Alaska Health Policy Review

eri Powers, MBA, is a health program manager for the Division of Health Care Services, Department of Health and Social Services in Alaska. In this talk -- presented at the Alaska Public Health Association Health Summit, December 7, 2009 -- Powers examines the Alaska Medicaid program as a vehicle for economic stimulus. She describes the many ways in which Medicaid supports both the Alaska economy and the "Three Ps" of public health. From the start of her talk, she candidly dispels the myths and "unenthusiastic comments" often heard about Medicaid, setting the record straight about a program that delivers the most comprehensive health care to Alaska's children in need. She includes an implicit message to health care providers who complain about the time it takes for Medicaid reimbursement: prompt reimbursement depends on how providers submit their claims. Everything you want to know about Medicaid is contained in Powers' talk below. Note that this presentation has been edited by AHPR for length and clarity.

Department of Health and Social Services disclaimer: This presentation was given at a December 2009 conference in Anchorage as a way to educate health care professionals about the Alaska Medicaid program. The talk was given by a Department of Health and Social Services employee, but was not intended to represent the Alaska Medicaid program's policies. Health care financing continually changes at the state and federal level, so it is possible that some of the information presented in December may have been updated.

Links to selected topics

Common Misconceptions and Unenthusiastic Comments about Medicaid
Writing a 20 Million Dollar Weekly Check to Alaska's Economy
Medicaid: Who is Involved and Who is Making the Rules?
Providers Issuing Electronic Claims are More Efficient, Receive Payment within Seven Days
Roadmap of a Medicaid Claim once it enters the System
Medicaid Reimbursement: How does it compare to private insurance?
Medicaid's Strengths and Support of the "Three Ps" of Public Health
Alaska's Medicaid Travel Program: More Vast and More Complex than Others

Important Note: the PowerPoint slides that accompany this presentation are available online.

Unenthusiastic Comments about Medicaid

I have attended this conference for several years, and I think that it's the finest conference that we have here in Alaska, of our own local conference. I think it's very good, with one exception. In every conference I have attended, the presenters, a presenter has made, some presenter throughout the conference, has made an unenthusiastic comment about Medicaid. This is true. Every conference that I have ever attended. And what I find is that unenthusiastic comments about Medicaid are generally just accepted and assumed to be true. So last year, I walked over to the table and I talked to the organizers and I said, "I am just a bit miffed, I'm miffed about these unenthusiastic comments." And so of course, they invited me to present, and that is why I am here today.

I'd like you to know up front, that I enjoy working for the Medicaid program. Medicaid is a program that is administered by the Division of Health Care Services. I find the issues that we have to deal with to be complex and stimulating at the recipient level, at the program level, and also at the national level. This afternoon I intend to present my perspective on some of the unenthusiastic comments that I have heard. I may also say things that will provoke discussion and challenge beliefs about the program. And again, there will be time at the end of the slides for any question that anyone might have.

These are some of the topics that I will cover today: administrative burden, reimbursement and coverage issues, changing requirements, and, because we live in Alaska, we need to talk about transportation. One of the largest programs of any state in the country is our Medicaid transportation program. And I will conclude with some of the ways that Medicaid supports the public health mission.

This slide, I love this slide. I know it doesn't translate very well into a large room. But again, ask me for a copy and I will send it to you. Most everything I'll talk about today, will be within the context of this slide. I found this on the Internet, it appeared to be a few years old, the version that I found. So I freshened it up, I added the patient, I added some of the perspectives that a patient brings with them to the health care encounter. And I also added CMS (Centers for Medicare and Medicaid Services), Congress, and AMA (American Medical Association), down there in the lower right-hand corner. So, what I will talk about today is the primary health care encounter, primarily with a private physician, or private, or in the private sector. I won't be talking about hospitals, I don't know anything about hospitals. And to talk about Indian Health Service would be a different kind of topic, and I'm not prepared to talk a lot about that today. Back to selected topics list

Medicaid: 20 Million Dollars a Week to the Alaska Economy

So, my first provocative statement this afternoon is that Medicaid did not break the health care industry. Medicaid merely represents the industry that we have. Let's jump out and take a look at the macro level for just a moment. This pie chart is, are the expenditures from not only Health Care Services, but some of the other divisions within the department. Last year, through Medicaid, through the MMIS system, the computer that processes all of those claims, through the MMIS system, we spent just over $1 billion for health care here in Alaska. Of that billion dollars, Health Care Services, or "Medicaid Proper", accounted for 57 percent of those expenditures. Senior and Disability Services accounts for 29 percent, and Behavioral Health is another 12 percent.

Medicaid spending is driven by changes in enrollment, inflation, and policy changes. So, of that 57 percent spent through the Medicaid division, 39 percent of those expenditures were for hospitals, 21 percent went to physician services, 12 percent for pharmacy, and 8 percent of our budget goes to transportation here in Alaska.

This slide is a copy of the actual check writes for Medicaid, over the past year. On average, Medicaid writes a check for $20 million every week and sends that back out throughout the state. So $20 million -- Medicaid is a huge economic engine for any state, Alaska included.

So, where does all that money come from? As most of you are aware, Medicaid is a state and federal partnership. Currently, under the Obama stimulus money, the federal government is contributing 61 percent of Medicaid to reimbursements, freeing up state general funds to contribute 39 percent. I am told that next year, these percentages are going to change after that stimulus money comes to an end, and Alaska will drop down to about 50/50 percent, which is the bottom [rung] for any state, 50/50. For many years, Alaska was at 58 percent federal funds, 42 percent state funds. The federal financial participation has a huge impact on our state coffers. A one percent change in the federal contribution results in a $10 million impact to the state general fund. So we watch this, monitor it very carefully. Back to selected topics list

Medicaid: Who's Making the Rules

You have to know a few things about a few things in order to understand Medicaid. These are the entities that are involved in managing the program, in some aspect at least. We have the Center for Medicare and Medicaid Services (CMS). We have the state Legislature, The Division of Public Assistance, the Division of Health Care Services, Medicaid. I'll talk just briefly about Affiliated Computer Services. That's our fiscal agent that facilitates the claims processing.

The Centers for Medicare and Medicaid administer, at the federal level, the Medicaid program, and also the children's health insurance program, known in Alaska as Denali KidCare. CMS manages the Medicaid programs in partnership with state governments. I want to add here, that Denali KidCare is Medicaid. It's an expansion program -- it's not different, it's not separate. There are different eligibility and income requirements, but Denali KidCare is a Medicaid program.

" ... any state that participates in Medicaid must cover all of the mandatory services that you see there: hospital, physician, lab and x-ray, some family planning services. And then, the Legislature decides, or determines which one of the optional services it can also cover."

CMS also administers HIPAA [Health Insurance Portability and Accountability Act]. I will be talking a little bit about HIPAA this afternoon. CMS also establishes quality standards for long-term care facilities. And they set the standards for clinical laboratories. Our bottom line at the state Medicaid level is that if CMS sets a rule, a standard, or a regulation, then we need to comply with that.

The Legislature has a very important role in administering the state Medicaid program. The Legislature is the body that determines which services are covered. They determine the optional services that are covered, the qualifying standards, and the categories of people who are eligible for those services. So let me show you what that looks like. Any state that chooses to participate in a Medicaid program must cover individuals who fall into one of the mandatory groups on the left hand side of the screen. So we have to cover all of these people. And then, the Legislature chooses which group on the optional side that the state can afford to cover.

Here in Alaska, we cover, of course, all the mandatory groups, and most all of the optional groups. And then Medicaid is also broken into mandatory services and optional services. Again, any state that participates in Medicaid must cover all of the mandatory services that you see there: hospital, physician, lab and x-ray, some family planning services. And then, the Legislature decides, or determines which one of the optional services it can also cover. When I first saw this a few years ago, I was surprised to learn that pharmacy is considered an optional service. Of course, you couldn't have a very effective health care program if you didn't cover pharmacy. The state of Alaska currently covers all of the optional services up there. We have had times, in budgetary crisis, where the Legislature has said, "We've got to cut somewhere," and so they eliminated a couple of the optional services for a brief time. Perhaps you heard about it -- we sure did.

Last year, at one of these meetings, one of the presenters said that one of the goals of public health was to reform Medicaid. I was a little curious about that statement, and I requested a meeting with the presenter. I think that what she meant was, by reforming Medicaid, was we needed to increase the eligibility standards for Denali KidCare. One of the things that I would like you to hear today is that in Medicaid, our role is to approve services and process claims. The Division of Public Assistance determines eligibility. And when people start talking eligibility issues with us, we really don't consider eligibility to be our issue. We consider that to be DPA's issue, not really a Medicaid proper issue.

As I just mentioned, at the Division of Health Care Services we clarify policy and facilitate claims payment. For us, a person is either eligible or they're not eligible. And when it comes to approving a service or paying a claim, for us there's no exception. They are either eligible or they are not eligible.

Affiliated Computer Services are our new contractor. It used to be First Health. Affiliated Computer Services won the contract this time. They are contracted with Medicaid to process provider claims and payments. They enroll providers into the program, they operate the recipient help line for us, and they provide some other administrative tasks for the Medicaid program.

Ensuring Access to Care

[There are] some conceptual fundamentals that are important to know. Medicaid is regarded as a federal entitlement program. If an individual is eligible for the Medicaid program, they are automatically entitled to any service that is required for them, that is covered under the state Medicaid program. Medicaid covers services that are medically necessary. Sometimes we will get phone calls from people and they tell us all the really important, valid social reasons why a service should be covered. And they might be good reasons, and solid reasons, and I support those reasons. But sometimes, they are just not reasons that Medicaid can make a decision about. We cover medically necessary services.

Medicaid has a responsibility to ensure access to care. One of the ways that we do that, is that we allow recipients to see the provider of their choice -- we don't limit that -- plus, we provide an awful lot of transportation. We have to make sure that we don't create a policy, or a system, or a structure, that interferes with access to care. And, the last program fundamental is due process, anytime Medicaid takes adverse action. An adverse action means to deny a service, to reduce a service, or to fail to act in a timely manner. Anytime Medicaid takes adverse action, we must notify the recipient in writing, of the determination that we have made, and offer them a fair hearing. Recipients have a right to a fair hearing and to have that decision re-examined by an impartial party to determine if we made the right decision, or if we should have made a different decision.

Administrative Burden

Now we will get into some of the fun stuff, I think -- administrative burden. When I hear people talk about "administrative burden," they are talking about Medicaid. I think they are talking about one of two things. If I listen, you know, I can kind of figure out where they are going. The first one is paperwork requirements. I have heard that Medicaid has onerous paperwork requirements, and the second administrative burden is the length of time until payment. I'm going to address both of those this afternoon.

"So my next provocative statement about Medicaid is that this law, Medicaid, does not require anything in addition to that documentation, anything in addition [to] what is already required by the provider's best practices, or what is required by the IRS."

The paperwork requirements -- I've copied right out of the state statute of what's required. By law, a provider is required to keep accurate clinical and financial records. If they're requesting Medicaid reimbursement, providers are required to document such things as a patient name, diagnosis, treatment, extent of treatment, dates, the need for medical service, annotated case notes, and certain billing information such as debits and credits, and third-party payers. If a provider is providing a service, and they are not requesting Medicaid reimbursement for it, Medicaid doesn't care. But if they are requesting Medicaid funding for that service, then the law says, their records have to include these things.

So my next provocative statement about Medicaid is that this law, Medicaid, does not require anything in addition to that documentation, anything in addition [to] what is already required by the provider's best practices, or what is required by the IRS. Back to selected topics list

Electronic Claims Equal Efficiency and Prompt Payment

[I am] coming back to this slide for just a moment, for my next provocative statement. I think that accurate record-keeping is a function of the efficiencies, or lack of efficiencies that individual providers have achieved in their back office practices. For those of you who have worked in offices, I am sure that you've had [the experience] that some back offices are highly efficient, those people are well trained, and that information and that paperwork just flows. Then there are other offices where it's not very efficient, and it's really difficult to find the information that you want or need. Again, that is not a Medicaid issue, that's an individual provider issue.

Let us talk about claims for a moment. When Alaska Medicaid transitioned, about 30 years ago -- a very long time ago -- from processing all of the claims manually, individually, and it moved to a computer-based system to process those claims, we were processing about 2,800 claims a month. Currently, we're processing 200,000 claims every month. That's all part of that $20 million that goes back out to the communities throughout Alaska. The federal government defines a "clean claim" as a claim that can be processed without obtaining additional information from the provider. And the federal government sets a standard for us that we have to comply with. State Medicaid is required to pay a clean claim within 30 days, and we're required, 90 percent. And we're required to pay 99 percent of the clean claims within 90 days. Alaska Medicaid consistently meets this standard.

The other large complaint that I hear a lot from providers is that, "It takes so long for Medicaid to pay us." And, my answer to that is that it depends on, the next slide we will go through that a little more closely. The last component on this slide is about edits. Edits are certain data entries and data combinations that the computer looks for in order to validate a claim. And if those two data points are not consistent with the logic that's in the computer, the computer says, "Wait! I can't process this! It doesn't fit the rules, I have to push it out, I have to pend that claim," which means that a human being has to take a look at that claim, and review that claim before it can process.

Some of the reasons why claims pend is because two data points don't match up, they're not logical together, or we have to manually price that claim. Alaska recipients get a lot of services out of state. Southeast people can go to Seattle for their health care, and we don't have pricing for every single procedure that's out there. Any time we have to manually price something, a human being has to look for that, and that's a large reason why things bounce out of the system and they pend.

Another reason is that there is something on the provider file that isn't current, or isn't accurate any longer. Perhaps a business license has expired, [or] the occupational license has expired. Something on that provider file at this moment in time isn't current or accurate. That claim will bounce out of the system and we will have to take a look at that, and research it before we can know what to do next.

Claims that have a third-party payment TPO, a third-party liability, so Medicaid of course, is payer of last resort. The private insurance company pays first, and then we have to determine how much that Medicaid will pay second. A human being has to look at that claim to make those determinations. And then the last reason -- I've kind of talked about this. The medical claim, it's a certain procedure code, a certain issue, and we have to have the medical records to take a look to justify the claim.

"If a provider submits a claim on Tuesday morning, that claim, a clean claim, will adjudicate Tuesday evening, we'll cut the check that Friday, mail it out, and the provider will receive that check on Monday. Nobody pays in seven days, but Medicaid does."

This is some research that I did earlier this year. I was trying to take a look at how long it was that Alaska Medicaid really takes to pay a claim. There's a lot of information here. I pulled out a random sample of 900 providers representing over $9 million worth of claims. What I found was that I could group those providers in three different groups: I had efficient billers, moderately efficient billers, and least efficient billers. That kind of creates a bell curve, so I think I'm on the right track there. I found that the efficient billers, by and large, are billing in the electronic format. They are billing very few paper claims, with or without attachments, and they are submitting 12 or 13 claims a week, in this time period that I was looking at. The moderately efficient billers were moving toward the electronic claims transaction, but still they were submitting 30 percent of their claims on paper. And we know that paper claims are just slower, for various reasons.

The last group was pretty interesting. Two hundred and fourteen providers fell into this category -- that I called least efficient billers. They are billing almost exclusively on paper claims. Half of them are practicing outside of the state of Alaska, and they've only submitted one claim during this time period that I was looking at. So, in terms of length of time to pay these claims, the efficient billers were turning over their accounts receivable in 16 days. Which is absolutely phenomenal. Absolutely. Blue Cross doesn't pay you in 16 days. But these people were very efficient.

"Medicaid pays faster than any other payer out there" is my next provocative statement. If a provider submits a claim on Tuesday morning, that claim, a clean claim, will adjudicate Tuesday evening, we'll cut the check that Friday, mail it out, and the provider will receive that check on Monday. Nobody pays in seven days, but Medicaid does.

So the efficient billers were turning over their accounts receivable in 16 days -- absolutely phenomenal. The moderately efficient billers were turning over their accounts receivable in 46 days. Now, business standard for turning over your accounts receivable is a range, anywhere from 35 to 45 days. Moderately efficient billers were turning over that account receivable in 46 days. Very, very good, by business standards.

The least efficient billers are skewing the whole thing for us. They are turning over their accounts receivable in 319 days. So, one of the things that that tells me is that they are not very practiced with the Alaska Medicaid. Many of them are practicing not in this state, and perhaps they are really not very committed to learning what they need to learn about Alaska Medicaid, and getting those claims in, and working those claims so that they get paid faster. But, if they don't get paid for 319 days, that's really skewing my data and that is why I had to break it out and take a look this way. It made a lot more sense to me, what was happening.

Audience member question: Is your random sample from all providers -- tertiary facilities as well as mental health?

Powers: My random sample was physician and physician groups. Back to selected topics list

The Claims Process

There are only so many things that can happen to a claim when it comes into our system. When the fiscal agent receives a claim, either electronically or on paper, we have to capture and control that claim. And one of the ways that we do that is that we assign each and every claim an individual claim control number so that we can follow that claim and identify where it is in the system at any time. That is the very first thing that happens -- it's assigned a unique identifier. That claim is then entered into MMIS, and if the provider is billing using an electronic transaction, that claim just goes right into the system. If they bill us on paper, it gets a claim control number but then it's imaged, and then it goes over to data entry, and somebody at ACS has to manually enter that claim information into the system.

As I mentioned before, MMIS cycles on Tuesdays and Fridays, and then there are only certain things that can happen. On the left-hand side, that claim can either pay or deny. A clean claim will pay. A claim that has a critical error on it will not travel very deeply into the system. A critical error, such as a mismatch between the Medicaid ID number and a waiver service. That's a critical error, and the system will automatically deny that claim.

"I think that providers who invest in the electronic format and create efficiencies in their office, they do a much better job of capturing reimbursements."

The next option is that the claim is pended, so that a human being can take a look at that claim, and from that process, the claim will either pay or deny. There are some claims that will be pushed over into the fourth category and the provider will receive a "resubmission turnaround document." That is just a form, and we are telling the provider, "There is something a little off about the data." We'll show them, "This data, is this really what you meant to tell us?" We give the provider an opportunity to fix that, to say, "No, I transposed some numbers here, it really should be this number," and they'll send it back in. The provider can either choose to respond to that resubmission turnaround document and fill out the form and send it back in, or they can say, "No, this is outside of my business process. I understand what you are telling me. I'm just going to resubmit that claim with that data element corrected." So again, from the resubmission turnaround document process, that claim either pays or denies.

All insurers have a process like this, and all of them have a resubmission turnaround process, whether they call it that or not. They probably call it something differently, but I have certainly received something from my insurance company where they said, "You know, there's three providers in this group and they didn't tell us which one [you] saw. Please tell us." That was a resubmission turnaround document, where they were asking me for one clarifying piece of information. I circled it, I sent it back in, and we all got paid and we were happy. All of that information is reported to the provider, on what we call a remittance advice, this is the line item detail that accompanies that check that providers receive on Mondays.

Forms and More Forms

When I started to think about HIPAA and electronic claims transaction, I was really kind of struggling with those concepts until I found this example on the Internet, and this really helped clarify it for me a lot. This is an example of an 837 professional claim. It is in the HIPAA compliant standard that is now required under HIPAA. Any provider who submits an electronic claim, it has to be in this format. It is not human readable. It is meant to be sent from computer to computer. This format was developed by the American National Standards Institute, and as I mentioned, is the only electronic format that providers can submit. If they are going to submit electronically, they must use this format, and it doesn't matter if they are submitting to Medicaid or Blue Cross or Aetna. This is the standardized format now, that everyone uses across the country. Providers can purchase software that will take their claiming data and put it into this format and send it to us. Sometimes providers don't want to invest in infrastructure like that, or for whatever reason, and they may contract with a billing service or a clearinghouse who will put it into this format for them, and then send it on.

I should have said, while that was up there, most of us grew up in health care when we were filling out this form: the HCFA 1500 or the CMS 1500. It was very easy, you put the person's name here, you put the date here, you put the Medicaid number here. We understood how to do this. This world has changed, and it is infinitely more complex now. And again, I think that providers who invest in the electronic format and create efficiencies in their office, they do a much better job of capturing reimbursements.

Medicaid Recipients

But let me move to recipients. We know that there is a burden to recipients [because] Medicaid is a complex program. And the program confers certain responsibilities onto the recipient. The first one is they are responsible to enroll and maintain their enrollment. Recipients are responsible to provide proof of Medicaid coverage at each visit. And if a Medicaid recipient fails to provide proof of Medicaid coverage, that provider is not required to accept Medicaid as reimbursement for that visit. We also have co-pays for adults, for certain services. If Medicaid does deny or reduce a service, and a Medicaid recipient wants to request a fair hearing, there are strict time lines that they have to follow in that process. After initiating a fair hearing, then all of the burden falls to us to meet our time lines. But they have to request that within 30 days of the adverse action.

I thought it might be interesting to see how many Medicaid recipients we have in Alaska, so I used PFD-eligible [permanent fund dividend] applicants as a proxy for census. In Alaska, Medicaid recipients comprise 16 to 20 percent of our population. We think this is a little higher than the national average, but the national average is catching up to us. We run a help line for recipients. They can call and ask us any question they have about Medicaid. This data is from a few years ago, but I don't think it's changed much at all. Recipients are calling, and the three large reasons that they are calling: they are inquiring about a claiming issue, they are asking about a covered service, or they're seeking information about a referral. We also publish the recipient handbook. We distribute this through Public Health OCS [Office of Children's Services], and it is available on our website. We have tried to describe in very broad strokes for recipients, what [their] Medicaid benefit covers, and we instruct them on every single page, if you have a specific question, call the recipient help line and they will be able to answer a coverage question for your particular circumstances.

I have mentioned fair hearings. This was some recent data that I pulled up to show you today. This is for most of this calendar year, and the status of some of those fair hearings. You will see that Senior and Disabilities Services has far more fair hearing requests than Medicaid does. That's just a function of the nature of their business. Back to selected topics list

Reimbursement: Adequate or Inadequate?

Let's spend a few moments and talk about adequate or inadequate reimbursement, depending upon your viewpoint. I want to mention "usual and customary," RBRVS -- I will tell you what that means -- and I will just talk briefly about the encounter rate. Here's what was happening under usual and customary, which was the payment structure in this country at the beginning of Medicaid and Medicare. You can see the growth curve there, for national health care expenditures. Usual and customary was characterized as inflationary, complex, distorted, irrational, inequitable, and open to abuse. Usual and customary was replaced with RBRVS, which is "resource-based, relative value scale." President Bush signed this into law in 1989, enacting the physician payment schedule RBRVS. Medicare implemented RBRVS in January of 1992, and private insurers, HMOS, and Medicaid quickly adopted RBRVS. Everybody knew we needed to move away from usual and customary, and move to a different payment structure.

"Alaska Medicaid publishes its fee schedule. ... -- it's out there for everyone to take a look at. I cannot get to the fee schedule for Blue Cross unless I am a provider, registered with their network, and then I can only get to the fee that they have negotiated with me."

And I will take a moment to walk you through the formula, I think it's important to have some concept of what the formula is. RVU stands for 'relative value units,' and it is a measure of the resource that is required to provide that service. And the GPCI, we call those GPCIs [pronounced "gypsies"] in our office. The GPCIs are a geographic differential because we know it costs more to provide a service in Manhattan then it does in Boise, so the GPCIs account for the differences in geography.

Audience member question: Do you think GPCI is technically accurate for us, Jeri, because it may cost more to provide a service in Manhattan, than it does Boise, I wager it costs more to provide a service in Bethel, than it does in Manhattan.

Powers: That's one of the limitations of the GPCIs, and a criticism of the GPCIs. You could literally be on one side of the street and be under one set of geographic differentials, and your competitor across the street enjoyed a different set. The federal government has done some things to help smooth that out, but it's not perfect by any means.

So, "relative value units W" stands for work. "Work" is the time required to perform the service, and work includes the technical skill, the physical effort, the mental effort, and the judgment and stress, due to the potential risks to the patient. So, all of that is incorporated into the formula -- the time and intensity it takes to provide that service. "Relative value unit P" stands for "practice," and it attempts to incorporate the expense of running an office, such as rent, utilities, staff salaries, office supplies, and equipment. "M" stands for "medical malpractice insurance."

So you can see how the formula is working: "RVU work" times "GPCI work" plus "RVU practice" times "GPCI practice" plus "RVU medical malpractice insurance" times the GPCI. Once you do that part of the formula, you get a relative value unit. You have to times that by the conversion factor in order to get a dollar amount. In Alaska, I have taken "99213" which is our most frequently billed code. It is a 15 minute office visit, 15 minutes face-to-face with the doc, low complexity. That's what "99213" is. I've worked out the formula and it comes to 2.2 RVUs times by Alaska's conversion factor, $45.90. So Alaska's Medicaid reimburses $101.75 for this particular procedure code. We think $45.90 is kind of high. In some states of the country, that conversion factor is $11.00 or $12.00. But I thought it would be interesting, I mean that's just what we think, we think it's kind of high. So, I wanted to compare the Alaska reimbursement with some of the big guys out there -- Blue Cross, Aetna. How do you think we compare?

I cannot get to that data. Alaska Medicaid publishes its fee schedule. Medicare publishes its fee schedule -- it's out there for everyone to take a look at. I cannot get to the fee schedule for Blue Cross unless I am a provider, registered with their network, and then I can only get to the fee that they have negotiated with me. I cannot see the fee that they have negotiated with my competitor who works across the street, or across town. So you can't get to the information from the private guys.

Audience member: So we have no transparency in reimbursement, that's...

Powers: No transparency. We looked this up and found that Medicare reimburses, for this code, $79.96. You can find that [snaps fingers], just like that.

So what's happened under RBRVS? This is what's happened: Spending has continued on an exponential curve. I will say, that RBRVS was not intended to control spending. It was designed to redistribute spending among the various physician specialties. There are other mechanisms that are applied to RBRVS to control spending, but that's a way different presentation than what I can do today. In general, [according to] all the journal articles that I've read, the medical community does not like the mechanism that is used to control spending. But by and large, there is support for the RBRVS formula and process itself.

"Medicaid is not the Cadillac of coverage service. For kids, it's the Mercedes-Benz. ... for children it's very robust coverage. You won't get the same kind of coverage from Blue Cross or Aetna, that a child is entitled to under the Medicaid program."

Last year this country spent $2.4 trillion on health care, representing 16 percent of gross domestic product. This is one of the basic reasons for our debate on health care today. And, RBRVS is administered by CMS [Centers for Medicare and Medicaid], with input from the AMA [American Medical Association], and of course, Congress has the oversight for CMS, at least. The relative value units, all of them are supposed to be reevaluated every 10 years. Every five years they do kind of a targeted review, and then if there is a great deal of agitation for a specific code, they will review that specific code, too. The AMA has a committee of volunteers to run the committee. They survey the medical community and ask them to validate the relative value units. They collect all of that survey information, they compile it, and they make recommendations to CMS based upon that survey. CMS has accepted roughly 95 percent of all of the recommendations that come from the AMA.

There is one other reimbursement strategy that I want to touch upon, and that is the encounter rate. The encounter rate is approved for federally qualified health centers, such as Anchorage Neighborhood Health [Center]. They have an encounter rate. Anchorage Neighborhood Health applied for the reimbursement strategy of encounter rate, and it's CMS that approves that, and approves whatever that dollar amount is for the encounter rate. The encounter rate is an all-inclusive, per-visit amount. It is a prospective system, meaning that the clinic submitted last year's cost reports. Here are my very complicated cost reports, sent them in, and then CMS will decide what that encounter rate is going to be for the following year. And just to give you a sense of how that cost report works, if the cost report says it costs me $200,000 to see 1000 patients, then my encounter rate is going to be $200. And that is a simplified version, but roughly that's how it works. Those are the payment strategies used by the Medicaid program.

I briefly want to talk about inadequate coverage, because sometimes I will hear people say, "You know, Medicaid should cover more things, or Medicaid should cover this, or that." We were commenting in our office that Medicaid is not the Cadillac of coverage service. For kids, it's the Mercedes-Benz. For adults, not so much, but for children it's very robust coverage. You won't get the same kind of coverage from Blue Cross or Aetna, that a child is entitled to under the Medicaid program. As an example, until very recently our state employee insurance didn't cover well-child exams for our children. Under Medicaid, that is a fundamental standard.

The next area that I want to talk about are these changing and complex rules that we are associated with. HIPAA changed our lives. HIPAA drove, this federal initiative drove, almost all of the changes that we are participating in, in health care today. Medicaid is not the driver, but being one of those payers that uses federal funds, we are required to comply. So oftentimes people will say, "Well Medicaid is making us do that," whatever "that" is. But what's really true is that it is a federal initiative and Medicaid has to comply, and if the provider wants to be paid, they have to comply also. Providers are now required to put their NPI on all claims. Most of you know, the "National Provider Identification" number, the NPI, is now required.

"We're hoping, expecting, with a system such as ICD-10 that has a much higher resolution, that we will improve our reporting, our payment, our policy decisions, and our ability to perform research. [Have] no doubt about it, this is going to be a tough transition."

We are looking at 5010 transactions. Remember that 837 that I put up here, that's not human readable? That is an example of a 5010 transaction. Right after it was developed, all these smart people get together and they say, "Well, it's pretty good for a start, but here are the things that we have to fix about it." So 5010 transactions are going to be required by January 13, and then following on the heels of 5010 is going to be implementation of ICD-10 [International Classification of Diseases]. This is going to be a huge struggle for all of us.

We are one of the very last countries to adopt the ICD-10. Most all of Europe is already there, Canada, France, Australia, Germany, the United Kingdom. The United States has been very slow to adopt ICD-10. The problems with ICD-9 is that it is now obsolete, it can't be expanded, and it really doesn't have the granular detail about coding that the ICD-10 will have. We're hoping, expecting, with a system such as ICD-10 that has a much higher resolution, that we will improve our reporting, our payment, our policy decisions, and our ability to perform research. [Have] no doubt about it, this is going to be a tough transition. Back to selected topics list

Alaska Medicaid Shining Star: Low Error Rates

Anybody here remember the PERM audits? "Payment Error Rate Measurement." Oh my gosh, the sky was falling, "We have to get prepared for PERM audits." This was just released: this is how Alaska compares, with those payment error rates. You can see the U.S. average, and then some other unfortunate states, up around 20 percent. I'd hate to be working for that state Medicaid program, I gotta tell ya.

Our error rate has been determined to be about one-half of one percent. Yes, this is really good news. But I guess what I want to convey to everyone is that audits are part of running a business, and the federal government requires that we randomly select providers and perform audits, which we do. Usually accountants and financial people are pretty comfortable with that. Clinical people go, "Oh my gosh, we are being audited what are we going to do?" This is just a normal fact of business.

Audience member question: So, quick question, what you attribute that rate to, as opposed to those other states? What are we doing right?

Powers: We really put a lot of resources into preparing for PERM. One of the things that we did is we told providers, "Please, please, please, provide the information that the auditors are requesting." Medicaid does not keep copy of the medical records. Sometimes people will call us and say, "I want all of my medical records." "Well, we don't have the records, your doctor has the medical records." Part of the PERM process was going back to individual providers and getting a copy of the documentation that supported that claim. We had a lot of support from the provider community, and put a lot of time and effort into this process, and that's, I think, what contributes to that.

Medicaid and the Three Ps of Public Health

What I want to talk about now are the ways that Medicaid provides support to the public health goals. In the 2010 book that is available -- anybody can pick one up out there -- there are the 'Three Ps' of public health. The first one is "promotion," which includes educating, and fostering healthy lifestyles for people. And then, what they have done is identify some of the goals that fall under health promotion. So I would like to show you some of the ways that we support public health in these goals. We don't cover all of these things, but we cover a fair number of them.

"Medicaid can't cover everything for everybody, so we have to look at other programs and funding sources to meet those needs, such as WIC."

And the first one is "nutrition." This is claims data for the last five years. We provided nutrition services to just under 400 newborns. For my purposes I defined a newborn as a little one under the age of one. We provided service to just under 400 little ones, many of whom had a diagnosis of "failure to thrive." We provided nutrition services to about 1,500 kids, also with a primary diagnosis of "failure to thrive." The average age of these kids is five and half years old. We provided services to adults -- most of these were pregnant women with gestational diabetes, and on average she was about 28 years old. Let me say one more thing about claims data out of MMIS. The way that I pulled the data does not include Indian Health Services, so if I had time to pull all of that data in, these numbers would be very, very different.

Audience member question: Jeri, with things like [garbled], diabetes during pregnancy. I mean, that is one area of nutrition, but when I think of prevention, I think of things that we're trying to do to prevent diabetes and obesity and those type of things. Will they pay for that? I mean, most insurances don't.

Powers: Right, most insurances do not. Medicaid typically does not cover education, and that usually falls under education.

Audience member question: I would assume that most of that target population that is on Medicaid, is also eligible for WIC, where the education would be provided.

Powers: Yes, yes. So Medicaid can't cover everything for everybody, so we have to look at other programs and funding sources to meet those needs, such as WIC.

Tobacco cessation is a newer program for us. We've had some challenges with this program, but we served 90 people, [and] that's okay. Ninety people that we got services to -- the average age was 49 years old, and we served slightly more women than men in this program.

Audience member question: So if that's not education, what is it? Like actual medication?

Powers: That's part of it, yes.

Substance abuse treatment -- I broke this out by fiscal year. We serve about 2,000 people a year for substance abuse. In state fiscal year '09, the Medicaid program paid four and a half million dollars for substance abuse services. Mental health services -- I tried to pull out five years worth of data, blew up the computer. I tried to pull out one year of data, and it blew up the computer, so I just had to go to one-quarter worth of services for the mental health clinic, and found that we provide services to 5,600 individuals. The residential services and inpatient services are both five years worth of data, and you can see that we've served over 3,000 people in both of those components.

The next public health area is "protection." I [have] to underline here, part of that is to make sure that clinics, hospitals, laboratories, blood banks, are reliable and that health care professionals are qualified to serve. Medicaid plays a very large role in making sure that providers are qualified to serve, and I will show you an example here. Anytime a hospital, a physician, or pharmacy, and other providers -- but these are my examples -- wish to enroll with Alaska Medicaid, they have to provide us with a fair amount of information. Part of our process is to independently verify each piece of data that they give us. In addition, we cross reference that provider with the federal sanctions and exclusions list to make sure that there are no blemishes out there on their record and they've moved to Alaska for a new start. It takes quite a bit of resources, on our part, to make sure that providers are qualified to serve. It's more complicated than I can even portray here. After we do verify that they are qualified to serve, we have to set the system in ways so that the computer recognizes the type of provider they are, the qualities that they have, if they are a hospital, for example, and we also have to set the payment grade so that we pay them accurately.

Audience member question: So is it correct that, in order for a provider to provide services to a Medicaid patient, they must be a Medicare provider as well?

Powers: Yes. There might be some exceptions to that, but by and large, the answer is yes.

Dental services -- I pulled this data three times, because we thought providing dental services to 11,500 kids was awfully high. How? Because what we hear a lot is the dental community just complaining about Medicaid, and we don't pay them enough, and they don't want to see Medicaid recipients. We pulled the data three times, and I have to tell you [that] we're still not 100 percent sure that we pulled the data accurately because it still seems phenomenally high to us, but if it's ballpark accurate, we're thrilled that 11,500 kids are getting some dental service. The reason that I think that it might be accurate is because when I look at the dollar value associated with this, we spent over -- this is one quarter's worth of data -- five and a half million dollars for these kids, and we spent two and a half million dollars for these adults. So, if I extrapolate out to one year, I'm in my budget for dental services. So, whatever the true number is, it's comfortably high. We like it.

Audience member question: Now with these figures, are you including Indian Health Services, or is it still excluded?

Powers: No, no. That's a different presentation.

Vision services -- we provide a lot of vision services for both kids and adults. Immunizations -- earlier this year we were able to change the regulations, and now Medicaid will cover immunizations for adults. It's a change that, in our opinion, was long overdue. Hearing services -- 6,600 individuals for hearing services, and you can see the breakdown from little ones, and kids, and adults. For newborns, this is in addition to the newborn hearing screening program that's implemented in all the hospitals. So this is in addition to that.

"I, personally, would like to see us take 10 percent of the energy that we're applying to newborns, and reprioritize the 10- to 14-year-old age group. ... I think that we could reprioritize this age group and do a much better job of reaching out to them and providing a service."

School-based services -- we've had this program for about five or six years. Although we have only a handful of school districts participating with us in school-based services, we have still served over 800 students, providing mostly speech therapy, and then a little bit of the other therapies.

And the last public health goal, "prevention and access to care." What I would like to speak about here is a little bit about EPSDT [Early Periodic Screening, Diagnosis, and Treatment], the well-child screening program, and transportation. We also cover some of these other services, maternal, infant, and child health, and family planning. But I just ran out of time, and couldn't pull out the data and make slides for those. This curve is our screening ratio, under the EPSDT program. And you can see on the left here, for the youngest-aged ones, we are getting all of those kids, we are screening 100 percent of those kids. As the child gets older, that screening rate drops and drops. I, personally, would like to see us take 10 percent of the energy that we're applying to newborns, and reprioritize the 10- to 14-year-old age group. These are the kids that are forming impressions and attitudes toward tobacco, substances, sexuality, and suicide. I think that we could reprioritize this age group and do a much better job of reaching out to them and providing a service.

Audience member question: Are you saying that 100 percent of the EPSDT-eligible kids have, I guess the way I'd look at that, is maybe they get one screen in their first year, maybe 100 percent of the kids do. Are you saying that 100 percent of kids one year of age, follow the periodicity scale, we get all of those kids?

Powers: It has to do with the way the federal government tells us we have to count these things. So if we get that child once, for any of those three or four screenings in the first year, we get to count that in our total. That's the way the federal government tells us to count that.

Audience member: Okay, so the point is, we could still be doing even better, with that age group, but I definitely agree with what you're saying with that teen group.

Powers: Yes.

So how does Alaska compare with the national averages? You know, the federal government sets the goal at 80 percent, for all age groups. No state in the country has ever achieved that. And you can see here, that Alaska follows the same trend as all the other states. The older kids, we just get them less and less. Back to selected topics list

Alaska's Unique Medicaid Travel Program

I had a request a couple of weeks ago from a public health nurse, asking me for a copy of a 416 report. She had just never seen one before, and had heard about it and wanted to know what they look like. This is the EPSDT report that we file with the federal government every year, telling them our screening rate. So I thought if she had never seen it before and was just curious, you might be curious as to what it looks like.

"Here in Alaska we load in 300 new travel prior-authorizations every day. In addition, to 300 new requests, we make changes and updates to 300 to 500 existing prior-authorizations every day -- that's Monday through Friday, [and] we are also open on Saturday and Sunday to manage travel."

I have to talk about transportation now, for just a little bit. No other state in the country has a Medicaid transportation program as vast and as complex as we have here in Alaska. We've talked with other states who have large rural areas, and asked them how they manage their Medicaid transportation program -- Montana, Wyoming, some other states. They say, "Well, we have a person who gets a request every now and then, and that person makes a decision about that transportational request." Their experience just doesn't compare with ours.

Here in Alaska we load in 300 new travel prior-authorizations every day. In addition, to 300 new requests, we make changes and updates to 300 to 500 existing prior-authorizations every day -- that's Monday through Friday, [and] we are also open on Saturday and Sunday to manage travel. [On the weekend] it goes way down because people aren't in the clinics, but we are available to manage transportation requests on the weekend. We budget $50 million for Medicaid transportation. The majority of our travel, as you can see, is requested for the same day, or next day. We've worked with the health aides to try and encourage and incorporate more advanced planning, [but] without a lot of success. This is largely driven by weather, where advanced planning really isn't very helpful.

However, we have preferred provider contracts with most of the small, rural carriers, so we don't pay an increased rate for that ticket for lack of advanced planning. It's the same price, whether we request it today, or if we request it for next week. We pay just a flat rate.

Audience member question: So this portion, this slide, would include Indian Health Service?

Powers: Yes,yes, yes, yes. And in fact, these are our major city pairs, you can see the first one is Anchorage-Bethel, Anchorage-Fairbanks, Bethel, Bethel, Kenai, Bethel, Bethel, Bethel, Bethel, Bethel, and Kotz [Kotzebue]. Forty-five to fifty-five percent of all of our travel occurs in and around the YK [Yukon-Kuskokwim] Delta.

Audience member question: Is that just because of population there, as opposed to other parts of the state?

Powers: I think it's a combination of things. I think there are genuine health disparities, and I think that Bethel has very fine services out there -- critical access, hospital, very fine services -- [and] Bethel is the regional hub out there.

This is my last, I think this is my last slide before taking more questions that you might have. When looking at this slide, be mindful of the scale on the left-hand side, that's increasing in half a percent increments. We process about 47,000 travel requests annually, and we approve anywhere between 97 to 99 percent of those travel requests. And I would like to end this with a defense of the travel component of Alaska Medicaid, because I think travel gets a bad rap.

My observation is that problematic transportation requests are oftentimes not related to transportation at all, but they're related to something else that surfaces when it comes time to request travel. It can be related to the issue that the requestor is not able to adequately describe the medically necessary reasons why travel is necessary. There could be a coordination of benefits issue, that doesn't surface until they request travel, and then it kind of bubbles up to the surface. We have to sort all of that out, how the private insurance is going to handle pieces of it, [and] what Medicaid is going to cover. Sometimes the caller is requesting that we travel the person to a non-enrolled provider.

So there are a lot of different issues that can surface at the time that travel is being requested. If any of you are in that position, where you're trying to acquire transportation services for a Medicaid recipient, and you believe that the fiscal agent has made a decision in error, you can ask to speak to a supervisor and you can ask that that travel requests be reconsidered. When you ask for a reconsideration, it automatically goes up to a supervisor, and very often it comes over to our office, where we can also take a look at it.

I have been asked by professionals and paraprofessionals alike, that I should trust them. We need transportation for somebody, and I should just trust them. You know, I am very polite when I answer them, but essentially what I am saying to them is that my retirement plans do not include jail time, thank you. I have to have medical necessity. That's the foundation for making a decision about travel, and the foundation for making a lot of decisions that Medicaid makes. So I have to have medical necessity, and then I have to follow certain other rules. Just like you, if you have a parking expense today for the conference and you neglect to get a receipt, but you go back to your CFO and you say, "Gosh, I really did have parking expense of $12 today. I need to be reimbursed for that. Just trust me." I don't think you're going to be reimbursed for that. It's the same thing with the Medicaid program. We have to meet certain requirements.

That's my presentation today. Anyone who would like a copy of this presentation, just e-mail me and ask for a copy and I'll send it to you.

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