Lawsuit over Medicaid rates is settled

The Alaska Department of Health and Social Services (DHSS) and Alaska State Hospital and Nursing Home Association (ASHNHA) have settled pending litigation related to cost containment regulations. The regulations sought to reduce Medicaid reimbursement rates for certain providers for fiscal year 2020.

The regulations were originally filed as emergency regulations that DHSS intended to make permanent. Emergency regulations can be adopted and implemented prior to any public notice and comment process, but can only become permanent if the process is followed. ASHNHA filed a lawsuit challenging both the emergency and permanent regulations. A preliminary order from the court indicated the judge was inclined to agree with ASHNHA on its challenge to the emergency regulations but not on the permanent regulations.

“I think this is a fair result for both parties,” DHSS Commissioner Adam Crum said. “Instead of spending more time in a courtroom, both sides sat down to see if there was a path forward. This settlement provides the process ASHNHA feels providers need while also recognizing the current finances of the state.”

“We appreciate the state’s good-faith efforts to resolve this lawsuit,” ASHNHA President/CEO Becky Hultberg said. “Because of the complexity of health care, it is important to ensure adequate public process when the state makes difficult decisions about health care coverage, access or reimbursement. This settlement recognizes the importance of that public process, while ultimately enacting the rate cut planned by the state.”

This settlement will allow Medicaid providers who were affected by the emergency regulations to request a settlement payment. Providers will be notified via the weekly remittance advice regarding how to request a settlement. This remittance advice will go out within five days of the court signing off on the settlement agreement.

This settlement relates only to the emergency regulations. DHSS will continue the process of making the regulations permanent as of Oct. 1, with an exception of Oct. 31 for mental health physician clinic services, at which point these cost-containment measures will be effective for the remainder for the fiscal year.

Neither party has made any admissions or concessions regarding their respective legal positions taken in the case, according to a news release from the state Department of Law. The settlement does not impact administrative rights to challenge permanent regulations. The settlement is a final resolution of the litigation and the court’s order approving the settlement will not be subject to appeal, according to the release.

The Anchorage Daily News quoted Hultberg as saying, “This lawsuit was about ensuring that as the state makes decisions about public services through the regulatory process, that the public and other stakeholders have an opportunity to weigh in. And I do want to note, the state has achieved its ultimate objective, which was to reduce rates.”

Click here to read the full text of the settlement and accompanying documents.