Summary: The report offers a number of ways that the department could potentially lower costs in the future. Some of these reductions may be accomplished without cutting services, while others may entail a reduction in services provided by the department. This is distinct from maximizing revenues in that, rather than seeking additional funding to offset general funds, these recommendations find ways that the department could be spending less on a task.

Key Recommendations for Lowering Costs

1. Annual reassessments should be conducted for persons that are receiving personal care assistance services.
(Recommendation 2.5)

DHSS suspended personal care assistance reassessments in response to difficulties the department has had in conducting timely reassessments. Approximately $103 million was paid during FY 14 for personal care assistance. Reassessments can be performed for everyone or individuals can be triaged by acuity or age. It is inefficient to continue to provide services to persons who may now need different or fewer services.

2. The department should consider limiting administrative costs during the grants and contracts process.
(Recommendation 3.2)

Percentage guidelines constituting a reasonable administrative cost should be considered. The department currently has no set limits in place to help minimize overall administrative costs in grants and contracts.

3. The department should consider the use of an electronic visit verification system with the personal care assistance and waiver programs and for in-home services.
(Recommendation 8.4)
(Recommendation 10.5)

Electronic visit verification systems are one of the technology tools that can minimize unnecessary state expenditures. Under this system personal care assistance providers will electronically verify every time they go to a residence to provide services. Numerous states including Texas, Illinois, and Oklahoma use electronic verification systems. This is estimated to save between $1,000,000 and $2,000,000 annually.

4. The department should create financial incentives for the personal care assistance provider agencies to control fraud and abuse.
(Recommendation 10.2)
(Recommendation 10.3)

The current program architecture contains no role for the provider agencies in the control of fraud and abuse. Currently, agencies benefit regardless if the rendering providers provide the services or not. The agencies take their administration fee off the top and pass the rest of the funding along to the rendering providers. The department should issue regulations specifying the responsibility of personal care assistance agencies for monitoring fraud and abuse and build in contractual requirements for provider agencies to control fraud and abuse. Additionally, the department could incentivize provider agencies to monitor fraud and abuse internally by automatically recouping funds from agencies whose rendering providers are not providing appropriate services and rewarding agencies whose providers consistently provide problem-free services. These recommendations should extend to all Medicaid services provided on an in-home service basis including chore and respite whose rendering providers are supervised by agencies.

5. Criminal penalties for Medicaid fraud should be increased, and penalties and interests should be assessed when persons are convicted of Medicaid fraud.
(Recommendation 10.6)
(Recommendation 10.7)

Both penalties and interest should be collected in situations where the Medicaid program has been defrauded. The contractor does not offer recommendations as to how penalties should be increased, believing this is a matter best determined by local culture and judicial history. While Alaska Statutes have provisions for recoupment of funds and disbarment from the Medicaid program, increased sanctions would provide State staff, prosecutors, and judiciary more latitude and support in controlling fraud. The State could benefit by having a Medicaid False Claims Act.

6. The telehealth pilot program is recommended for expansion.
(Recommendation 8.1)

Senior and Disability Services staff have estimated the travel savings from the first 50 persons assessed through the telehealth pilot program to be approximately $2,000 per person, based on the travel costs to remote locations. Fixed cost for the telehealth program are $20,000 for equipment and $1,000 a month for the telehealth room. An increase in telehealth in reassessments is an effective and efficient use of technology.

Long Term Care Lowering Costs Recommendations Table
Recommendation NumberRecommendation
2.5Annual reassessments should be performed for persons that are receiving PCA services. Currently PCA reassessments have been suspended. Reassessments [should be] performed for everyone or triaged by acuity or age. It is inefficient to continue to provide services to persons who may now be different or fewer services.
2.7A new Pioneer Home should not be constructed at this time. Over the next decade construction of a Pioneer Home should be considered with the Kenai Peninsula area as a candidate area. This home would not need to be constructed right away, as the population will not significantly increase until 2022.
3.1The Department should increase their ability to monitor, track, and limit administrative costs for vendors.
3.2The Department should consider limiting administrative costs during the contracting process. Percentage guidelines constituting a reasonable administrative cost should be considered.
3.3The Department should further monitor grant and contract budgets to ensure costs are properly allocated across each of the major cost or functional areas. In reviewing bids and/or budget proposals, the Department may desire to directly compare projected costs to see which vendors potentially may be hiding their costs.
3.4The Department should change the CON application fee to a fee that covers the cost of processing the application. A maximum fee of $75,000 generates more in revenue to the state than the state incurs in costs to process the application. Please see Recommendation 5.4 for additional details.
5.2The office of private physicians loophole in the CON regulation should be closed. Amend office of private physician’s provisions to close the loophole as it is not defined as a "healthcare facility.” Language pertaining to “not otherwise a health care facility” will need to be revised. In the past, providers have registered as an office of private physicians and then proceeded to purchase other health care facilities under the guise of an office of private physicians. This license enables the providers to bypass the required CONs through this loophole. The Department should close this loophole by changing regulations surrounding office of private physicians and the acquisition of other healthcare facilities. Regardless of the license type of the purchaser, a CON should be required for all facility types.
6.4The Department should review the Veterans Needs Assessment as published by the University of Alaska, Anchorage to review potential cost shifts that may have been identified by the study.
3.8The Department should consider expanding the Funded Human Services Community Matching Grant Program for FY 2014 to other municipalities that do not exceed 65,000 in population. This is a good way to meet the needs of additional citizens while receiving additional match funds.
6.1The Department should move with the CFC waiver program to receive the additional 6% federal match.
6.2The Department should move forward with implementing a 1915(i) option. Please refer to PCG’s Behavioral Health Performance Review report for more details on the Medicaid 1915(i) option.
6.3Adjustments to the calculation of cognition on the CAT should be made. Adjusting CAT scoring is something the state could do without going to the time and expense involved with a 1915(i).
8.1The telehealth pilot program is recommended for expansion. An increase in telehealth in reassessments is an effective and efficient use of technology that will be cost effective.
8.4The Department should consider the use of an electronic visit verification (EVV) system with the PCA and waiver programs.
10.2The Department should issue regulations specifying the responsibility of PCA agencies for monitoring fraud and abuse and build in contractual requirements for provider agencies to control fraud and abuse.
10.3The Department should create financial incentives for the provider agencies to control fraud and abuse.
10.5The Department should establish an EVV system for in-home services.
10.6Criminal penalties for Medicaid fraud should be increased.
10.7Penalties and interests should be assessed when persons are convicted of Medicaid fraud. The state could benefit by having a Medicaid False Claims Act.