Judge sees no 'actual emergency' in Dunleavy claims of Medicaid emergency

An Anchorage judge says she agrees with Alaska hospitals that the Dunleavy administration’s attempt to skip the public process with emergency regulations cutting Medicaid payments has a fatal flaw—the absence of “an actual emergency.”

Superior Court Judge Jennifer Henderson ruled Friday that she is likely to make a formal ruling to temporarily stop the emergency regulations with a preliminary injunction. She invited the state and the Alaska State Hospital and Nursing Home Association to submit any additional comments by this Friday.

The Dunleavy administration should take the hint and admit that the only emergency is the result of inadequate planning and execution by the governor and the state health department, which tried to enact regulations without due process.

The hospital and nursing home group filed suit in July seeking to stop the emergency regulations created by Gov. Mike Dunleavy and his health department, which is led by Adam Crum, whose main experience before his state job was with his family-owned truck driving and construction academy.

The regulations that called for a 7 percent cut in payments to many providers went into effect July 1 after the Dunleavy administration claimed there was no time for advance notice, public review, analysis or research.

The association says that the simultaneous nature of the Dunleavy Medicaid vetoes and the emergency regulations is the best evidence that “this underfunding is an occurrence entirely of the Dunleavy administration’s own deliberate creation.”

The judge said she tends to agree that this is not a real emergency. So the regulations may be halted while court proceedings take place, which would be a plus for Alaska health care providers and the 217,000 Alaskans on Medicaid.

I’ve read the public comments submitted to the state about the impact of the regulations. As far as I can tell no one submitted comments endorsing the Dunleavy plan, while dozens of experts warned of a crisis ahead and serious threats to the quality and availability of health care in Alaska. It is an alarming picture.

Here are excerpts from the public record:

Dr. John DeKeyser, Anchorage: I've been delivering babies for 40 years, the majority of that time in Anchorage. I am usually on the sidelines regarding political issues. I can no longer remain quiet. Please consider: Many providers in Alaska do not accept patients with Medicaid and Medicare due to low reimbursement. One group of internal medicine physicians went bankrupt because they had a high ratio of Medicare & Medicaid patients as opposed to private insurance. Those of us who still accept patients on Medicaid do so out of a sense of commitment to the community. However, magnanimity only can go so far. Our practices lose income when we accept Medicaid patients.

Shelley Ebenal, Fairbanks Memorial Hospital: While we appreciate that rates are held for primary care and critical access hospitals, rate cuts to long term care at Denali Center and to Fairbanks Memorial Hospital, a dual federal designation hospital, will deeply impact health care services in the Interior. We believe the best way to protect health care services in the Interior is to exempt long term care and dual designated Sole Community Hospitals and Rural Referral Centers from rate reductions, just as Critical Access Hospitals are currently exempt.

Andrea McGuire, CPC, Orthopedic Physicians: …. Timely access to care for Medicaid patients could become a more complex challenge than it currently is. The proposed cuts will further inundate providers who accept Medicaid patients and likely cause some to limit Medicaid access or completely withdraw from the program. The result will be overcrowded emergency rooms, which will then further drive up the cost to the state and reduce access to care.

Dr. Evelyn Rider, Alaska Neonatology Associates: The Alaska Medicaid dollars spent on newborn care has had a high return of investment as evidenced by the vast improvements in morbidities and mortalities among newborns in the state. Essential to maintaining these improvements is having the very best providers in the state invested in optimizing care for sick newborns. In this era of decreasing Neonatology providers nationwide, we are able to recruit some of the best neonatal physicians from the Lower 48 and offer a competitive salary. Neonatal care depends on other physician sub-specialty services. Without appropriate subspecialty services, a good portion of sick babies we care for would need to be transferred out of state.

Emily Ennis, Fairbanks Resource Agency: The proposed Emergency Regulations appear to disregard that the outcomes of the reductions may actually increase the cost of care if individuals with disabilities result in needing long-term hospitalizations due to the lack of access to needed medical care. In addition to the increased fiscal costs of reducing and/or eliminating access to medical, behavioral and dental care, the proposed Emergency Regulations appear to disregard to the long-term harm and trauma to our most vulnerable citizens and their families resulting from inadequate care.

Victor Joseph, Tanana Chiefs Conference: We recommend the department immediately abandon these regulations for a standard public notice and comment process. We recommend that the Department exempt tribal facilities from the rate reductions and inflation freeze applied through 7 AAC 145.; 7 AAC 150.; and 7 AAC 160.

Andrew Jimmie, chairman Village of Minto: The Department could have and should have engaged us much earlier on possible rate reductions and inflation freezes, which it was discussing with the Legislature as early as March during the Legislative budget making process.

Dr. Alexander von Hafften, Anchorage psychiatrist: I oppose reducing reimbursement rates for the evaluation and treatment of persons experiencing mental illness and substance use disorders. Alaska DHSS should be increasing not reducing access to care. Access to outpatient and in-patient care for persons experiencing mental illness and substance use disorders in Alaska is already too limited. Inadequate access and poor quality mental health and substance use disorder care are cost shifts. . . . My experience is that reducing rates is one of the many ways that access to care is reduced. So, what more can be asked then, is it evidence-based public policy or sound economic policy to reduce access to care even further? We pay now or we pay later. If later, the price will be much higher.

Dr. Karl Baurick, Fairbanks: I am an OBGYN in Fairbanks and very concerned about the pending Medicaid changes. I own a 6-provider clinic that employs 21 people. We see a large proportion of Medicaid recipients and will be profoundly affected. Our clinic is barely limping along now, if we don’t get the already meager reimbursements from Medicaid we will have to lay people off at best, close our doors at worst. Many of our patients have mobility, access issues and won’t be able to get to the clinic without Medicaid help.

Abby Bingham, Alpenglow Care Coordination: I work with the most delicate of our population; people who experience disabilities and the elderly. The cuts to senior benefits and adult dental have been devastating to this population and my clients need my assistance more than ever. In the midst of this, my own pay has been decreased by 5% due to the Medicaid cuts from Dunleavy. This means that my caseload remains the same, my workload is increasing due to clients needs and the services for my fees are decreased by 5%.

Dr. Lecia Scotford, Bristol Bay Area Health Corporation: BBAHC is deeply concerned about the emergency regulations impact on tribal health programs. The state has conveyed its impression that these cuts will not negatively impact the Alaska Tribal Health System (ATHS) or the Medicaid beneficiaries that we serve. The emergency regulations contains across-the-board inflation freezes and rate reductions that will impact skilled nursing facilities, long term services and supports targeted case management, specialist services, and other critical services.

Chris Gunderson, president, Denali Family Services: Group services are the primary means by which we provide psychosocial rehabilitation in our programs for transition-aged youth and early childhood clients. Rate reductions will put critical components in our continuum of care at risk. Whatever modest savings might be realized in the short-term will be overshadowed by increased financial and social costs down the road.

Dr. Eric Schneider, Fairbanks: As a physician practicing in Alaska for 13 years (4 years military, 9 years employed group practice), I am opposed to the emergency Medicaid cuts announced just two days before implementation at the start of the current fiscal year. My opposition is on many grounds: the timing of the cuts, the size of the cuts, both now and in recent years, the negative impact on access to care, if few providers participate in Medicaid, the burden will only increase on those that continue to participate, most medical practices operate on small margins, access to psychiatry and mental health, loss of federal matching dollars.

Kathleen Fitzgerald, member of a nonprofit board: If community based agencies are further reduced, you are risking closures and necessitating out of state institutional placements at a higher rates and at tremendous negative impacts to the individuals we support

Dr. Stephen Tower and staff of Tower Orthopedic: We have been one of the few orthopedic offices in Anchorage that has not limited access to Medicaid patients. Now that the new measures have been announced, we have had to stop taking new Medicaid patients because of the proposed reduced reimbursement rates for non-primary professional care services, which we definitely fall into. When 10% of our total income has already been cut by 10% previously and that same 10% of our total income is going to be cut again, we are looking at a serious deficit of income….These reforms are putting medical care for Medicaid recipients in a downward spiral from which they may not recover in the long run or at least for a very long time.

Dr. Sherrie Richey, Providence hospital: As a obstetrician and gynecologist, there are fewer and fewer of us willing to provide what amounts to frequently the only primary care and pregnancy care most young women receive. With a decrease in reimbursement, the appointment schedule positions available to provide care for those patients will necessarily become fewer. In this day of decreasing reimbursements and increasing costs, those slots must be held open for patients who will have a more reasonable reimbursement. We are already taking about a 30% reimbursement rate from our charges and the reimbursement currently only covers about 75% of our overhead. Obviously, this is unsustainable at the current reimbursement without cost offsets by other patients. With a drop in those reimbursements, many of us will have to greatly decrease our acceptance of those patients or go out of business.

Dr. Arom Evans, Eagle River: We a are private non-grant funded agency of 2 psychiatrists, 4 PA’s and 2 psychologists and doctorate level therapist. We treat kids as far north as Kotzebue and as far south as Ketchikan. Many of the children we serve have no other access to psychiatric care. Without intervention, these kids often get worse and end up in emergency rooms and hospitals. Further reduction in payment for professional services will threaten our ability to treat the Medicaid population. We already had to stop providing individual therapy to Medicaid clients because cost of overhead and salary for the therapists was higher than Medicaid would reimburse. If further cuts are made to professional services this is likely to occur for psychiatric evaluation and medication management services. We may be forced to stop providing these services to Medicaid clients. We do not want to do this, however as a private non-grant funded agency we cannot pay overhead and salary at a higher rate than we are reimbursed.

Cindy Farrens, Mat-Su Care Coordination: The reduction is currently impacting the ability to support the vulnerable elder residents of Matanuska Susitna Borough whom I serve as a Care Coordinator. These Home and Community Based Waiver and Personal Care Services are essential to keep disabled and elderly Alaskans in their homes. This reduction will have a significant impact on the quality of care and the hours these Alaskans can receive care.

Myla Gatpandan, ASAP Transport: This will potentially impact Medicaid recipients. I am from the transportation business. And a lot of transportation services do not provide social rides due to the fact that the current rate right now can’t even pay for 1 employee for even 1 unit of social ride without escort, especially coming from farther distances in the Anchorage area. ASAP Transport is only one of the few that provides social rides due to our commitment and Christian ethics. Approving this proposed reduction will also affect jobs: reductions in staff, hours, wages, benefits, holds placed on hires, etc.

Tara Smith, president Cornerstone Home Care: Co-owner of a home care agency that represents and serves Juneau, Ketchikan, Haines, Petersburg, Prince of Wales Island, and Angoon’s senior and disabled populations who receive in home care through Medicaid. Personal Care services are the least expensive service to all the elderly, frail, and disabled to remain independent and safe at home. We are now receiving about the same reimbursement we received in 2015. This drop has occurred when we are paying employees a higher rate than we paid in 2015, and there are newer state regulatory requirements of more administrative costs, as well as more training costs, without reimbursement.

Lee Ann Crafton, care coordinator, AK Hippie Chic Services: I am a single person agency servicing 28 payable clients and approximately 15 non-payable clients (pro bono). I travel in my own car, paying my own travel expenses, 2-3 times per month to Homer, Seward, Anchorage and the Valley from Kasilof. … Cutting income to care coordinators will affect our ability to see and communicate with our clients and their services agencies (part of the state regulations and legal requirements for cc’s), as well as affect our ability to support ourselves.

Vicki Stroup, Aurora Advocacy: As a care coordinator, I cannot afford a pay cut. Being employed by a small, independent employer already means that I have no benefits, which means that I have to pay out of pocket for health insurance. In order to maintain my rate of pay, I will have to increase the amount of people on my caseload. This will mean a decrease in the quality of services I am able to provide to those people.

Beverly Schoonover, acting executive director, Statewide Suicide Prevention Council: We caution that these proposed cost containment efforts could impact the fiscal solvency of behavioral health providers around the state, which could impact their service array and have negative impacts on the vulnerable Alaskans they serve. Possible consequences of the proposed emergency regulations to reduce behavioral health rates by 5% this fiscal year include: Private insurance rates could grow as medical providers charge more to make up for lower Medicaid revenue. Individual behavioral health providers employed by agencies able to bill Medicaid may leave these agencies, as they realize they can operate with less restrictions and charge more as a private pay provider. Behavioral health providers who are less likely to have the cash on hand to weather these reductions in funding, could choose to stop accepting Medicaid patients or close their doors altogether. Nonprofit organizations, often serving as safety nets for their communities, will have less capacity to provide services, which often act as protective factors in preventing the need for higher cost services downstream. Waitlists for important behavioral health services will grow as demand will continue to outscore agencies’ capacity.

Holly Scott, Quintessence Planning and Care Coordination: These 5% cuts will have a dramatic impact on the individuals served on Home and Community Based Waivers and Personal Care Services.

Christopher Dietrich, Ak Collaborative for Telemedicine and Telehealth: I am currently a PA practicing primarily in Child and Adolescent Psychiatry. The rate designated to be changed and limited will directly impact my patient care and may limit my ability to provide care leading to increased hospital visits that will directly increase Medicaid costs and lead to poorer health outcomes. I additionally work in corrections and limiting service access and reducing providers will likely lead to increase costs on inmates being newly remanded.

Robert Croley, Abacus Care Coordination: Hey Gov! I am a care coordinator.. I operate a care coordination business with a paltry 4% profit margin and you’re gonna take that away from me, thanks dude! Were that not bad enough, over the last several years there has been repeated changes in regulations that make it more difficult for me to operate, and result in more hours and more labor and more benefit to the state and yet not a penny more about this.

Chuck Wright, Quintessence Planning and Coordination: I am a Care Coordinator and of course am much opposed to going back to 2013 rates while job responsibilities have increased. This change will cross a threshold of not being worth it and will undoubtedly greatly shorten my work as a Care Coordinator which I have been doing for over 20 years. I very much enjoy supporting people who experience disabilities through my work but do need to be treated at least fairly. However, my much more serious concern is for the agencies who provide services.

Christine Culliton, Independent Care Coordination Agency: Currently we receive 3 calls per week from people we can’t assist because I can’t hire a new Care Coordinator to help them; it is heartbreaking to turn people in their worst moments away because we don’t get paid. Any further reduction will result in Christine Inc. pulling out of Haines, Hoonah, Petersburg, Kake and Ketchikan due to the high cost and reduction of reimbursement; please reconsider any further reduction to the rate of reimbursement so we can continue to support Alaska’s most vulnerable individuals.

Allison Lee, executive director, Alaska Association for Personal Care Supports: AAPCS has been working to support providers as they analyze and make business decisions that would allow them to continue serving in the event of a 5% rate reduction. Responses from the membership included some of the following real and potential impacts: Closure of brick and mortar support locations in rural areas of the state, Limitations on any further expansion plans to under-served areas of the state, Reduction of Program Support staff and administrative wages and benefits, Reduction in the geographical range that providers will be able to serve from their regional offices, Reduction of wages and benefits to Direct Service Professional (DSPs).

Renee Rafferty, regional director of behavioral health, Providence Hospital: The cost containment effort included in the emergency regulation change will impact the fiscal solvency of the behavioral health system in Alaska and have a negative impact on vulnerable Alaskans….. The budget constraints and Medicaid shortfalls are a direct result of reductions made by the administration and the gap cannot be closed by continued provider rate reductions without significant impacts to access to care.

Dr. Eli Powell, Alaska State Medical Association: While there may be times emergency regulations make sense in this case the department knew for months it intended to pursue this path. The department could have easily started the regulation process earlier so that it coincided with the budget or new fiscal year. This so-called emergency is mere convenient excuse to move forward in a shorter period of time without having to deal with a public process.

Dr. Timothy Bateman, the Alaska Hospitalist Group: We have had to absorb the state’s Medicaid cuts for the past two years totaling 13.8%. Another 5% would cause additional financial harm to our practice impacting our ability to recruit and retain physicians to Alaska. We often see a two to three month delay for Medicaid patients to be seen by Primary Care. It is not uncommon that we see increased hospital readmissions and preventable repeat visits to the emergency room as a result of a broken system of care. Additional cuts to Medicaid will exacerbate the problem further.

Michael Bailey, Alaska Association on Developmental Disabilities: A stable workforce is essential to assure sustainability of all home and community based services within the shared vision of a flexible system which assures that person-directed processes are upheld toward a meaningful life in their home, their job and their community. Concerned that the short-notice period and lack of public comment prior to rapid implementation of the rate reductions has not allowed providers' to adequately prepare their budgets and adjust operations to incorporate these reductions.

Barb Jewell, Cordova Community Medical Center: These proposed reductions are aimed at reimbursements for services that have consistently not been inflation proofed, are services provided to our most vulnerable populations and will hit small rural providers hardest. As the local and only Community Behavioral Health and Developmental Disabilities provider in Cordova, we are already experiencing decreases in funding based on reductions to grants while also experiencing an increase in administrative costs related to additional regulation and compliance requirements.

Tom Chard, Alaska Behavioral Health Association: Because our goal was to use current, Alaska-specific data to determine the precise cost of care, a 5% reduction to the reimbursement rates means providers are receiving 5% less than what it costs to deliver the care.

Dr. Corinna Muller, Aurora Maternal Fetal Medicine: I recently opened my practice in July of 2018, and have put a considerable amount of present finding into purchasing ultrasound machines, computer systems, electronic medical record, office supplies, and other practice costs to practice in Alaska. I was born and raised here and went to UAF for my undergraduate training before medical school. I feel that quality care should be available to our most vulnerable patients and that they should not have to travel out of state if the opportunity is here in Alaska to pursue this care. The Governor’s proposed cuts to Medicaid funding in the state of Alaska jeopardize patients who need quality medical care. It also makes it very difficult for a private solo subspecialty clinic to remain productive considering the high cost of equipment that I have in my subspecialty when physician reimbursement is significantly decreased.

Governor’s council on disabilities and special education: High cost services such as personal care for medically fragile individuals will most likely be too difficult for agencies to offer, especially in rural areas where local staffing is already challenging. This rate cut is especially devastating for provider agencies who service rural communities, which are already challenged by providing services due to distances and staff shortages. Agencies may be forced to eliminate service in unprofitable service areas, and many agencies may close, further reducing options for access to care.

Jean Kincaid, Mat-Su Services for Children and Adults: A stable workforce is essential to assure sustainability of all home and community based services. This proposed 5% rate cut will significantly impact the range of services we can continue to provide. For example, the current reimbursement rate for respite services is below the cost for us to provide those services. We have struggled with a decision to eliminate respite services because it is essential for the families we serve. It is often the difference between being able to have their loved one continue to live in their home or having to find more expensive residential services.

Dave Andrews: There are agencies in our community who have cut out an entire type of service because they can no longer afford to provide them. Assisted living homes have closed, employees have been laid off, and other agencies have stopped providing services to individuals they have served long term, as they can no longer afford to provide them. These rate reductions will impact real people in real ways.

Barbara Rodriguez-Rath, the Arc of Anchorage: We are not in the position to carry the financial weight of providing services to individuals where costs to serve them outweigh the reimbursement rate and even more so should the rate continue to decrease instead of increase with the rate of inflation and hard costs to provide those services.

Amanda Race, Tanana Chiefs Conference: We are asking for the demonstration of care for vulnerable Alaskans, by not ignoring the real impacts of recent reductions to their services through utilization caps, and eliminating further provider rate reductions.

Chip Hinde, Crossroads Counseling & Training Services: The attempt to reduce spending by cutting necessary funds is irresponsible. The neediest and most vulnerable Alaskans, those who experience disabilities will be at greater risk of harm if there is a reduction in available services through any cuts or freezes on Medicaid spending. Entities that serve these vulnerable individuals are already seeing reductions across the board from other cuts made in the budget.

Michael Baldwin, Alaska Mental Health Trust Authority: The proposed rate reduction will reduce access to and availability of services for Trust beneficiaries. recommend that going forward, DHSS engage with key behavioral health provider stakeholders to identify alternatives for cost containment that do not threaten the already fragile continuum of care. Stakeholders could also inform how best to ensure appropriate levels of care, including the least restrictive and lowest cost services when and where possible, are in place. The proposed regulations may not be compliant with federal regulation. We also believe that the emergency regulations may not fully comply with federal regulation 42 C.F.R. §§ 447.203 and .204, which require documentation that proposed rate reductions will not interfere with patients’ access to care. Further, these federal regulations also state that beneficiary input be sought “on beneficiary access to the affected services and the impact that the proposed rate change will have, if any, on continued service access.” It does not appear that those required steps were taken.

Dennis Hass, president, Fairbanks Resource Agency: The Key Coalition maintains that the continued erosion of community supports and services indicates a budget philosophy that devalues our most vulnerable Alaskan citizens and promotes institutionalization. Individuals experiencing disabilities and mental health challenges and their service providers have already taken more than their fair share of “cuts” in reduced services and loss of grant dollars. This loss of funding for stakeholders is resulting in a growing wait list of desperate families and individuals.


(If you want to contribute financially to this independent reporting and analysis project, you can do so here through PayPal. Or simply mail checks to: Dermot Cole, Box 10673, Fairbanks, AK 99710-0673. Thank you.)

Dermot Cole7 Comments