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Walker bumps up budget for ferries and homeless, saves money on Medicaid

JUNEAU -- Alaska Gov. Bill Walker released an updated budget proposal Wednesday that restored some $15 million for ferry service and homeless shelters that had been cut from his first budget package.

The additional money was offset by anticipated savings from reforms to the state's Medicaid program.

The new proposal would add an extra $350,000 to state spending for the next fiscal year, a statement from his office said, with the new money balanced in part by $20 million in savings the state would get by reducing costs to Medicaid, the insurance program for the poor and disabled that costs the state more than $600 million annually.

The proposal released Wednesday was the governor's last chance to tweak his budget before the state Legislature begins reviewing and adjusting it.

Walker has tied Medicaid savings and reform to his plans to expand the program, a campaign promise that he says will provide health care to 40,000 more Alaskans. The expansion of the program would be fully funded by the federal government through 2016 before falling to 90 percent by 2020, but Alaska's Republican legislative leaders have said they're skeptical of even small spending increases with the state facing a multibillion-dollar budget deficit.

Budget documents released by Walker's office Wednesday said the state is counting on saving $10 million by shifting the care of Alaska Native and American Indian recipients of Medicaid to tribal health care providers, where services would be fully paid for by the federal government.

The shift would be accomplished in part through the use of expanded and enhanced services for orthopedics and intensive care for newborns at the Alaska Native Medical Center in Anchorage, the documents said.

Monique Martin, a health care policy advisor at the state's health department, said ANMC has expanded its neonatal intensive care unit and remodeled an area for new mothers, which should mean fewer Alaska Native and American Indian patients are referred to other hospitals where their care is only partially covered by the federal government.

She said the department was "comfortable" with its estimated $10 million in savings, which it said shifted only a small portion of the $158 million in annual state spending on Medicaid expenses for Alaska Natives and American Indians at non-tribal providers.

Douglas Eby, the vice president for medical services at the Southcentral Foundation, a part-owner of ANMC, said it was too early to say whether the Walker administration's projected savings were accurate.

"The theory is sound, we believe. But whether the exact numbers hold true, we can't answer that until we have a chance to look in more detail," he said in a phone interview. "We're going to see what they used and what assumptions were made."

The Walker administration also said it would save money by changing some Medicaid-related regulations and fees — and in at least one case, by tightening some eligibility requirements for care.

Walker's budget counts on $2.5 million in savings, for example, by forcing seniors and people with disabilities to show that they can't perform two daily tasks rather than one — like dressing, bathing, or using the bathroom — before they can qualify for services from a personal care assistant.

The state's personal care assistance program currently covers about 4,000 people, according to a health department website. Sana Efird, the department's assistant commissioner, couldn't say how many people would be affected by the proposed changes, though she added that the department would have public hearings before the adjustments became final.

Asked how the department's proposal weighs cost savings with potential cuts to services, Efird responded: "We're absolutely trying to strike that balance, to make sure we're trying to serve the needs of people but at the cost we can afford."

"We're under a tremendous budget pressure, and unfortunately, all reductions throughout the entire state and especially in the health and social services department will affect people's lives," she added. "Because that's what we do — we help people."

Rep. David Guttenberg, D-Fairbanks, said that driving down Medicaid costs and saving money without diminishing care would be an "accomplishment" for the Walker administration, but he said he couldn't make a judgment based on an initial reading of the budget documents released Wednesday.

"Are they saving money by denying services?" Gutenberg said. "You can't tell by this."

Sen. Pete Kelly, R-Fairbanks, said he appreciated Walker's proposed Medicaid savings.

"Good on him," Kelly said in an interview. He added, however, that the proposal is similar to past cost-cutting measures and "isn't anything groundbreaking."

Kelly, who co-chairs the Senate Finance Committee and has been critical of Walker's Medicaid plans, said the $20 million in potential savings helps the governor make his case for expansion.

"It just might not be enough," Kelly said. "We need to see a lot of this."

Becky Hultberg, the president of the Alaska State Hospital and Nursing Home Association, which supports Medicaid expansion, said the cost cutting measures are necessary. But she added that her group is also looking for broader reforms to make the whole Medicaid system more efficient.

Other budget changes in Walker's proposal include shifting $6.2 million into the ferry system's budget to avoid a cut proposed earlier that would have affected service.

The administration is also adding $9 million for emergency shelter and housing programs to make up for an earlier cut that Walker's office called an "unintended consequence" of its efforts to reduce the state's capital budget.

Some shelters said the original cuts could have forced them to close, and advocates Wednesday praised the restoration of the money.

Walker's new budget also restores $7 million to a regional jails program that would have otherwise sustained a $10.5 million cut, according to budget documents. Local officials in communities with the jails said the originally proposed cuts would have resulted in higher costs for prisoner transportation and didn't make sense.