Healthcare providers concerned about possible delay of Medicaid payments

May 11, 2018

Credit Photo Courtesy of South Peninsula Hospital

Healthcare providers may have to wait over a month for the state to reimburse them for services paid for by Medicaid. That’s because Alaska’s Medicaid program will run out of money any day now. The Legislature has yet to appropriate the roughly $48 million needed to fund the program until the end of the fiscal year in June. For some providers in Homer, that gap in reimbursement won’t be detrimental, but others may deplete their savings in order to prevent a gap in services.

Jay Bechtol is the CEO of South Peninsula Behavioral Health Services, better known as the Center. He said roughly 80 percent of the services the Center provides are paid for by Medicaid.

“We provide the service, we write a note to the state saying we did this service and the state pays us for that service," he explained. "As of Tuesday next week, any note we write saying we did that service, they'll say thank you and maybe we'll have money someday.”

To be clear, the government is legally obligated to reimburse providers for Medicaid services. But unless the Legislature provides that funding in next year’s capital budget, payments for services provided before the beginning of the new fiscal year in July could be delayed.

“So we would be able to make it,” Bechtol said. “It would wipe out our rainy day fund or savings fund. It would really limit our ability to do some expansion work and refurbishment on some buildings we want to do. It would limit our ability to expand some programming going forward, but we would continue to operate and provide the service for our clients and make sure our staff are paid on time.”

Bechtol said if the state decides to reimburse providers in a lump-sum payment, it should be able to restore its savings. But if the state pays the Center back over time, Bechtol said it will have to make cuts.

“It means clients don't get services,” he said. “It means people don't have jobs. It means people get laid off and people with significant mental illnesses aren't getting their medication on time.”

CEO of the Alaska State Hospital and Nursing Home Association Becky Hultberg said if payments are delayed,  some providers could shut down completely and stop offering services. But she said don’t panic yet. 

“We expect an amendment will be offered to include the funds in the capital budget,” she said. “It's too early to be concerned about whether or not you're going to be able to get services or see your doctor. Let's let the legislature have the opportunity to fix this.”

She said larger operations, such as South Peninsula Hospital should be just fine if payments are delayed, but there is another issue for hospitals.

“So at this point, Medicaid is not paying for the full cost of a hospital stay,” Hultberg said.

That concerns South Peninsula Hospital. SPH spokesperson Derotha Ferraro said the hospital will continue to provide services for people if Medicaid reimbursement is delayed.  But she said this latest issue follows two years of cuts to Medicaid.

“That is a really big deal,” Ferraro said. “We've had two years in a row of 5 percent cuts in Medicaid funding. So if the state does that again and that's compounded on top of delayed payments from the current year, that really puts a lot of pressure on the healthcare providers in the state.”

As of 5 p.m. Friday, the House Finance committee had not taken up the amendment to fund Medicaid.

If the finance committee does write Medicaid funding back into the capital budget, it will still need to be approved by the full House and any changes will have to be reconciled with the Senate.