Members of the medical community testified at a legislative hearing today about the numerous failures with the state’s new Medicaid payment system, an online system that’s been in the works for seven years and went into effect in October. Some of the providers who testified said that because the payment system doesn’t work and they aren’t getting paid to provide services, they are on the brink of going out of business. One said that she had to take money out of her children’s college fund so that she could keep her assisted living facility in Fairbanks open. Others said that they have had to hire additional staff to deal with the problems in the new system.
House Health and Social Services Committee Chair Republican Rep. Pete Higgins, a Fairbanks dentist, said that the system makes the problem with Obamacare’s rollout “look good.”
The Department of Health and Social Services contracted with Xerox in 2007 to upgrade the 25-year-old Medicaid payment system. The total contract was for $146 million, including the costs of continuing to run the system for a certain number of years. It was supposed to be completed by 2010. Instead, it rolled out in Oct. 2013, and immediately caused huge problems to medical providers who bill the state for Medicaid services.
Alaska is not alone with the issues it’s had with the system. New Hampshire and North Dakota have also experienced problems with the same Xerox system. In Montana, as of December, Xerox missed three deadlines and was facing penalties of $30,000-per-working-day, according to news reports. Montana was considering shelving the system.
In Alaska, the online system apparently was not thoroughly tested before it went live. It did not work, and for months, it appeared as if little was being done to get those providers information regarding payments for medical services.
According to a chart provided by Xerox, in November the call line fielded about 3,500 calls. The average time to get through for those who did not give up was 54 minutes. In December, that number dropped to an average of 45 minutes.
David Hamilton, a representative from Xerox, told the committee that calls now are being answered in five minutes or less. However, some who testified disputed that number. They said when they called, they were still put on hold for much longer than that, and when they did get a person to speak to, the person often didn’t have answers to questions.
“Many have quit calling the line” said Karen Perdue, director of the Alaska State Hospital and Nursing Home Association. Perdue conducted a survey of the association’s members last week. The total amount of money owed by the state to those who answered the question was $198 million. Although she said that the state has been helpful and responsive, 21 hospitals rated the new system’s timeliness and accuracy as either poor, very poor or barely acceptable.
Because of the problems with payments, the state began providing so-called “advances” to providers based not solely on what they billed, but based, at least in part, on historical data. All told, according to DHSS Commissioner William Streur, the Medicaid department has sent providers $118 million in such advance payments.
However, because payments have not corresponded with the patient services, many providers are leery of taking the money, fearing the state will audit them and they will have to try to match payment with services.
MaLane Harbour, the director of Primrose Retirement Communities in Wasilla, said that if such an audit does take place, it will be an “accounting nightmare.” She said that the center has hired a new staff member just to deal with this, and that it’s negatively effecting the patients.
Lisa Smith, director of Choices, an Anchorage mental health center, said that her reserves have run dry, and that she requested advances twice in January but hasn’t heard back. “If this can’t be corrected we’ll be forced to close our doors before the next fiscal year,” she said.
Hamilton, from Xerox, told the committee that the system has improved over time, and they expect to get the bugs worked out in the coming months.
“We do understand the impact, and we apologize for the interruption,” he said.
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