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Alabama Medicaid's $157 million request stirs debate

Brian Lyman
Montgomery Advertiser

Behind the desks at a hearing Wednesday morning, legislators grilled officials from the Alabama Medicaid Agency about costs in the program.

Even if Gov. Robert Bentley wanted to expand Medicaid, could serve as an effective veto over him.

“Unless we get control of Medicaid, it could be the downfall of everything,” said Rep. Lynn Greer, R-Rogersville, after Medicaid staff told legislators they would seek an increase of $157 million to maintain their current level of services. “It could be the downfall of Alabama.”

Behind a table across from the legislators, Medicaid staff said not getting the money could lead to major reductions in services and new limits to provider access, both for Medicaid recipients and the privately-insured.

“If a pediatrician closes the door, if a pharmacy closes the door . . . it’s my pharmacy, it’s my kids’ doctors and all these things are doing to fall apart,” said Stephanie Azar, Alabama Medicaid Commissioner.

The two-hour meeting on the program’s needs boiled down to two questions: Can the state afford to give Medicaid what it needs? And can it afford not to?

Medicaid makes up the single largest expenditure in the state’s troubled General Fund budget. Medicaid should receive $685 million from the budget this year. The federal government pays about 70 percent of the $6 billion program’s total costs, and the state’s hospitals, pharmacists and nursing homes all make significant contributions.

The program’s eligibility requirements are strict for adults. Childless adults almost never qualify, and parents of children eligible for Medicaid only qualify if they make 18 percent of the federal poverty level – about $2,867 a year for a family of two, or less than $56 a week.

Despite the restrictions, more than 1 million Alabamians, more than a fifth of the population, qualify for the program.  More than half are 17 or younger, and many pediatricians rely on Medicaid to keep their doors open.

Sen. Bill Holtzclaw, R-Madison, said he did not know how the state could continue paying for that many people, especially when Medicaid covers “every other child” in the state of Alabama.

“There’s no end game,” he said.  “I’m interested in focusing on end game.”

Azar pointed to the state’s ongoing efforts to establish regional care organizations (RCOs). The program aims to shift from the current fee-for-service model to one that rewards outcomes and encourages better base management.

Under the proposal, the state would move Medicaid patients into RCOs, which would receive money to treat patients. RCOs would have to meet quality benchmarks, but could keep allocated money if their expenses come below it.

That could encourage efficient health care practices and slow down cost growth in Medicaid. The Medicaid commissioner said they were “extremely close” to securing a waiver for RCOs from the Center for Medicare and Medicaid Services (CMS), which oversees federal programs. The waiver could come in several weeks.

“We should all be very proud of the bold effort you have asked Medicaid to undertake,” Azar said. “Transformation is tough . . . but I urge you to stay the course and finish what we started.”

The $157 million would go toward continuing the implementation of RCOs, as well as medical inflation, required CMS pay backs and loss of carry forward money. Azar said that neither the budget nor the waiver request anticipated expansion of Medicaid to those making 138 percent of the poverty level or less.

Some senators expressed concerns with rising costs in the program. Sen. Arthur Orr, R-Decatur, asked why incentives went to patients to perform basic health care functions to get them to follow courses of treatment, asking “is there any stick we can use?”

Azar said “all the states struggle with that issue” but that case management in the RCOs could provide a possible solution.

Legislators also raised questions over whether the state could control eligibility, but Azar said that was a function of the program.

“When the federal government is sending 70 percent of the $6 billion into the state’s economy, they have a lot of control,” she said.

Without the funding, Azar said, Medicaid would have to end RCO implementation. The agency would also have to end outpatient dialysis, eyeglass programs and hospice care, and reduce its provider match. That could reduce access to the program.

Other legislators suggested the agency needed to do a better job addressing fraud in the program.

“We believe there are people taking advantage of the system, because we live it every day, we see it every day,” said Rep. Rich Wingo, R-Tuscaloosa. “We don’t have $156 million.”

Some legislators pushed back against the accusation of fraud. Rep. John Knight, D-Montgomery, suggested during comments to Azar that legislators would not question her closely if she was the CEO of a $6 billion company. He also stressed the poverty Medicaid patients face.

“These are patients who’d like to do better,” he said. “They’d like to be gainfully employed. They don’t want to take advantage of the system.”

Sen. Bobby Singleton, D-Greensboro, said some Medicaid patients in his district only have access to a doctor once a week.

“They have to wait until Wednesday until they get sick,” he said. “Otherwise, they have to go to the emergency room.”

The Medicaid presentation was part of ongoing hearings on the General Fund budget. Legislators have warned there may be cuts in next year’s budget, and agencies are making their cases to maintain their current level of services.

The Department of Human Resources, which administers federal anti-poverty programs and runs child welfare services in the state, said it needs an additional $20 million to maintain its services in 2016. DHR Commissioner Nancy Buckner said the money would be used for an IT project, various capital costs, and the hiring of about 30 workers for child welfare. Child welfare workers work "heartbreaking cases," Buckner said, and turnover is at 29 percent.

The Department of Mental Health will seek $7 million to keep services. Commissioner Jim Perdue said the money would mainly go to inflation, contract requirements and requirements for the department's 1,300 employees. Perdue also said more beds were needed to continue the department's transition to a community-based model. Courtney Tarver, associate commissioner for intellectual and developmental disabilities, said an additional $7 million -- with $3 to $4 million a year for five years afterward -- could allow the department to cut back its waiting list on services for those with intellectual disabilities, which currently stands at 3,250.

The Department of Senior Services said that it is not currently seeking additional money, but Commissioner Neal Morrison said legislators could see long-term savings if they increase funding to a program that helps senior citizens transition out of nursing homes.