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 revenue, such as improving fee structures, implementing new fees, and looking for new ways to collaborate with tribal entities and other groups.

Key Recommendations for Maximizing Revenue

1. The department should transform the State’s current Medicaid 1915 waivers and implement the 1915(i) and 1915(k) options to refinance and improve community behavioral health service delivery.
(Recommendation 3.0.6)
(Recommendation 10.2.3)

A 1915(i) option expands the home and community based services eligible for Medicaid reimbursement by redefining the standards of eligibility to receive services. Under a 1915(i) option, individuals can receive the array of services even when they do not require an institutional level of care; 1915(k) authorizes the Community First Choice program, a Medicaid state plan option that encourages the use of home and community based service by supporting a six percent increase in the federal medical assistance percentage and reimbursing states for additional attendant services. Home and community based services help to assist individuals in need of a lower level of care to receive services at home, rather than in a higher level of care facilities at greater expense to the State. The report estimates that implementing the 1915(i) and 1915(k) options could achieve $24 million in savings annually.

2. The department should consider the pursuit of a Medicaid 1115 waiver to broaden the array of behavioral health services financed by Medicaid.
(Recommendation 3.0.7)

Section 1115 waivers authorize demonstration and pilot projects as opportunities for states to improve their Medicaid programs. The amount of additional funding is variable and depends on specific parameters agreed upon by the State and the Centers for Medicare and Medicaid Services, but it is estimated that Alaska could achieve $10-$15 million in savings through a 1115 waiver. Regardless of the amount of funding received, the State will not have an increase in costs, as 1115 waivers are required to be budget neutral.

3. The State should develop local sources of funding for behavioral health initiatives.
(Recommendation 3.0.9)

The department currently requires a 25 percent community match of all state funding for community behavioral health grants. The State should also explore a tax or assessment on hospitals. By levying a tax on hospitals within a municipality and dedicating that tax to the State’s share of behavioral health services Medicaid payments, the department will receive additional federal matching funds that can be redistributed within the provider community, so long as the redistribution benefits the local safety net hospital. This financing mechanism would expand the funds available for behavioral health infrastructure development to include the revenue from the provider tax, decreasing the department’s dependence on the general fund for infrastructure improvements.

4. The department should amend its grant and contract requirements to more strongly incentivize behavioral health providers to leverage third party insurance.
(Recommendation 9.2.4)

Making grant approval contingent on demonstration of consistent screening for third party insurance and eligibility would strengthen the ability of the department’s grants and contract procurement process to adequately leverage insurance.

5. The department should improve its efforts to identify veteran recipients of behavioral health services who may be eligible for services through the Alaska veterans affairs healthcare system.
(Recommendation 10.2.2)

Services provided through the Alaska veterans affairs healthcare systems are funded by the federal government as part of its obligation to veterans. Making sure that veterans services are properly billed to the Alaska veterans affairs healthcare systems reduces dependency on state-funded direct care. Estimated savings/cost avoidance is up to $1 million annually.

Behavioral Health Maximizing Revenue Findings Table
Finding NumberFinding
2.3.1The State should reform Title 12 to distinguish between violent and non-violent misdemeanor offences in the code governing forensic psychiatric evaluations for misdemeanor offenders.
7.3.1The State should consider increasing criminal penalties for Medicaid fraud and assessing interest and additional financial penalties on individuals convicted of Medicaid fraud.
Behavioral Health Maximizing Revenue Recommendations Table
Recommendation NumberRecommendation
3.0.4The Department should pursue implementation of Certified Community Behavioral Health Clinic (CCBHC) services in order to take advantage of enhanced federal Medicaid financing for vital delivery system reforms.
3.0.5The Department should consider expanding Medicaid to cover adults under 65 with income up to 133% of the Federal Poverty Level (FPL), taking advantage of substantially enhanced federal funding to build additional infrastructure to meet the needs of underserved behavioral health populations.
3.0.6The Department should transform the State’s current Medicaid 1915 waivers, including implementation of 1915(i) and 1915(k) options to refinance and improve community behavioral health service delivery.
3.0.7The Department should consider the pursuit of a Medicaid 1115 waiver to broaden the array of behavioral health services financed by Medicaid.
3.0.9The State should develop local sources of funding for behavioral health initiatives.
6.4.1As Medicaid plays an increasing role in financing the Department’s behavioral health services, the Department should consider a thorough review of position descriptions and delineation of regulatory responsibilities to optimize Medicaid administrative reimbursement.
9.2.4The Department should amend its grant and contract requirements to more strongly incentivize behavioral health providers to leverage third party insurance.
9.5.7The Department should continue its progress in transitioning from grants to contract-based financing for behavioral health services that are amenable to fee-for-service billing.
10.2.2The Department should improve its efforts to identify veteran recipients who may be eligible for services through the VA Healthcare System.
10.2.3The Department should proceed with implementing Medicaid 1915(i) and 1915(k) options in order to open up new opportunities for Medicaid financing through CMS.
12.2.1As the behavioral health system becomes increasingly dependent on Medicaid financing, current utilization tracking must be adapted to incorporate utilization controls more appropriate to fee-for-service payments than grant-based reimbursement.