Dunleavy administration seeks review of Medicaid overhaul plans for Alaska

The Dunleavy administration wants a consultant to evaluate the possible benefits of its plans for overhauling Medicaid in Alaska.

The Alaska Department of Health and Social Services wants to know whether it’s a good idea to shift relatively healthy Medicaid recipients onto subsidized private insurance plans, while also setting work requirements for some. The agency also wants to know whether a block grant from the federal government -- something that’s not been done before for any state -- would support those plans.

It’s willing to pay up to $100,000 for the advice, according to a request for proposals issued late last week. It wants the “proof of concept” analysis completed in one month, by the end of June.

The health department is asking for a high-level look at the state’s “potential model” for altering Medicaid, to help it determine whether to continue pursuing the concept, Donna Steward, deputy commissioner for the agency, said last week.

A detailed analysis over six months, perhaps a year, will be done if the agency moves ahead, she said. That would help the state prepare an application for a federal waiver to make the changes, she said.

“It’s a request for a consultant with experience working on Medicaid transformation in other states to review the proposal as outlined and provide consultation and expertise on whether it’s something that could be helpful for Alaska,” she said.

The agency wants to control health care costs and insurance premiums that are among the highest in the U.S, the request for proposals says. More than 200,000 Alaskans receive Medicaid coverage, paid for mostly with federal funds.

Alaska advocacy groups have panned the idea of a block grant. They say it would cap the amount of federal Medicaid dollars coming to Alaska, changing the current process of the federal government paying for an open-ended percentage of the program.

If expenses exceed the cap, the state could be forced to pay more, or have to cut services, provider rates or access under Medicaid, said Becky Hultberg, president of the Alaska State Hospital and Nursing Home Association.

“Block grants shift risk from the federal government to the state,” Hultberg said. “It’s difficult to understand why a state would want to accept that increased level of risk.”

Hultberg said the administration has sent confusing signals about whether it’s seeking a block grant. She said the latest proposal adds to that uncertainty.

State health care officials have downplayed the idea that the state is pursuing a block grant, but Gov. Mike Dunleavy has urged President Donald Trump to support it. Nationally, Republicans have proposed block grant funding as a way to manage Medicaid.

Steward said the proposal is simply asking a question, and a block grant isn’t needed to support the other changes.

“All we’re asking is if there were access to a block grant would it support this type of proposal?” Steward said. “But we’re not seeing movement at the federal level to put block grants in place.”

Steward said it appears congressional approval would be required for the state to receive a block grant, complicating the chances that it will happen.

[Alaska doctors and dentists tell Gov. Dunleavy his budget will hurt patient care.]

Steward said shifting some people who are relatively healthy from Medicaid onto the federally facilitated health care marketplace could potentially reduce what the state pays for Medicaid. Those people would still be entitled to Medicaid, which would act as a secondary insurer, ensuring they don’t lose services, she said.

“That’s required at the federal level, so it’s not a responsibility we would be able to shirk, nor would be trying to do that,” she said.

In a separate review already underway, the state has hired international consulting firm Milliman to provide an actuarial analysis that can help determine the cost to the state of moving some Medicaid recipients into the federally facilitated marketplace.

That would help inform how many people should be shifted to the federal marketplace, Steward said. That analysis should also be done by the end of June.

The results of both the “proof of concept” paper and the Milliman review will help the state determine if it should pursue the restructuring plans further, she said.

Hultberg said she’s skeptical that the administration’s plans will improve the Medicaid program in Alaska, but she believes the agency is doing the right thing by investigating the concept before applying for a federal waiver.

A 2016 study paid for by the state found that shifting Medicaid recipients to the marketplace will lead to greater expenses for the state, she said.

“Until we see the actuarial analysis, we suspect this will cost the state money,” Hultberg said.

She said health care organizations want to bring down the growth rate of medical costs.

“We need to look at a redesign of the system, but in a thoughtful way that results in an outcome we all want, which is a healthier population at a cost we can afford,” she said. “This is not path I think that will get us there.”

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or