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Here are 10 ways to cut health care costs in Alaska

  • Author: Tim Schuerch
    | Opinion
  • Updated: January 10
  • Published January 10

As an attorney who has spent most of his career in health care, I would like to offer the following ideas for bringing down the costs of health care in Alaska.

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• Amend the Alaska nonprofit corporations code to give nonprofit directors the same rights as for-profit directors to inspect the corporate books.  Many health care providers in Alaska are organized as nonprofit corporations. Nonprofit directors have a fiduciary duty to their respective corporations that is identical to the fiduciary duties of for-profit directors. An important way that directors of both types of corporations exercise their fiduciary duties is to review the corporate books to make sure there is nothing improper going on that might hurt the corporation.

However, the Alaska nonprofit corporations code as currently written does not give nonprofit directors a right to inspect the corporate books, hurting their ability to exercise their fiduciary duties. The Legislature should address this oversight to improve the transparency and accountability of Alaska nonprofit corporations.

• Scrutinize the Medicare cost reports of health care providers participating in Medicaid, and make them publicly available on the state website. Nearly all health care providers in Alaska participate in the federal Medicare program. Medicare requires many of these providers to submit detailed cost reports.

Because of this, Alaska Medicaid uses Medicare cost data to determine many types of payment rates.  Thus any effort to control Medicaid costs must include strengthening Medicaid's scrutiny of providers' Medicare cost reports, as well as increasing the transparency of that cost data.

• Curtail Medicaid payments for capital costs. The state doesn't budget or fund capital costs out of the operating budget, even for state-owned buildings. If this is the case, why should Medicaid pay for the capital costs of private sector health care providers?

The Medicaid state plan should be amended to curtail this corporate subsidy.

• Eliminate inflation-based Medicaid payment increases. The Medicaid state plan authorizes annual inflation-based increases in payment rates based on a prospective application of a global healthcare inflation index. This methodology is flawed because it will often result in payments to providers in excess of their actual costs of providing care. The Medicaid state plan should be amended to eliminate this corporate subsidy.

• Eliminate the "exceptional relief to rate setting" bypass in the Medicaid state plan. The Medicaid state plan authorizes providers to be paid in excess of applicable rates if they are losing money. Many health care providers in Alaska are organized as tax-exempt, nonprofit corporations that participate in Medicaid and Medicare. It is reasonable to expect providers to at least break even in an environment where they don't have to pay taxes and are guaranteed a steady stream of paying customers. The Medicaid state plan should be amended to eliminate this corporate subsidy.

Under this model, the state would annually develop a short list of drugs for which significant health care dollars are spent, and where wholesale acquisition costs have gone up significantly.  The manufacturers of those drugs would be required to disclose all factors that contributed to the price increase, and justify the increase to the attorney general. It would also require Alaska Medicaid to use the federal 340B drug pricing formula to save money on prescription drugs.

• Repeal the physician exemption from Alaska antitrust laws. Current Alaska law grants physicians a broad exemption from our anti-trust laws. Predictably, the income of specialist physicians who have been clever enough to use this loophole to create group practice monopolies has skyrocketed. Without competition, these physicians can charge any price they want for their services. Competition between doctors is good for health care consumers because it tends to bring down prices and ensure high-quality services. The Legislature should repeal this exemption.

• Strengthen the Medicaid provider agreement form by requiring providers to specifically certify compliance with the anti-kickback statute, physician anti-referral statute and False Claims Act. The current Medicaid provider agreement does not require providers to specifically certify compliance with these key federal health care fraud and abuse laws. Requiring these certifications will make providers more diligent and cautious in their business arrangements so as to avoid improperly giving or receiving kickbacks, improperly making payments for referrals, or improperly making false claims for payment from Medicaid.

• Amend the Medicaid Fraud Control Unit's authorizing statute to give it more independence. Alaska has an effective Medicaid Fraud Control Unit within the Department of Law. However, fraud unit investigations are often limited to small providers because investigating large providers entails political risk for the elected politicians that the fraud unit reports to. By giving the fraud unit more independence, it will have greater latitude to investigate Medicaid fraud wherever it may be occurring.

• Authorize the Medicaid Fraud Control Unit to protect Medicaid beneficiaries from improper use or diversion of Medicaid payments. Federal law makes it a felony for health care providers receiving Medicaid payments to knowingly and willfully convert such payments, "or any part thereof," to a use other than for the use and benefit of the Medicaid beneficiaries on whose behalf payment were received.

The fraud unit should be authorized to enforce this law because it would protect Medicaid beneficiaries from the risk of being short-changed on services by providers that might be tempted to divert their Medicaid receipts to unrelated uses.

Tim Schuerch is an attorney in Anchorage with 20 years of legal and executive experience in health care and Alaska Native corporations. 

The views expressed here are the writer's and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@adn.com. Send submissions shorter than 200 words to letters@adn.com or click here to submit via any web browser.

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