Expanded Medicaid coverage for drug addiction to start July 1, but money for new services is in limbo

The Alaska Department of Health and Social Services rolled out additional details today of how Alaska’s Medicaid program will be able to cover a wider array of drug addiction treatment starting July 1, which is in part a response to Alaska’s rising opioid abuse epidemic.

The changes will allow more treatments like intensive outpatient treatment, residential treatment, hospitalization, withdrawal management and community support services to be billed to Medicaid and introduces other methods to screen people for drug addiction and connect them with useful services.

“These changes will go a long way towards rebalancing Alaska’s behavioral health system which will decrease our use of acute, costly services while improving our ability to intervene earlier with Alaskans who are struggling with addiction,” said Deputy Commissioner Albert Wall in a prepared statement accompanying the release. “The 1115 waiver makes it possible for providers to offer more community-based treatment options and local resources that help support recovery, health and wellness.”

The waiver application process required the state to identify underserved areas of the state in need of additional substance abuse treatment services. The application found that drug treatment services in effectively every corner of Alaska fell far short of the need.

Recognizing that much of Alaska’s crime is driven by substance abuse, the Legislature had hoped to kick-start the opening of new substance abuse treatment beds with $10 million in capital project grants.

But money to build out those services and add additional treatment beds throughout Alaska is in limbo due to the Legislature’s failure to fully fund the capital budget. That money was supposed to come out of out of the state’s Constitutional Budget Reserve.

The Legislature failed to tap into the reserve, which needs a three-quarter vote in each chamber, after minority Republicans made their votes contingent on including a $3,000 dividend in the bill. Without the CBR vote, there’s not money for the grants—as well as a slew of other issues including the crime bill itself and the match to receive federal highway dollars.

The new substance abuse treatment services weren’t expected to require additional state funding outside of Medicaid billing thanks to the expanded coverage of the 1115 waiver.

The capital budget is not currently on the special session call for July 8. Legislative leadership urged the governor to add it to their call when they announced plans to skip out on the governor’s request to hold it in Wasilla. It’s unclear just what a renewed capital budget would look like, but it could give the Legislature an opportunity to reopen what it has already approved.

“Importantly, the Governor’s proclamation also fails to include the Fiscal Year 2020 capital budget. If the capital budget is not finalized in July, Alaska’s private sector industries could be devastated by forfeiting nearly $1 billion in federal highway and aviation projects because required state matching dollars were not provided,” said a joint statement released by Senate President Cathy Giessel and House Speaker Bryce Edgmon. “We respectfully urge the Governor to add to his call the capital budget.”

More about the waiver

The waiver was put into the federal government last year as part of a broader effort to get more behavioral health services covered by the safety net program. The original application sought to extend coverage for “Alaskans experiencing serious mental illness, severe emotional disturbance, substance use disorder (SUD), co-occurring substance use and mental illness, and at-risk families and children.”

The application was whittled down to just substance abuse disorders in order to speed the process along. The other elements of the proposal are still under review by the Center for Medicaid and Medicare Services.

Waivers allow states to tailor the operation their health care programs to, ideally, better address the unique challenges faced in a state.

The state already received a waiver allowing Alaska to offer supplemental insurance to insurance companies for high-cost patients on the individual marketplace, a concept known as reinsurance that has resulted in a 25 percent drop in marketplace premiums since it was implemented in 2017.

The Dunleavy administration is in the early stages of considering a push to transform Alaska’s Medicaid program from an needs-driven open-ended program to a capped block grant system. The administration currently has a $100,000 contract out to study block grants, Medicaid work requirements and shifting some Medicaid recipients to private insurance.

That study is due to the administration by June 30.

Covered services

According to a DHSS memo earlier this month, here’s the specific types of services that would be covered under the waiver:

  • Intensive Outpatient Program (IOP): Structured programming services, 9-19 hours per week for adults (6-19 hours for adolescents), focused on major lifestyle, attitudinal and behavior issues that impair the person’s ability to cope with major life tasks without use of substances.
  • Partial Hospitalization Program (PHP): Clinically intensive outpatient programming for 20 or more hours per week that address the same issues of IOP but also have the capacity to treat individuals with substantial medical and psychiatric problems.
  • Residential: Evaluation, observation, medical monitoring and addiction treatment services provided in an in-patient, 24-hour supportive living environment.
  • Withdrawal management: Assessment, supervision, observation, and support services provided in ambulatory, clinically managed or medically monitored settings depending on the level of the individual’s need.
  • Community Recovery Support Services: Counseling and wraparound support for newly recovering people to prevent relapse and promote recovery.

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