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Existing problems need fixing before Medicaid expansion moves forward, state says

  • Author: Laurel Andrews
  • Updated: September 28, 2016
  • Published December 7, 2014

Alaska's new Gov. Bill Walker has made expanding Medicaid a top priority of his administration, but two major problems within the existing system must first be fixed. And those problems are much worse than initially thought, newly-appointed Department of Health and Social Services Commissioner Valerie Davidson said Friday.

Backlogs in two systems are "a lot more dire than we thought last week," Davidson said. One is a payment system that has been plagued with defects since it was unveiled last year. The other, issues with the Medicaid eligibility system.

Walker has repeatedly said that Medicaid expansion would be one of his first priorities upon taking office, a reversal of position from former Gov. Sean Parnell, who called the expansion a "failed experiment" in 2013.

Davidson said Walker appointed her as DHSS commissioner in part because of her support for Medicaid. Davidson formerly worked as the senior director of intergovernmental and legal affairs at the Alaska Native Tribal Health Consortium, which supported the expansion and issued two reports that found an expansion would bring $1.1 billion in revenue to the state.

She began her new appointment on Dec. 1, taking over from outgoing commissioner William Streur.

The new administration is a "sea change" from Parnell's, Davidson said, and Medicaid expansion would be one of the department's "game changers" moving forward. But first, two major backlogs need to be ironed out.

The first issue is Alaska's Medicaid eligibility system, which Alaskans use to sign up for the government program. The eligibility system has a backlog of applicants that must be addressed before the system can include an additional 40,000 Alaskans anticipated to enroll in Medicaid after the program is expanded, Davidson said.

The total scope of the backlog wasn't yet known, Davidson said, and the department was on a "fact-finding mission" to determine its extent.

The second problem is a backlog in payments that has plagued the state since it rolled out a new payment system last year.

Unveiled in Oct. 2013, Alaska's new Medicaid payment system was contracted with Xerox State Healthcare LLC. The system has been fraught with glitches since it rolled out and has caused delayed payments to health care providers. At a legislative hearing in February, providers testified that the new system was an "accounting nightmare."

The state filed a claim against Xerox in September with the Alaska Department of Administration seeking $46.7 million in liquidated damages.

A hearing is scheduled for February, said Margaret Brodie, director of health care services with DHSS.

Twenty-eight different issues were raised in the state's claim, Brodie said. She also noted the possibility of a lawsuit being filed in Superior Court against Xerox.

A total of 232 defects had been identified in the computer system. A dozen of those defects were "show stoppers" which caused claims to be paid incorrectly, Brodie said.

The state had been making "offline payments" to "ensure (health care providers') financial capacity," Brodie said. The state hoped to have the backlog of payments cleared up by the end of February.

Those system issues need to be resolved before Medicaid expands, to prevent a "sloppy implementation," Davidson said.

Meanwhile, Gov. Walker said in late November that he was weighing whether the expansion will move forward with or without the blessing of the Legislature.

"We certainly hope that we can work with the Legislature," Davidson said, adding that the Legislature's support was ultimately necessary as it must approve the receipt of federal funding for the expansion.

Under Medicaid expansion, the federal government would pay 100 percent of the expansion through 2016, gradually decreasing to 90 percent by 2020. The state would then pay the remaining 10 percent.

Medicaid expansion was one of the tenets of the Affordable Care Act, designed to be implemented in every state. In 2012, a U.S. Supreme Court ruling struck down the requirement, making the expansion optional and left up to the discretion of state leaders. Twenty-eight states have chosen to expand Medicaid thus far.

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