State of Alaska Division of Legislative Audit

Long Term Care Performance Review

Maximizing Revenue

Summary: The report recommends several ways that the State can maximize the amount of federal matching funds available. In some cases, the State may cut the amount of general funds needed to provide existing services to Alaskans by increasing the share that the federal government provides. In other cases the State could expand services by providing additional federal matching funds. However, this would require the State to expend additional general funds. The report also highlights other ways that the department can increase revenues, such as improving fee structures, implementing new fees, and looking for new ways to collaborate with tribal entities and other groups.

Click here for the table of all recommendations for maximizing revenue

Key Recommendations for Maximizing Revenue

  1. The department should implement a Medicaid 1915(i) option.
    (Recommendation 2.2)
    (Recommendation 6.2)

Section 1915(i) of the Social Security Act established an optional Medicaid benefit, giving states a new method with which to cover home- and community-based services. Fifteen states now have approved 1915(i) programs and five others have pending amendments. The services authorized under 1915(i) specifically include “day treatment or other partial hospitalization services, psychosocial rehabilitation services, and clinic services (whether or not furnished in a facility) for individuals with chronic mental illness.” This implementation will allow an estimated $4,494,300 in federal funds to be captured, allowing a reduction in State general funds expended.

  1. Alaska should implement the Community First Choice 1915(k) option.
    (Recommendation 2.3)
    (Recommendation 6.1)

Section 1915(k) of the Social Security Act established the Community First Choice program, a new Medicaid state plan option to provide home- and community-based attendant services and supports a six percentage point increase in the federal medical assistance percentage. As a “state plan” benefit, the option is available to states without the need for special waiver authority. The purpose of the program is to encourage the use of home- and community- based services. The department should submit a Medicaid state plan amendment to the federal Center for Medicaid Services to operate a Community First Choice program. A DHSS-commissioned 2012 study of the feasibility of the program indicated substantive savings could be accomplished, but the department chose not to implement it because of a lack of staff. In the case of the Community First Choice program, it is more cost effective to hire a staff person to supervise the implementation of the program than put off implementation of a cost effective program because staff are not available. The additional six percent federal match would allow the department to offer more quality/quantity of service with current spending levels. This is estimated to generate savings up to $2,500,000 annually.

  1. Alaska should submit a Medicaid State Plan amendment to obtain approval for implementing a Long Term Care Insurance Partnership Program.
    (Recommendation 2.4)

The Insurance Partnership Program is a public/private partnership between states and private insurance companies, designed to reduce Medicaid expenditures by delaying or eliminating the need for some people to rely on Medicaid to pay for long-term services and supports. Over 40 states have initiated these insurances programs and found such programs cost effective.

  1. The department should implement a person-centered rate setting system that ties acuity to payment level, allowing higher acuity patients to receive a higher reimbursement.
    (Recommendation 2.9)

Currently, the assisted living reimbursement rate is tied to the number of beds in the facility and not related to the characteristics of persons receiving care. The creation of a person-centered rate setting system that ties resident acuity to reimbursement rates would provide the Alaska Pioneer Homes higher reimbursement for Level III residents.

  1. The department should explore expanding the Traumatic and Acquired Brain Injury Grant through a Medicaid waiver.
    (Recommendation 3.7)
    (Recommendation 6.11)

The State currently provides state funding for traumatic brain injuries and related injuries through three general funded grant programs: the Traumatic and Acquired Brain Injury Grant totaling $70,624, Traumatic and Acquired Brain Injury Case Management services totaling $300,000, and Traumatic and Acquired Brain Injury Mini Grants totaling $200,000. The department could pay for the services through a waiver and receive federal match funds for the service provision. This could be used to expand services under the waiver with an estimated potential savings of $285,000 annually.

  1. Alaska should implement a provider assessment fee to further capture federal dollars.
    (Recommendation 6.9)

Provider assessment fees or taxes are mandated payments set by a state on health care providers. A state voluntarily decides whether to implement a fee and what the fee applies to. States are allowed to use the collected and federally-matched money to increase reimbursement to Medicaid providers or to support the Medicaid program in other ways. This practice allows states to increase revenue for their Medicaid program, which in turn allows the state to expand coverage to its residents, to prevent provider rate cuts, or to fill budget gaps in the Medicaid program. Currently, all states but Alaska impose at least one type of provider assessment.

  1. The department should upgrade the Pioneer Home in Palmer to provide both domiciliary and veteran’s skilled nursing home care.
    (Recommendation 6.5)

The Palmer Pioneer Home received Veteran Affairs certification as a veteran’s nursing home in 2006, and is regarded as a domiciliary care unit which lies in the continuum of care as an Assisted Living Facility. The Veteran Affairs per diem rate does not cover the monthly Pioneer Home rate of $2,100, or roughly $70 per day. Currently, the Palmer Pioneer and Veterans Home receives a domiciliary rate of $44.19 per veteran resident per day. If the Pioneer Home expands services to offer nursing facility level of care, this Palmer Pioneer and Veterans Home would receive $102.38 per day for providing veterans this level of care. The department also has the option of only licensing limited portions of the home as a skilled nursing facility.

  1. The State of Alaska should amend its policy to make waiver eligibility for Alzheimer’s disease and related dementia less of an exclusionary process.
    (Recommendation 2.6)

The assessment tools used for Medicaid waiver eligibility make it difficult to allow an individual with Alzheimer’s disease and related dementia access to Medicaid funds. The State has the power to amend this policy, which will allow better care for individuals suffering from Alzheimer’s disease and related dementia. Furthermore, federal match on expenditures can be utilized to allow more individuals access to waiver services.