What could splitting DHSS accomplish?

Alaska Department of Health and Social Services Commissioner Adam Crum last week appeared on the Governor’s FirstHand podcast to talk about the proposed splitting of the department.

Gov. Mike Dunleavy is expected to issue an executive order on the first day of the 2022 legislative session which will split the department in two. The order will become effective July 1, if the legislature does not block it, as it was willing to do last year. The order would move the Office of Children’s Services, Division of Juvenile Justice, the Alaska Pioneer Homes and Alaska Psychiatric Institute to the newly created Department of Family and Community Service.

 

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The new Department of Health would include the Divisions of Public Health, Behavioral Health, Healthcare Services, and the Division of Senior and Disabilities Services, which will provide oversight for Medicaid programs.

The sprawling department, which Crum called a “beast”  has a budget of roughly $3.5 billion, and the split could help make managing services more efficient.

We have to have the management structure in place to make sure that we’re doing the best we can do from a managerial and administrative side, that recipients are receiving benefits that payments are going through and that programs are designed the right way,” he said. 

Currently, the department has a commissioner, two deputy commissioners, an assistant commissioner for finance, and the chief medical officer for public health to oversee some 3,500 employees. The small executive team has been trying to manage all departments. Crum said Medicaid overshadows other services, accounting for roughly one-third of the state’s total budget. Splitting the departments could create more space for other offices.

“What that means is every week we are writing a check between $40 and $50 million out the door to Medicaid providers,” Crum said. “That’s how much money the Medicaid program is, and what it means to the overall health of the system of health care for just the employer market. We want to make sure that the system is running the best way possible.”

Crum said they’re working to make the transition essentially unnoticeable to Alaskans who use its services. He said there would be “no earth-shattering moment” for patients or beneficiaries. The largest impacts will be behind the scenes, among internal divisions such as finance and management, including payroll, human resources and IT services departments.

There have been concerns about the split. Dunleavy introduced a similar executive order in 2021, but ended up rescinding it due to technical errors and a lack of support in the legislature. Stakeholder concerns include whether people who are eligible for Medicaid, but live in state-owned facilities like a Pioneer Home, would have their Medicaid eligibility disrupted. Crum said it wouldn’t. Someone who is eligible for Medicaid and receives services from a Medicaid provider would still be covered under that service, he said.

The split could also help facilitate the department’s work to move away from a fee-for-service model. Alaska is one of the last states in the country to continue using such a model for providing care, and the federal government is pressuring them to move towards a value-based Medicaid care model.