How small healthcare providers in Alaska work with Medicaid to deliver vital services
Wil Sundberg, owner of Alchemy Orthotics & Prosthetics, works on a prosthetic leg. Alchemy fabricates prosthetic and orthotic devices for adults and children out of its Anchorage office.
Medicaid was enacted by the federal government in 1965 to pay for certain healthcare services for low-income families with dependent children and the aged, blind, and disabled. Though federally mandated, states share the cost of the program with the federal government, and each state creates and manages its own Medicaid plan, subject to federal approval.
Over time the program has grown to include more than fifty mandatory and optional eligibility groups; Medicaid expansion in 2015 further increased the number of Alaskans eligible for Medicaid. According to the Alaska Department of Health and Social Services, which administers the state plan, Alaska’s.
Medicaid program covers more than 200,000 men, women, and children, providing access to healthcare services they couldn’t otherwise afford.
Healthcare providers aren’t required to accept Medicaid and for small businesses, the idea of dealing with the bureaucratic red tape that often accompanies government programs can make it seem like an unattractive option. And while some of those concerns are valid, they aren’t insurmountable.
“When you’ve got good front office staff, it’s not that terrible,” says Heidi Bennetts, chief administrative warrior at Alchemy Orthotics & Prosthetics in Anchorage. “You just have to have someone in that front seat who has a backbone and is kind and capable of directing people in the right direction and eloquently explaining what the rules are.”
Becoming a Medicaid Provider
Healthcare providers and facilities that want to become an authorized Medicaid provider must apply through the state’s online provider portal. There are no prohibitions on who can accept Medicaid, so long as providers offer a covered service and can produce the required documentation.
“If there’s a service that’s covered, then any willing provider who enrolls can provide that service,” explains Monique Martin, director of government relations and regulatory navigation at Alaska Regional Hospital.
Some documents, like a National Provider Identifier, current business license, proof of malpractice insurance, and proof of professional licenses, are required of all providers. Other information, like certifications or accreditations, are specific to each practice area. None of it, though, is that different from what’s necessary to become a preferred provider for any other insurance company.
“For credentialing it’s not any different than getting into a [preferred provider organization],” says Cathy Bessent, office manager at Alaska Dentistry for Kids, a pediatric dental practice in Anchorage. “You have to show your medical malpractice insurance, your licensing, and a history of practice. It’s pretty minor when it comes to that. It’s just time consuming because you have to pull all that up.”
First time applicants, those wishing to reenroll in the program, and providers up for revalidation, which occurs every three to five years, must pay an application fee. According to the department website the fee for 2019 is $586, although the amount changes annually.
Medicaid providers are also subject to federal and state audits and, effective June 2018, must perform self-audits once every two years. The self-audit requirement was implemented to “ensure services billed to Alaska Medicaid are supported by adequate documentation,” according to a FAQ on the department’s website.
Before Medicaid increased its reimbursement rates for orthotic and prosthetic devices in 2019, Alchemy Orthotics & Prosthetics owner Wil Sundberg wasn’t sure how much longer he’d be able to accept Medicaid.
“If there’s a service that’s covered, then any willing provider who enrolls can provide that service.”
Medicaid Reimbursement Rates
One of the biggest concerns for Medicaid providers is the reimbursement rate. Healthcare providers who accept Medicaid are contractually obligated to accept the reimbursement rate, which is set by the Office of Rate Review. The established rates, however, aren’t always commensurate with the provider’s actual fee.
“Medicaid is not a great payer and, in some cases, pays less than what the service costs,” Martin says.
Like contracts with private insurance companies, providers cannot seek reimbursement from patients for the difference between Medicaid’s allowable rate and the provider’s actual fee, a process known as balance billing.
“When you contract with Medicaid you agree to their fee schedule,” Bennetts says. “You accept the Medicaid rate as payment in full.”
Bessent estimates that Medicaid’s reimbursement rates for dental services are 65 to 70 percent of Alaska Dentistry for Kids’ fees. The sheer bulk of the office’s Medicaid case load helps offset the amount the practice must write off.
“I would say our patient load is probably 40 percent Medicaid, so it’s not horrible when you consider the amount of treatment that we see,” she says. “It is profitable to us.”
That wasn’t the case for Alchemy Orthotics & Prosthetics, which provides orthotic and prosthetic devices to patients with amputations, abnormal gaits, or other skeletal deformities. Owner Wil Sundberg says reimbursement rates for durable medical equipment had not increased in twelve years, putting their rates 20 percent below those of other providers.
“You would submit a $5,000 payment and get reimbursed one-fifth of that, maybe,” he says. After years of “getting the run around,” Senator Cathy Giessel was finally able to get reimbursement rates increased. “It didn’t make up for the [lean] years, but at least it got us back in the game,” he says.
Become an Industry Sponsor
Until Medicaid increased its reimbursement rates for orthotics and prosthetics this year – the first increase in 12 years – Alchemy Orthotics & Prosthetics owner Wil Sundberg said his practice was only reimbursed one-fifth of what it cost to make the devices his patients needed.
Medicaid’s billing process can also cause headaches with excess paperwork and delayed payments, particularly if Medicaid isn’t a patient’s primary source of coverage.
“If you’ve got a clean claim—and what I mean by a clean claim is nothing got kicked back for being missed—it’s usually within a week or two that you get paid,” Bennetts says.
Where the process can get difficult is with cases in which a patient is covered by both private insurance and Medicaid.
“A normal patient that comes in and we can check eligibility and get things sent in and the only insurance they have is Medicaid or Denali Kid Care, their claims pretty much sail through,” Bessent says. “We don’t have a lot of problems with that; the problems come into play when you’re dealing with a third-party payer.”
Because Medicaid is a payer of last resort, providers must submit all claims to the patient’s primary insurance before submitting to Medicaid, Bessent explains. That requirement stands even if they know that the patient’s primary insurance doesn’t cover a procedure.
“It’s very cumbersome, because for every visit you must bill to that third-party insurance and get a denial,” she says. “If treatment is parceled out over several months, it delays payment.”
Bennetts agrees that the rules when Medicaid is a secondary payer can cause problems.
“They don’t allow electronic claims for secondary coverage, you can only submit them on paper,” she says. “If it’s not lined up properly, it gets kicked back. If it’s handwritten, it gets kicked back. I have to say that’s the only pain in the butt.”
Despite the quirks, Bennetts says the billing process is manageable.
“I guess that’s just a matter of perspective,” she says. “If you’ve got a decent system in place, it’s not that difficult at all.”
Changing Political Landscape
Funding for Alaska’s Medicaid program has been a constant source of debate in Juneau, with lawmakers looking at methods of cost containment ranging from a proposed 5 percent rate reduction (which went into effect October 1) to the elimination of certain covered services like adult dental.
Uncertainty over what services the state will continue to fund and at what rate—as well as whether the state will have the money to pay its bills at all—can negatively affect a provider’s willingness to accept Medicaid.
“When you stop doing rate rebasing, when you withhold inflation, when you cut provider rates, there’s a point where you start to go backwards,” Martin says. “If states reduce reimbursement too much, it could really impact a provider’s willingness to take Medicaid recipients because that’s not a really good business model.”
Others take a more cynical view.
“The paranoid part of me says, ‘Let’s make it so hard for providers and pay so little so they won’t want to accept Medicaid anymore,’” says Dee Berline, a pediatric occupational therapist and owner of Therapy by Deesign in Anchorage, of the state’s actions. “I don’t know that that’s true, but I don’t know that I’m the only one that says that.”
These concerns leave many providers wondering whether they’ll need to scale back or even stop accepting Medicaid altogether.
“There’s always the looming threat of the state not making payments when they’ve run out of money,” Martin says.
That’s especially true for providers like Alchemy, which provides its patients with a tangible product. Sundberg likens it to squeezing “all of the toothpaste out of the tube,” though he says it’s a problem his practice faces not just with Medicaid but insurance companies as well.
“We front everything that walks out the door,” Bennetts explains of the prosthetics and orthotics Alchemy makes for its patients. “We have to pay our suppliers for whatever was used to make that device. That’s what gets scary—what’s the longevity of the company?”
Changing politics aren’t the only concerns. Delays in the department’s ability to update its online manuals to reflect policy changes is another source of frustration, with providers sometimes not realizing changes have been made until a claim is denied.
“[The department] will change something, but you can’t find it anywhere in their policies,” Berline says. “They don’t update their policies fast enough to catch up with what the new ruling is, so you can be out of compliance and not even know it.”
The state’s emergency reduction of Medicaid reimbursement rates this past June is the most recent example. Berline gets the state’s online public notices via email and knew about the reductions. But she says she knows others who found out only when they began receiving reduced payments.
Bessent was one who was caught unaware.
“It’s probably my responsibility to know about it, but it was kind of a shock,” she says. “It would’ve been nice to have a letter or some advanced time.”
Despite concerns over funding and the sometimes cumbersome billing practices, providers say there are definite advantages to accepting Medicaid. One is the promise of an almost steady income stream.
“I’ll be honest with you, one of the advantages is they pay weekly,” Berline says. “For the most part, what Medicaid pays, they pay on time.”
There’s also the satisfaction that comes with providing medical care to people who would be unable to pay out-of-pocket, with many providers seeing it as a form of altruism.
“Some providers take Medicaid patients not because they want to get rich but because they think it’s the right thing to do,” Martin says.
It’s a sentiment echoed by Sundberg, made stronger by the fact that the equipment he provides directly affects his patients’ livelihood.
“If we can provide [our patient] a leg or fix up what they have, that means they can work and pay for their family and become a productive member of society,” he says. “It’d be difficult to know you can fix something and have the ability to do it, and you just elected not to take Medicaid.”
“The Alaska Department of Health and Social Services will change something, but you can’t find it anywhere in their policies. They don’t update their policies fast enough to catch up with what the new ruling is, so you can be out of compliance and not even know it.”
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