5 Things AK: 1332 waiver, Sitka Community Hospital, Noel Rea

Usually, summer in Alaska and in Washington DC is a slower time for health policy.  Nothing feels slow about health care today, however.  Among the many things, here are 5 Things We’re Watching in Alaska health care for your review.

As always, thanks for reading our stuff.

DJ 5 Things Signature

1.  Moving pieces in DC health policy

At some point today, the Senate is supposed to vote on a bill of some sort related to health care reform.  However, failure is perhaps the most likely option.  Sen. Murkowski has been called a “lost cause” by Republican whips hoping to move debate forward. Concerns she laid out in March with three other Senators have not been addressed in any draft before the Senate.

Gov. Walker led a bi-partisan group of governors in pushing Congress to focus on fixing the current model rather than throwing it all out.  Today, the White House released an email saying that “Obamacare has wreaked havoc on innocent Americans.”

Meanwhile, Democrats are out with an economic agenda that could squarely take on cost issues in health care, both by addressing pharmaceutical costs and bringing greater anti-trust scrutiny to highly consolidated providers and health plans.

2.  Alaska’s 1332 waiver approved, funded

CMS approved Alaska’s 1332 Waiver, which funds the Alaska Reinsurance Program. The program will receive $332 million in federal funds over the next five years to help lower premium costs. The state is also projecting savings of up to $48 million next year.

The approval will likely lower Premera’s requested rate filing for 2018, which was due to Alaska’s Department of Insurance 6 days after the waiver was approved. Premiums are expected to decrease up to 20 percent. We’ll be keeping an eye out for the rates, which will be updated in mid-August. When the state first approved the Alaska Reinsurance Program for 2017, Premera’s rates increased 10 percent, compared to 39 percent in 2016 and 37 percent in 2015.

This represents very good staff work in the Walker administration, with support from the Congressional delegation. Alaska was first with this approach at re-insurance, but now states across the country are following its lead.

3.  A recap of DHSS budget cuts

Alaska managed to pass its operating budget with time to spare (compared to three states that went into shutdowns) but still has a ways to go to come up with a sustainable savings solution to address the state deficit. Alaska has reduced overall state spending by 44 percent in the last 5 years. Governor Walker even volunteered to take a pay cut, but ended up donating part of his salary to Safer Alaska.

DHSS received a small budget cut of 1 percent, about $30 million. But branches of DHSS see higher budget cuts, with Senior & Disability Services getting a 11.2 percent decrease. Medicaid Services does have a small budget increase, but only due to an increase of federal funds to offset state cuts.

4.  Sitka Community Hospital in transition

Sitka Community Hospital and SEARHC had an agreement in place to collaborate in Sitka.  That led instead to a proposal from SEARHC to pay $6.5m for the 12-bed critical access hospital. That’s now fallen apart, with Sitka now looking for other offers.

Interestingly, the primary driver for the city-owned hospital is the $31m public employee pension liability. One consultant said that, and declining cash flow, were reasons to sell to SEARHC. Another said implementing a few operational changes would generate more than enough profit to remain independent.

As Alaska’s economy continues to contract, this community conversation is likely to continue throughout the state. It will be interesting to see how it plays out here, and the lessons to draw for the future.

5. Video: Noel Rea and Virginia Mason in AK

Noel Rea is a Senior Hospital Administrator at NetworxHealth, which is a subsidiary of Virginia Mason Hospital based in Seattle. He joins us in this edition of “What They’re Watching” to talk about maintaining independence in Alaskan communities. As hospital systems seek to expand and acquire independent or rural facilities, Rea argues for the shift to providing support for those hospitals through affiliations rather than complete acquisitions.

“If there was an opportunity to provide support to some of the rural and independent facilities or a tertiary hospital could provide that support without absorbing them, I think that’s a real mix that needs to be done and something that we’re looking at.”