State stalls payments on Medicaid; out of money


Doctors and other Medicaid providers around the state began receiving letters today from the Alaska State Department of Health and Social Services stating that their payments would be delayed because the state has run short of money.

The letters were dated May 24, but there has been no public notification from the Office of the Governor or DHSS that payments were being withheld in his signature Medicaid program.

The letter, from Margaret Brodie, Director of the Division of Health Care Services, simply says that the delay is necessary due to a “tight budget situation” in the current fiscal year.

Brodie’s letter says the solution will come as “Medicaid funds are reallocated among accounts.” Moving money from one account to another is like paying off one credit card with another one when you’re broke. It’s one step short of a bounced check.

“Doctors are getting stuck in this shell game, using doctors as political pawns,” said one medical provider, who asked to remain anonymous for fear of retribution. “Shame on them for dragging doctors into a reimbursement that is questionable as to whether it even meets our costs, and now to delay payments because the State is out of money?”

Alaska’s budget challenge for Fiscal Year 2017 is now being addressed by the Legislature, which is in special session in Juneau. But the Brodie letter indicates that the FY16 budget has simply come up short.

No announcement from the department, nor notification to lawmakers was made to indicate the crisis has reached the point where payments cannot be made.

Eight months ago, three Kenai area healthcare providers filed a lawsuit against Alaska’s Medicaid billing and payments contractor, Xerox State Healthcare, over millions of dollars in unreimbursed claims.

South Peninsula Hospital in Homer, Alaska Speech and Language Clinic in Kenai and the Kenai Vision Center said they suffered severe losses due to the State’s unpaid debts.

In 2014, Alaska sued Xerox State Healthcare for breach of contract. The new software system the company installed was far past deadline. Providers were going bankrupt and leaving the state because they were not paid for their services.

In August of 2015, Governor Walker expanded Medicaid in Alaska by executive order, saying the costs would be borne by the federal government. The Alaska Legislature did not want Medicaid expanded until it was reformed, and Governor Walker and Commissioner Davidson promised significant reforms. To date, none is apparent, costs have climbed, and the system cannot pay its existing bills.

NOW THIS: The letter received by providers on May 24 was not copied to members of the Legislature, and there was no statement to the press by the Governor’s Office on this collapse of his signature program, Medicaid.  Surely this matter was known by Commissioner Valerie Davidson, a champion of the Medicaid expansion program that the governor signed into law by executive order last summer.

Davidson was nowhere to be found in this crisis, and neither was the governor. Instead, the governor’s web site published a statement from him encouraging Alaskans to “buy local.”


This story will be updated.