszewski asked which type of system was
generally less expensive.
Ms. Ricci replied that cost comparisons between the two
systems were complex due to inherent differences in each
state's population, service availability, and delivery
costs. For instance, Alaska's higher overall health care
costs likely influenced per capita expenditures, regardless
of the system used. Managed care organizations might cover
a different range of services than fee-for-service systems
which made direct comparisons difficult. She indicated that
there were both advantages and disadvantages to each model
and that fee-for-service systems allowed for greater direct
control over how services were paid, while managed care
organizations could potentially offer better care
coordination or more comprehensive service offerings.
However, she noted that managed care arrangements included
a profit margin that did not exist in fee-for-service
models. She reiterated that Alaska did not operate a
managed care organization within its state Medicaid
program. However, when she spoke with Medicaid directors in
other states, she found that many states implemented small-
scale managed care components while still maintaining
significant fee-for-service elements.
Representative Tomaszewski asked whether medical providers
were generally satisfied with the fees paid under the
current system. He asked if hospitals and providers were
content with the structure in place for the negotiation
process.
Ms. Ricci responded that medical providers were not
consistently satisfied with the fees established through
the Medicaid program. She stated that part of the
dissatisfaction was related to the overall design of the
health care delivery system and the insurance market.
Public payers such as Medicare and Medicaid typically
operated on a fee schedule with lower reimbursement rates.
In contrast, commercial insurers often negotiated higher
rates. The dynamic led to cost-shifting between public
programs and private insurers. When providers expressed
concern about Medicaid or Medicare rates, it was typically
due to the perception that commercial payers offered more
favorable reimbursement, which prompted providers to shift
costs to those payers to offset financial losses from
public reimbursements. The department was aware of the
concerns and was working to address them within the
limitations of the state budget. She explained that the
department was presently engaged in a rate methodology
review to assess how Medicaid reimbursement rates were
established across service categories and determine whether
the rates supported the desired outcomes in the health care
delivery system.
9:14:02 AM
Representative Johnson asked for confirmation that Medicaid
federal funds were still administered by the state.
Ms. Ricci responded in the affirmative. She indicated that
a future slide would explain how the Medicaid funding cycle
operated.
Representative Johnson remarked that one of the most common
complaints she received from constituents related to delays
in Medicaid payments to providers. She explained that the
delays negatively impacted both health care businesses and
access to care. She asked for more information on how
Medicaid's payment timeline compared to that of private
insurance. She also wondered whether recent cyberattacks on
the state's computer systems had affected Medicaid
operations or payment systems.
Ms. Ricci responded that the department received reports
from providers who experienced delays in payment or claim
processing. She emphasized that it was important to
consider the issues in the context of approximately 8.5
million claims that were processed annually. Although the
overall system managed a high volume of claims, individual
provider concerns remained significant and warranted
attention. The department worked to determine whether
reported issues were part of broader system-wide trends or
were isolated incidents specific to individual providers.
She provided an example involving claims clearinghouses,
where errors could occur if the clearinghouse failed to
transmit provider-submitted information into the Medicaid
Management Information System (MMIS). In such cases, it
might appear that the issue resided within the state's
Medicaid payment system, but the root cause was external.
She noted that identifying and resolving these types of
issues could be highly complex. She relayed that the
department would return to the committee later in the day
to present a set of proposed IT changes intended to address
some of the known systemic challenges in the Medicaid
program. She shared that a Medicaid modernization plan
would be built out over the next several years to improve
infrastructure, leverage automation, and result in better
service for providers.
9:17:29 AM
Representative Hannan understood that based on the earlier
explanation of managed care versus fee-for-service, managed
care appeared similar to a health maintenance organization.
She suggested that such a model would only be feasible in
areas with a sufficient number of providers available for
network participation. She noted limited provider
availability and restricted access were persistent
challenges across the state. She asked whether her
understanding was correct and whether Alaska's limited
provider landscape effectively made the managed care model
unworkable considering that many services were offered by a
single provider.
Ms. Ricci responded that while managed care organizations
could be structured as health maintenance organizations, it
was not a requirement. She stated that a managed care
organization could be designed in a manner similar to the
health insurance plans offered to state employees or
retirees, which did not operate as health maintenance
organizations. She explained that when pooling risk across
a population, it was essential to consider how many
providers would participate in the network and whether the
size of the population pool would be sufficient to sustain
the risk. She acknowledged that participation had
historically presented a challenge in Alaska. The
legislature had reviewed the feasibility of managed care at
several points over the previous ten years and despite the
considerations, the state had remained within the fee-for-
service model.
Representative Hannan asked whether cost shifting was a
factor in making Medicaid services financially viable. She
suggested that Medicaid patients became more affordable to
treat when providers charged more to private payers such as
Aetna and Blue Cross Blue Shield. She stated that while
treating Medicaid patients might yield lower profit
margins, providers were not obligated to accept the
patients unless they voluntarily enrolled in the program.
Ms. Ricci responded that providers that enrolled in the
Medicaid program agreed to accept Medicaid patients. She
stated that there was typically a mix of reimbursement
rates from different payers in any health care business.
Even within the commercial insurance market, payers often
reimbursed at varying rates. Public payers such as Medicare
and Medicaid generally reimbursed at lower rates than
commercial insurers. She explained that many Medicaid
reimbursement rates in Alaska were based on cost. The rates
were calculated using cost reports submitted to the Centers
for Medicare and Medicaid Services (CMS) by providers. The
state then applied a set percentage to the reported costs
to determine the final Medicaid reimbursement rate. The
structure made the relationship between actual service
costs and Medicaid fees complex to evaluate.
Ms. Ricci relayed that her colleague would now provide
information on Medicaid eligibility.
9:20:29 AM
DEB ETHERIDGE, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH, continued the presentation on slide
5. She explained that the Division of Public Assistance
(DPA) played a critical role in ensuring that eligible
Alaskans had access to healthcare. She stated that Alaskans
had multiple options for applying for Medicaid and the
division aimed to ensure accessibility by offering a
variety of application methods. Individuals could apply
online through the MyAlaska portal, through the federally
facilitated marketplace at healthcare.gov, by contacting
the virtual contact center by phone, by visiting a DPA
office to meet with an eligibility technician, or by
working with a fee agent in rural areas. She explained that
fee agents in rural locations could help applicants
complete the application process and receive an interview.
The division also accepted Medicaid applications submitted
by mail or by fax.
Ms. Etheridge explained that once a Medicaid application
was submitted, DPA made eligibility determinations based on
two specific categories. The first category included
individuals who qualified for disability-related Medicaid
and included individuals who were age 65 or older, had a
disability, or received Supplemental Security Income (SSI).
The group also included individuals who received Medicare,
lived in a nursing home or assisted living facility, or
received home and community-based waiver services.
Eligibility for disability-related Medicaid was based on
income limits, which varied depending on household size and
living situation. Additionally, applicants in the category
were subject to a resource test. If an individual with a
disability exceeded pre-determined resource limits, the
division also evaluated whether the individual could
instead qualify under the second major category of
eligibility known as Modified Adjusted Gross Income (MAGI).
Ms. Etheridge explained that MAGI was the larger of the two
categories and applied to low-income children, pregnant
women, families, and adults aged 19 to 64 who did not have
dependent children. Eligibility under MAGI was determined
based on household size and income following guidelines
established by the Internal Revenue Service (IRS). Unlike
disability-related Medicaid, MAGI did not include a
resource test.
Ms. Etheridge relayed that DPA played a central role in
verifying Medicaid eligibility, regardless of the category.
The division used electronic data sources whenever possible
to streamline the verification process. However, applicants
were still required to meet all eligibility criteria,
including financial requirements. The requirements included
income and, in some cases, asset tests, along with other
program-specific limits. Additional eligibility criteria
included proof of citizenship or qualifying immigration
status, possession of a valid Social Security number, and
assignment of rights, which meant that applicants were
required to permit Medicaid to recover costs from other
sources such as private insurance. Some Medicaid programs
also imposed limits on assets, including savings and
property ownership. Once all required documentation was
submitted, the division issued a written determination of
approval or denial. Adequate notice was provided in cases
of denial, and all individuals were entitled to a fair
hearing. Approved individuals were required to renew their
eligibility annually. She relayed that the division was
currently using an ex parte process for renewals.
Ms. Etheridge explained that under the ex parte process,
the division initiated a review 60 days before the renewal
due date. During the review period, the division checked
available electronic resources to verify Alaska residency,
income, and other eligibility criteria. If the division was
able to verify eligibility, it automatically renewed
coverage for an additional year. If verification was not
possible, the division sent a shortened renewal form to the
applicant to complete and return. The division processed
the renewal upon receipt of the form. She stressed that
Medicaid benefits continued throughout the renewal process.
The division also provided at least ten days' notice prior
to taking any negative action. She stated that a well-
structured Medicaid system ensured that eligible
individuals could apply for, qualify for, and maintain
coverage without unnecessary barriers. She affirmed that
the division was working toward a system that effectively
served those in need while maintaining accountability and
program integrity.
9:26:19 AM
Representative Galvin asked about the difference between
Medicaid eligibility for children aged zero to one as
compared to children aged zero to six. She understood that
the governor had recently made a change allowing for
coverage specifically for children in the zero to one age
group.
Ms. Ricci responded that the relevant change was in the
postpartum extension bill [SB 58 passed into law in 2023]
that had been passed by the legislature. She acknowledged
and appreciated legislative support for the bill, which
extended Medicaid coverage for mothers who had given birth
from the previous limit of 60 days after birth to a new
coverage period of 12 months.
Representative Galvin asked for clarification on whether
the extended coverage applied to both the mother and the
child, or only to the mother.
Ms. Ricci replied that the change only affected coverage
for the mother. She explained that there had been no
changes to Medicaid enrollment eligibility for the child
because the child was already eligible for Medicaid
coverage for the first year of life.
Representative Galvin asked whether other states offered
Medicaid coverage for children beyond age one.
Ms. Ricci responded that children in other states could be
eligible for Medicaid beyond age one, depending on income
thresholds or other categorical eligibility criteria. She
reiterated that the general structure had not changed and
that children in other states remained eligible based on
other state's policies.
Representative Galvin asked if children from birth to age
one were also required to meet a specific eligibility
threshold.
Ms. Etheridge responded that coverage for children aged
zero to one fell under the category of continuous
eligibility. If a mother was receiving Medicaid benefits at
the time of the child's birth, the child was automatically
eligible for Medicaid. She added that some states operated
under Section 1115 demonstration waivers that allowed for
the extension of continuous eligibility for children beyond
the age of one.
Representative Galvin if whether Alaska was unique in not
extending continuous eligibility for children beyond age
one. She wondered if other states had adopted such policies
and if there was any available information on the outcomes
of any similar efforts.
Ms. Ricci responded that several other states had pursued
Section 1115 waivers in order to extend continuous Medicaid
enrollment for children beyond age one. She understood that
fewer than ten states had applied for the waivers. She did
not know if the waivers had taken effect yet.
9:30:07 AM
Ms. Ricci continued on slide 6 which addressed Medicaid
services in Alaska statute. She reiterated that Medicaid
was a joint federal and state program and the services
covered by the Medicaid program were guided by federal
requirements and outlined in Alaska state statute. She
relayed that AS 47.07.030 defined covered Medicaid services
and identified two categories of services. The first
category consisted of mandatory services, which Alaska was
required to cover under Title XIX of the Social Security
Act. The second category consisted of optional services,
which were listed in state statute but were not required by
federal law. However, she noted that referring to these
services as "optional" could be misleading. Changes under
the Affordable Care Act (ACA), which took effect in 2010,
had rendered some services mandatory that were listed as
optional in Alaska. Additionally, expectations regarding
health insurance coverage and the factors that affected
individual health status had evolved since the statute was
originally written. She explained that many of the services
listed as optional had become mandatory.
Ms. Ricci relayed that some examples of services considered
optional under state statute included prescription drugs
and emergency hospital services. She noted that if Alaska's
Medicaid program had not covered prescription drugs, the
system would likely have experienced significantly higher
rates of emergency room visits. She stressed that some
services remained technically optional in statute, but were
effectively necessary due to both federal regulatory
requirements and the realities of the health care delivery
system.
Representative Josephson asked for more information about
the potential cuts to Medicaid. He understood there were
ongoing national discussions about possible reductions of
trillions of dollars. He asked whether a federal
administration could reduce funding for mandatory services
and if DOH had sought a legal opinion. He acknowledged that
the topic had also been raised in a subcommittee. He
stressed that the funds needed to remain available in order
for the state to continue providing services to over
200,000 Alaskans.
Ms. Ricci replied that the department was actively
monitoring federal discussions related to Medicaid and
other health care programs. She explained that all states
routinely tracked the developments because of the direct
relationship between federal decisions and state-
administered Medicaid programs. She confirmed that no
specific federal proposals related to the reduction of
funds had been introduced. She relayed that DOH would work
with Department of Law (DOL) and other relevant entities to
assess potential impacts on Alaska's Medicaid program.
Co-Chair Josephson asked whether the state had experienced
any delays or disruptions in the transfer of funds for
Medicaid recipients. He asked if there had been any
noticeable concerns or slowdowns in the flow of payments
through MMIS.
Ms. Ricci confirmed that there had been no delays in the
flow of federal Medicaid payments.
9:34:36 AM
Ms. Ricci advanced to slide 7 and reiterated that Medicaid
was a joint federal and state program. The joint structure
allowed states some flexibility in designing and operating
Medicaid systems; however, the designs were first required
to be approved by CMS. She directed attention to the
diagram on the slide depicting the process of federal fund
flow. She explained that DOH first communicated its
projected claims costs for a given period to the federal
government. Based on the projections, the federal
government authorized the state to expend a corresponding
amount. The authorization was not an immediate transfer of
funds but rather a preliminary agreement. Once the
authorization was in place, the state paid providers on a
weekly basis as claims were submitted. She noted that the
state's weekly Medicaid expenditures totaled approximately
$52 million. After processing the payments, the state
submitted a report of the actual expenditures to the
federal government and subsequently drew down the
corresponding funds to reconcile the payments.
Ms. Ricci clarified that the diagram represented only a
portion of the complex and ongoing interactions between DOH
and CMS. Providers were permitted to submit claim
corrections or adjustments for up to two years following
the original claim submission or payment, which added
further complexity to Medicaid fiscal management. The
states also individually managed Medicaid eligibility and
enrollment processes, enrollment of providers, and service
delivery. She indicated that the legislature played a vital
role by approving the optional services covered by
Medicaid, authorizing the use of waiver services for
certain programs, and defining the eligibility groups
included in Medicaid coverage.
Representative Allard asked for specific documentation
outlining what the federal government funded for each
program, including descriptions and dollar amounts.
Ms. Ricci responded that she would follow up in writing
with a breakdown of federal versus state expenditures by
service category.
Representative Allard emphasized that she did not need a
comparison, but instead wanted specific details on what
federal funds supported which programs, along with program
descriptions.
Ms. Ricci confirmed that she would provide the information.
9:37:51 AM
Ms. Ricci continued on slide 8 and explained that a key
component of the Medicaid program was the method of
financing, which involved joint funding from the federal
and state governments. The federal share of costs was
determined by the Federal Medical Assistance Percentage
(FMAP). She relayed that the federal match was calculated
annually for each state and the minimum match was
established each year. The chart on the right side of the
slide detailed different FMAP rates based on various
eligibility categories. She explained that the category
labeled as "regular Medicaid" was the lowest federal share
provided for services. At a minimum, the federal government
funded 50 percent of Medicaid program costs, but the
federal match could be higher dependent upon specific
economic conditions. The regular Medicaid match rate in
Alaska was 51.54 percent, but different types of services
received different federal match rates. For example, the
51.54 percent rate was the lowest match for standard
Medicaid services, while services provided to tribal
members through tribal health organizations qualified for a
100 percent federal match. She emphasized that
understanding the differences was important when evaluating
the Medicaid budget.
Representative Tomaszewski asked how accurately individuals
were categorized to ensure proper federal match rates were
applied. He wondered if the department encountered
challenges in assigning individuals to the correct match
category.
Ms. Ricci responded that enrollment was determined through
income-based eligibility or categorical eligibility, which
was tracked and linked to claims data. Individuals were
categorized based on their enrollment in the Medicaid
program. She acknowledged that system errors could occur
and DPA was actively addressing the issues. She added that
auditors reviewed the accuracy of eligibility and
enrollment data on an annual basis. She explained that
additional coordination was required for individuals to be
eligible for the 100 percent match through Indian Health
Services (IHS). She noted that Medicaid services might also
be delivered outside the tribal health system, which
required careful tracking and verification. If there was a
care coordination agreement between the tribal health
system and the external provider, the department could
attempt to recoup a 100 percent federal match for any
Medicaid funds that had been expended. She explained that
the recouping process had been a significant component of
the Medicaid system since it became available in 2018 and
had saved approximately $138 million in general funds in FY
24.
Representative Tomaszewski commented that the current
process seemed to occur after funds had already been
expended. He asked if there was any way to be more
proactive.
Ms. Ricci responded that for the vast majority of services,
the estimated federal match was tied directly to the
individual's categorical or income eligibility status at
the time of enrollment in the program. She clarified that
additional administrative work might be required for
certain IHS services to receive the full federal match.
9:43:07 AM
Representative Hannan understood that IHS had been expanded
in many communities and IHS facilities were often the only
available providers in some areas. She asked whether a non-
tribal citizen receiving care at an IHS facility would
still result in the state receiving the regular 51 percent
federal match under Medicaid, rather than the 100 percent
match.
Ms. Ricci responded in the affirmative.
Representative Hannan asked if the expansion of IHS into
new areas created complications for Medicaid delivery to
non-tribal citizens. She noted that organizations such as
SouthEast Alaska Regional Health Consortium (SEARHC) had
established new facilities and she wondered if the shift
caused challenges due to the change in reimbursement rates
between tribal and non-tribal recipients.
Ms. Ricci responded that the reimbursement rate was
determined by the state. She explained that there was no
change in the billing process for tribal health
organizations. She indicated that an organization would
submit a claim to Medicaid and the state would then
identify whether the individual qualified for a 51 percent
match percentage, 90 percent match, or another federal
match percentage. She noted that complications could arise
due to differences in how tribal and non-tribal health
organizations were reimbursed. She explained that the
Medicaid program paid different amounts to tribal providers
and to non-tribal providers, which affected the overall
funding structure.
Co-Chair Foster asked for more information about the
potential impacts to hub hospitals that currently received
a 100 percent federal match under FMAP, such as SEARHC in
Juneau, Norton Sound Health Corporation in Nome, and Yukon-
Kuskokwim Health Corporation in Bethel. He noted that the
facilities served a high percentage of tribally enrolled
individuals and asked whether a hypothetical cut in the
federal match would significantly impact the providers. He
thought the possibility of the match being reduced to
around 50 percent was alarming.
Ms. Ricci responded that the federal match accrued to the
state and the Medicaid program paid the Medicaid rates
directly to the provider and the state drew down the
appropriate federal match. She explained that the
difference between a 100 percent match and a 50 percent
federal match reflected the impact on state dollars used to
cover the services. The state paid the same amount to
providers regardless of the federal match rate. The
variation in the federal match simply determined how much
federal funding the state could draw down to support the
payments.
Co-Chair Foster remarked that if there was a reduction in
the federal match rate, the result would either be a
reduction in services or a requirement for the state to
cover a greater share of costs. He emphasized that the
state already faced financial challenges and increased
costs was an important issue.
9:47:45 AM
Representative Johnson asked if the 100 percent FMAP match
on slide 8 meant that the service was fully covered by the
federal government and the state did not contribute through
a shared match.
Ms. Ricci responded that under a 100 percent FMAP, the
federal government reimbursed the state for 100 percent of
the claim amount paid for services. She clarified that a
51.54 percent match meant the federal government reimbursed
51.54 percent of the cost for services provided to eligible
individuals.
Ms. Ricci advanced to slide 9 and explained that an
important component of the Medicaid program was the
Medicaid State Plan. She repeated that Medicaid was a joint
federal and state program and that the plan served as the
formal agreement between Alaska and CMS. The plan outlined
key program elements, including eligibility criteria,
covered services, provider reimbursement methods, and
program administration processes. The plan was subject to
federal guidelines, but states still had some flexibility
in how they implemented the program. The plan served as the
framework for how the state and federal government
structured Medicaid in Alaska and was publicly accessible
to ensure transparency.
Ms. Ricci emphasized that any proposed changes to
eligibility, covered services, administrative procedures,
or reimbursement rates generally required a state plan
amendment (SPA). She explained that the SPA process
involved submitting a formal amendment request to CMS to
authorize a change that the state found to be reasonable
and compliant with federal requirements. She noted that the
process included public and tribal consultation periods and
followed a strict procedural framework. She relayed that it
was essential that all Medicaid services be authorized
either through the state plan or a federally approved
waiver. Services that were not authorized through such
channels were not eligible for a federal match.
9:50:55 AM
Co-Chair Josephson relayed that he was alarmed when the
administration was proposing removing dental coverage for
Medicaid recipients in around 2019. He understood that some
legislatures had the authority to act as a check on SPAs.
He noted that there was a conference in Anchorage that
included participation from the insurance industry, health
care providers, and other stakeholders. He asked whether
the governor had the full authority to make adjustments to
the Medicaid state plan without any input from the
legislature.
Ms. Ricci responded that Alaska's legislature had a more
substantial role in the Medicaid program than legislatures
in many other states. She explained that in Alaska,
statutory authorization was required before the department
could pursue waivers for Medicaid services, which was a
level of legislative involvement that did not exist in all
states. She added that the department routinely updated and
adjusted the state plan in the normal course of
administering a health insurance program. The updates did
not typically require legislative or statutory changes.
However, the department could not add new services, expand
eligibility, or implement similar changes without first
obtaining statutory authority from the legislature. She
reiterated that such a high level of legislative oversight
was rare.
Co-Chair Josephson asked for clarification on how the state
would add a specific benefit. He asked whether the
legislature would need to pass a bill to authorize the
benefit of adult podiatry care, for example, which he
believed was not currently covered in Alaska but was
covered in other states.
Ms. Ricci responded that the services that could be covered
by Medicaid were specified in state statute, including both
mandatory and optional services. She noted that podiatry
was not among the optional services currently listed for
adults in state statute, meaning that the department would
not have the authority to offer coverage without a change
in state law.
Co-Chair Josephson asked if the governor could unilaterally
request that CMS approve adult podiatry as a covered
service without legislative approval.
9:54:31 AM
Ms. Ricci responded that because the department was a state
agency, it operated in accordance with state statute. She
explained that a statutory change would be required before
the state could submit a request to CMS to include adult
podiatry care in the Medicaid program. She noted that
whenever the state submitted an SPA, corresponding
regulatory changes were often required. She emphasized that
both federal approval and state regulatory revisions needed
to be considered when making any changes to the Medicaid
program.
Ms. Ricci continued to slide 10 and relayed that waivers
were an additional tool for authorizing Medicaid services.
She stated that waivers allowed states to offer services or
implement delivery models not typically allowed under
standard Medicaid rules. The Medicaid program included a
wide range of waivers that were often referenced by number
and letter.
Ms. Ricci stated that the two waivers most relevant to
Alaska's Medicaid program were the Section 1115 waiver and
Section 1915(c) waiver. She noted that the numbers referred
to specific authorizing provisions in federal law. The
federal Secretary of Health and Human Services could grant
permission for states to implement alternatives to standard
Medicaid provisions. She added that each waiver had its own
restrictions and the waivers were subject to federal
requirements. For example, Section 1115 demonstration
waivers had been used in Alaska to expand access to
behavioral health and substance use disorder services
beginning in 2018. She relayed that the Section 1115
waivers allowed states to test new service delivery models
or offer services not typically covered by Medicaid,
provided that the efforts met the program's overall goals.
She explained that the waivers were required to meet
specific conditions and be deemed budgetarily neutral by
the federal government. She added that Section 1115 waivers
typically operated for a five-year demonstration period and
were subject to periodic renewal.
Ms. Ricci highlighted that the Section 1915(c) program
waivers were listed on the right side of the slide. She
explained that the program waivers were used to help
individuals remain in their homes and communities and were
commonly known as home and community-based waiver services.
She noted that Director Tracy Dompeling from the Division
of Behavioral Health (DBH) and Director Tony Newman from
the Division of Senior and Disability Services (DSDS) each
managed waivers within their respective divisions.
9:57:27 AM
TONY NEWMAN, DIRECTOR, DIVISION OF SENIOR AND DISABILITIES
SERVICES, DEPARTMENT OF HEALTH, continued on slide 11. He
relayed that DSDS oversaw the administration of Alaska's
five 1915(c) waivers. He reiterated that the waivers
provided services intended to help Alaskans remain in their
homes and communities. He stated that the waivers
collectively served approximately 5,500 individuals in the
state. The first waiver was the Individuals with
Intellectual and Developmental Disabilities (IDD) waiver,
which served approximately 2,100 individuals. The second
waiver, Alaskans Living Independently, primarily served
seniors who were Medicaid-eligible and experiencing
functional challenges. The waiver enabled eligible seniors
to live more independently and was the largest waiver of
the five, serving around 2,400 individuals. The third
waiver, Children with Complex Medical Conditions, served
individuals under age 22 who had severe chronic medical
conditions requiring care that would otherwise be provided
in a hospital or nursing facility. Approximately 240
children and young adults were served under the waiver.
Mr. Newman continued that the fourth waiver, the
Individualized Supports waiver, was introduced in 2018 as
part of Medicaid reforms. The waiver served individuals
with intellectual and developmental disabilities and
provided a reduced set of services for eligible
participants. Approximately 600 individuals were served
through the waiver. The fifth and final waiver, Adults with
Physical and Developmental Disabilities, served around 176
adults. The eligible group often included individuals who
had aged out of other waivers and met the nursing home
level of care requirement. He stressed that the waivers
shared common features although each waiver served distinct
populations. When an individual was enrolled in a waiver,
the individual was granted access to a range of services
intended to support independent living. There were
approximately 14 types of waiver services available,
ranging from habilitative care, which could be delivered at
home or in an assisted living setting, to employment
services, adult daycare, and environmental modifications
such as ramps and roll-in showers. He explained that waiver
eligibility required individuals to qualify for a Medicaid
category determined by DPA, led by Director Etheridge, and
to meet a level of care requirement assessed by DSDS.
Mr. Newman expressed that he appreciated the legislature
for appropriating funds beginning in FY 24 through FY 26 to
modernize the assessment process. The division planned to
implement a new tool called the "NRI" that would support
several long-desired systemic improvements advocated by
stakeholders. He noted that without the waivers, many
individuals would have required institutional care. He
reported that the department estimated Alaska would spend
over $1 billion on institutional care in the absence of
waiver services. The availability of the waivers was
projected to save the state approximately $600 million and
enabled Alaskans to remain in their homes and communities.
10:01:18 AM
Representative Hannan relayed that constituents often
reported that they were on the IDD waitlist. She asked if
the waiver and the IDD waitlists were the same. She
inquired about what actions needed to be taken in order to
help transition individuals from the waitlist into waiver
coverage. She understood that such transitions would result
in cost savings and stronger communities.
Mr. Newman responded the IDD waiver had a waitlist of
approximately 323 individuals since late January of 2025,
although the number changed almost daily. He explained that
the legislature had asked the department to develop a plan
in 2022 estimating the cost of eliminating the waitlist.
The resulting report was available on the department's
website and included details on the appropriations
required. He reiterated that the department proposed a more
cost-effective approach that involved introducing a new
assessment tool. The overall cost of eliminating the
waitlist could be reduced if the new tool was utilized. He
clarified that the legislature had only funded the
implementation of the assessment tool and that additional
appropriations would be required to provide services and
remove individuals from the waitlist. The costs were
outlined in the report.
Co-Chair Josephson recalled that there was a discussion in
a subcommittee that that estimated approximately $30
million would be needed to eliminate the waitlist. He asked
whether such an investment would result in immediate
savings compared to the cost of institutional care. He
asked if immediate cost savings could be realized if the
legislature decided to eliminate the waitlist without
waiting for the full implementation of the new assessment
tool.
Mr. Newman responded that it would be difficult to make
such a determination. He explained that the department
prioritized individuals on the waitlist based on level of
need and the remaining individuals on the list typically
had the lowest level of identified needs. He added that
many of the individuals on the waitlist were already
receiving services, often through the more limited
Individualized Supports waiver that had been introduced in
2018.
Representative Galvin requested that the 2022 report be
shared again with the committee. She explained that she had
not been in the legislature when it was originally
published and wanted the opportunity to review it. She
acknowledged that the report included significant cost
estimates.
Mr. Newman confirmed that the department would provide the
report.
Representative Galvin then asked for more detail on more
limited services available under the Individualized
Supports waiver. She wanted to know what the services
included, whether it helped reduce costs elsewhere, and
what the differences were between the limited services and
the more comprehensive services available under other
waivers.
Mr. Newman responded that the key difference was the
availability of residential services: the IDD waiver
included residential services, while the Individualized
Supports waiver did not. He explained that residential
services were among the most intensive and expensive
offered through the IDD waiver. He noted that the
Individualized Supports waiver had been created in part to
reduce state spending, which allowed the department to
lower general grant funding.
10:06:18 AM
Co-Chair Josephson asked if the state currently had the
housing, staff, and facilities necessary to eliminate the
waitlist.
Mr. Newman responded that it was a valid concern. He stated
that the availability of service providers, particularly
direct support professionals (DSP), would be a critical
factor in any effort to fully eliminate the waitlist. The
waitlist could be eliminated by offering everyone access to
services, but without the necessary workforce, there would
effectively still be a waitlist.
Representative Stapp asked how many other states had a
waitlist.
Mr. Newman responded that several dozen states had a
similar waitlist. He mentioned that his own nephew had been
on the waitlist in Pennsylvania for many years.
Representative Stapp asked what the average amount of time
was that an individual spent on the IDD waitlist in Alaska.
Mr. Newman replied that the department had the information,
but he would need to follow up.
Co-Chair Josephson asked whether there were waitlists for
the other four waiver programs.
Mr. Newman explained that the department had recently
implemented a waitlist for the Individualized Supports
waiver. The waitlist was currently small as the program was
capped at 600 people. At the moment, about 45 people were
on the list.
10:08:06 AM
Representative Tomaszewski stated "waivers are savers." He
asked whether the $600 million in cost savings listed on
slide 11 consisted of federal dollars, state dollars,
general fund dollars, or a mix.
Mr. Newman responded that the amount included both state
and federal dollars.
Representative Tomaszewski asked whether the mix of funding
depended on the specific program and how the breakdown was
determined.
Mr. Newman replied that the number was calculated by
determining how many people were on each waiver and
comparing the number with the average cost of institutional
care. The costs of placing individuals in nursing homes or
other institutions for people with disabilities were
compared to the costs of receiving home and community-based
services through a waiver.
Representative Tomaszewski asked for the specific breakdown
between federal and general fund dollars.
Mr. Newman responded that the split was roughly 50 to 51
percent federal dollars.
Representative Tomaszewski asked for confirmation that the
funding fell into the lowest federal matching category.
Mr. Newman responded in the affirmative.
10:09:41 AM
TRACY DOMPELING, DIRECTOR, DIVISION OF BEHAVIORAL HEALTH,
DEPARTMENT OF HEALTH, continued on slide 12 which was an
overview of Alaska's behavioral health system and the
public funds that supported the system. She explained that
the system began undergoing redesign and reform in 2016
following the passage of SB 74, which required the
department to pursue an 1115 waiver to improve and
modernize the Medicaid behavioral health system in Alaska.
The waiver also aimed to increase overall funding in the
system and shift it to more sustainable sources, allowing
federal contributions to be used to support services. The
slide showed the combined funding from Medicaid and grants
supporting the behavioral health system from FY 18 through
FY 24.
Ms. Dompeling relayed that she would begin by providing an
overview of the Medicaid funding categories. The brown
sections of the slide represented state plan behavioral
health services, with the lighter brown showing the state
share and the darker brown showing the federal share. She
explained that the blue sections of the slide represented
the 1115 services, with the lighter blue sections showing
the state portion and the darker blue showing the federal
portion. She highlighted that the 1115 services began
coming online in late FY 20, starting with the substance
use disorder services. Additional mental health-related
services were added later in FY 21.
Ms. Dompeling noted that the 1115 waiver had been
bifurcated to separate substance use disorder services from
mental health services. The separation was a direct
response to the emerging opioid epidemic in Alaska, which
led to prioritizing substance use disorder services first.
She relayed that the green line on the slide represented
grant funds that were appropriated by the legislature and
distributed by the division to community behavioral health
providers throughout the state. The numbers in bold at the
top of each column on the slide represented the overall
annual spending from FY 18 through FY 24. The spending
increased by roughly $120 million during the time frame,
which was a 48 percent increase. She explained that much of
the growth was due to the implementation of the 1115
demonstration waiver. She highlighted that demonstration
waivers were time-limited and the initial waiver lasted
five years. The department had secured a renewal that
extended the waiver through December 31, 2028, which
offered an opportunity to pursue amendments to expand and
finetune the waiver to better suit Alaska.
Representative Galvin asked whether the grant funding
represented by the green line included federal or state
funds. She asked why the amount had dropped significantly
in recent years.
Ms. Dompeling responded that most of the green line funding
came from federal sources. She explained that DBH received
annual block grants for both substance use and mental
health issues and the federal funds made up the majority of
the grants. She added that the division could follow up
with a breakdown of the state appropriations contributing
to the grants. The decline in grant funding was largely due
to a shift in the way in which services were funded. For
example, children's residential services were previously
funded through grants, but over time the services
transitioned to being covered under the 1115 waiver,
allowing providers to bill Medicaid instead. Total spending
in the behavioral health system still increased over the
past seven fiscal years despite the reduction in grant
funding.
10:14:38 AM
Representative Bynum asked whether the spending shown in
the presentation excluded funding from other state
agencies, such as the Alaska Mental Health Trust Authority
(AMHTA) or the Department of Education and Early
Development (DEED), which could also provide behavioral
health services.
Ms. Dompeling replied that the data primarily represented
DBH funding. She relayed that there were times when AMHTA
allocated funds to the division for specific purposes, such
as crisis services, and in those cases the funding would be
included in the grant portion of the chart.
Representative Bynum asked whether the AMHTA contributions
were included in the grant component represented by the
green line on the slide.
Ms. Dompeling responded in the affirmative.
Co-Chair Josephson asked what information was reflected in
the green line for FY 26.
Ms. Dompeling replied that she did not have the information
immediately available. She noted that anticipated
reductions were tied to the expiration of COVID-19
supplemental funds. She thought Ms. Ricci could respond in
more detail.
Ms. Ricci suggested that the committee discuss the FY 26
funding during the scheduled afternoon meeting, which
included a budget overview for DBH.
Co-Chair Josephson recalled that about five years ago, he
had offered amendments in the House Finance Committee to
increase behavioral health grants, particularly the direct
cash grants. He remarked that one of the amendments had
failed by a single vote. The committee had heard from
groups under the Behavioral Health Association umbrella
that some services could not meet the requirements of the
1115 waivers. He recalled that one key barrier mentioned
was capacity. For example, startup costs for opening a new
behavioral health clinic were not reimbursable under the
waiver structure. He asked whether such concerns were still
valid or if the system had since evolved. He wondered if
there were still people with unmet needs who did not
qualify for waiver coverage.
Ms. Ricci responded that gaps continued to exist in
Alaska's behavioral health care system. She stated that one
of the department's ongoing priorities had been to
strengthen the behavioral health care system. There had
been some progress due to the implementation of the 1115
wavier, but more work still needed to be done. She relayed
that Ms. Dompeling had developed a strategic plan to
address the challenges in partnership with stakeholders
across the state. She explained that the Youth Behavioral
Health Roadmap was finalized the previous year and was an
important part of the strategic plan. Another component had
been a recent assessment conducted by consultants from
Milliman that outlined ways to improve the crisis response
system. The focus continued to be on identifying and
closing gaps in the behavioral health continuum.
10:18:13 AM
Representative Jimmie noted that her constituency had a
high number of Medicaid participants and asked whether
there was a way to bring counselors into schools to better
support students' mental health.
Ms. Ricci responded that the department had been working on
developing school-based services to help schools provide
mental health care. She reported that the department
received a $2.5 million grant from CMS in 2024.
Additionally, legislation passed in 2024 had removed state-
level limitations and allowed school districts more
flexibility to access Medicaid funds. She confirmed that
the department had been actively building out the program.
Representative Jimmie asked for confirmation that the
effort applied statewide.
Ms. Ricci responded in the affirmative.
Ms. Ricci continued to slide 13, which detailed some major
developments in Alaska's Medicaid program. She explained
that Medicaid had been established at the federal level in
1965 and Alaska had joined the program in 1972. In 2015,
the state had expanded Medicaid eligibility under the
Affordable Care Act (ACA). In 2018, the federal government
had approved Alaska's 1115 waiver for behavioral health
services. She noted the federal government had required
states to maintain Medicaid enrollment in 2020, except in
very specific cases. The federal government had also
offered states a temporary 6.2 percent increase in the
federal match rate to help offset the costs. The enhanced
match had begun phasing out in April of 2023, and at that
time, states were required to redetermine eligibility for
all Medicaid enrollees. She relayed that it had been a
massive administrative undertaking and had posed challenges
across the country.
10:20:49 AM
Ms. Ricci moved to slide 14, which displayed Medicaid
enrollment and spending trends. She noted that the gold and
green lines represented enrollment. The gold line reflected
the total number of individuals who had been enrolled in
Medicaid at any point during each fiscal year. In FY 24,
the number of enrollees had reached nearly 280,000, but the
month-to-month enrollment numbers were lower. For example,
the state had counted about 253,000 actively enrolled
individuals in April of 2023, which was when the state had
begun its process of redetermining eligibility. As of
December of 2023, the number had dropped to 246,000. The
green line represented the number of individuals who had
actually received a service through Medicaid. She clarified
that not every enrollee incurred costs or accessed medical
care, which was an important distinction when considering
the Medicaid budget. The bars at the bottom of the chart
showed the funding sources. The dark blue line represented
the federal portion of the state Medicaid budget, while the
light blue line represented the state portion. Over the
past eight years, the federal portion of the Medicaid
budget had increased at a faster rate than the state
portion.
Representative Bynum noted that there was a difference
between the number of enrollees and the number of
individuals who had actually received care. He asked
whether there was a requirement that Medicaid enrollees
receive preventative care.
Ms. Ricci responded that there was no requirement.
Representative Hannan asked whether the department
encouraged enrollees with chronic conditions to receive
care in order to be proactive. She asked if efforts were
made to prevent catastrophic outcomes due to unmanaged
chronic illnesses.
Ms. Ricci responded that some programs existed for
individuals with severe or acute needs. She stressed that
strengthening support for individuals with chronic
conditions remained a priority for the department.
Representative Hannan asked if barriers to accessing care
contributed to the gap between enrollment and actual
service usage, such as travel from remote communities or
arranging childcare.
Ms. Ricci responded that there were likely many
contributing factors. She added that a gap often existed
between individuals enrolled in a plan and those actively
using services. However, the widening of the gap over time
was significant and had implications for the Medicaid
budget and population health management.
10:24:56 AM
Representative Galvin asked if continuous care costs were
lower for emergency postpartum coverage for mothers and
infants compared to preventative care.
Ms. Ricci responded that she was not sure how many states
had implemented continuous coverage and there was not much
information available.
Representative Galvin clarified that she was referring
specifically to the zero to one age range.
Ms. Ricci responded that she would follow up with the
information.
Representative Stapp asked how much flexibility the state
plan had to incorporate incentives to encourage
participants to seek out preventative care.
Ms. Ricci responded that there was substantial flexibility.
She added that implementation would depend on the
division's available bandwidth.
Ms. Ricci proceeded to slide 15, which illustrated various
influences on the Medicaid budget. She noted that the
budget was complex and could be affected by inflation,
federal match rates, enrollment numbers, population health
trends, and the methods and rates used to reimburse
services.
Ms. Ricci moved to slide 16 and stated that one of the
elements the division had been tracking was the number of
individuals receiving services, particularly during the
redetermination of eligibility over the past two years. She
explained that the division had monitored whether there was
a decrease in the number of individuals receiving services
at any given time. The chart showed that there had been
relative stability, with an average monthly difference of
approximately 2,000 individuals.
10:27:13 AM
Ms. Ricci advanced to slide 17. She noted that individuals
with chronic conditions required more medical services,
which resulted in higher associated costs. The slide
depicted the correlation between chronic conditions and
increased healthcare costs. She emphasized that one of the
division's focus areas was supporting individuals in
managing their chronic conditions to maintain overall
population health.
Ms. Ricci continued to slide 18 and noted that a small
portion of the population accounted for a
disproportionately large share of total spending, which was
typical in many insurance plans. The gold bar on the chart
on the slide represented approximately 10 percent of
Medicaid recipients who utilized services. She noted that
10 percent of the recipients accounted for approximately 67
percent of total Medicaid spending which equated to roughly
$1.8 billion. Conversely, about 60 percent of recipients
accounted for only 7 percent of total spending. She
remarked that the spending distribution was not unusual for
insurance. She explained that the pie chart on the left
side of the slide provided a different visual
representation of the same dynamic between the high and low
utilization groups.
Ms. Ricci proceeded to slide 19 and stated that
reimbursement methods significantly influenced the Medicaid
budget. She clarified that the left side of the slide
listed various types of rates paid to different providers,
depending on the services offered. The right side of the
slide illustrated typical adjustments made to the rates.
The adjustments could occur annually or on a one-time basis
and were driven by factors such as inflation, rebasing,
legislative appropriations, and federal policy changes.
Co-Chair Josephson asked if inflation and rebasing were
connected.
Ms. Ricci responded that inflationary adjustments grew on
an annual basis and were generally defined in regulations.
She relayed that rebasing involved evaluating the
underlying costs incurred by a service provider over a
longer period of typically three to five years. Both
mechanisms reflected changes in service delivery costs but
addressed different aspects of the rate-setting process.
10:29:49 AM
Ms. Ricci continued to slide 20, which included a chart
that illustrated cost-saving strategies used within the
Medicaid program. She explained that tribal reclaiming
leveraged a 100 percent federal match for certain services
and generated $138 million in FY 24. She noted that drug
rebate recoveries savings were shared between the federal
and state governments and had offset Medicaid service costs
by approximately $135 million in FY 24. She added that the
supplemental drug rebates received by the state totaled
approximately $168 million.
Co-Chair Josephson reviewed the agenda for the afternoon
meeting. He stated that Ms. Ricci would return in the
afternoon to discuss the department's budget in more
detail.
ADJOURNMENT
10:31:15 AM
The meeting was adjourned at 10:31 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HFIN - DOH Medicaid 101-final 021325.pdf |
HFIN 2/13/2025 9:00:00 AM |