5 Things We’re Watching – Alaska, December 2013

Sometimes health policy and market changes happen quickly.  Sometimes, they are more subtle.  There are a few of the more subtle variety in Alaska health care this month after the more turbulent months of October and November.

That said, from VBP to NEA, the implications of the acronyms this month – while subtle – could be impactful in any case.  Subtle but impactful – that’s what we’re watching this month.

DJ Wilson - Host, State of Reform

1. “Value based payments” coming to AK physicians

One of the last things Congress did before it adjourned for the holiday was move forward on a compromise bill to change the payment model to physicians who see Medicare patients.  If Congress can agree on anything, that’s noteworthy in itself.

The “doc fix” bill ends the SGR payment system in Medicare, fixes reimbursement rate growth on a 0.5% annual trend line, and institutes a “value based payment” (VBP) system to compensate providers on a ‘pay for performance’ model.  The Congressional Budget Office says this will mean an additional $67 billion in payments to providers from 2014-2018.

2. Healthcare.gov:  Plans struggle, a turnaround possible? 

One of the stories we’re hearing about in other states is the major financial impact the weak showing of healthcare.gov is having on insurance companies – as well as the shifting positions of the Obama administration as it tries to get through this period.

In Alaska, both Moda and Premera have adequate reserves to handle the storm.  But, the instability now may to lead to higher proposed rate increases in the future.

That Kurt DelBene (husband of US Rep. Suzan DelBene) is taking the reins is a very good sign.  Also a good sign:  how quickly an exchange can get turned around with the right leadership.  Oregon has gone from 700 enrollees to 7,500 in just the last week.  One would think a turnaround could happen in AK, too.

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3. A retirement, a new CEO and a new role

Three noteworthy transitions are taking place this month in Alaska health care.  First, the inimitable Delisa Culpepper is retiring from the Alaska Mental Health Trust Authority.  She is a force of nature, and one unlikely to stay on the sidelines long.

At Alaska Regional Hospital, Julie Taylor starts there as the new CEO this month.  And, Laura Hudson, the now former Executive Director of Alaska Physicians and Surgeons has taken a job with Aetna as it expands in the state.

4. The hole in Alaska’s safety net

One of the implications of not expanding Medicaid in Alaska is that a major hole exists in the safety net for Alaskans (the pink portion in the image).

Whereas a family of four earning $117,760 per year is eligible for subsidized health insurance, the person making $14,349 will have to pay the full retail price for private coverage.

There are right ways and wrong ways to provide coverage – or not provide coverage – to medical care to Alaskans.  It’s a complex conversation of economics, social justice, and personal responsibility.    But, a model that favors incomes of $100,000 over incomes of $10,000 doesn’t seem the way to do it.

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5. School district benefits on the table in 2014 session

Last May, we highlighted an issue to keep your eye on:  who controls school district benefits.  That issue surfaced again at a December 10th hearing by the Senate Finance Committee.  It reviewed findings of a study by the Hay Group on how school districts pay for health benefits.  The study recommended moving the control of those benefits from trusts, like that operated by NEA-Alaska, to the state.

Highlighted in the findings was the self-reporting from 27 of the 53 districts that broker fees were about $4m.  Ironically, it also noted that AlaskaCare for state employees was generally a richer benefit package than those offered to district employees.  District employees, in the aggregate, pay about 11% of their own healthcare costs versus a 15% average of districts nationwide.

A primary area of savings identified by the consultants would come from moving patients to a narrow “optimized provider network” – what they called “low hanging fruit.”