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A new lawsuit over Alaska's Medicaid backlog asks a judge to order faster processing

A hospital hallway on April 7, 2020 in Juneau, Alaska. (Rashah McChesney/KTOO)

Just days after his death, Sierra Ott's young son Liam's condition worsened. His doctors said he would need surgery. He took an emergency flight from Fairbanks.

“While he was there, it was discovered he had hemophilia due to a heel prick that never stopped bleeding,” Ott said in a phone interview Friday. “He was diagnosed with severe hemophilia A, and from then on, the hospital encouraged us to apply for TEFRA.”

TEFRA is a form of Medicaid, the federally funded insurance program for children with disabilities. It is named after the Tax Equity and Fiscal Responsibility Act of 1982, the law that created the program.

So Ott filed an application on her son's behalf in October and was told the application would be processed within 90 days.

But those 90 days expired six months ago – in January. From time to time, she called the social welfare office to ask about her application. She said she was told to check again later or the application would be in the hands of another office.

Thousands of Alaska residents are facing a similar problem. Last month, state officials told Alaska Public Media that more than 15,000 Medicaid applications were backlogged. The state attributed that to the expiration of pandemic-era requirements that prevented the state from dropping people from the insurance program. The Department of Human Services said the state's outdated computer systems made it difficult to comply with new federal requirements that prevent children from being kicked out of Medicaid, prompting the state to temporarily halt processing applications.

Today Liam is 11 months old and is preparing to crawl.

“He's doing really well with the medication he has to take, even though it's an injection,” Ott said. “He's handling it like a champ.”

But it's not cheap. Hemophilia treatments are notoriously expensive. Ott estimated she would have to pay about $8,000 a month out of pocket.

Ott said she was lucky. Her husband is a retired veteran who is covered by the government's military health insurance program, and it covers most, but not all, of her son's medical expenses.

But Ott knows that not everyone is so lucky. And that gives her cause for concern.

“What would we do if we didn't have our insurance? We would have to talk about this every week, do we pay for this or my son's medication?” Ott said. “When we have that conversation, I know there are families who are having that conversation.”

So she filed a class action lawsuit demanding that the state comply with deadlines set by state and federal Medicaid laws.

In most cases, the state must decide on an application within 30 days. People like Liam, who need a disability assessment, have as long as 90 days.

Internal data show that the state processed only about 40% of new and renewed Medicaid applications on time in the fiscal year ending last June.

Ott's case involves the disability determination, and the Health Department said through a spokesman that the agency has limited control over how long that process takes. The disability determination is split between the federal Social Security Administration and the state Department of Labor, the spokesman said. The Department of Labor did not return a call seeking further details as of Friday afternoon.

And state Social Security disability assessment offices across the country are overwhelmed. In November, new claimants had to wait an average of more than seven months to find out if their disability claim was approved, according to government data aggregator USAFacts.

Deb Etheridge, director of the Department of Public Assistance, told Alaska Public Media last month the state is working on its side of the problem. She said the department is hiring new staff, working overtime and fixing the computer system problems that have been a reason for the department's backlog. And new internal data shows the state has made some progress. In the year ending June 30, the state processed 45% of new applications and 55% of renewals on time. But still, about half of applications are not processed on time.

Medicaid coverage may be retroactive once approved.

“Even if we have not determined eligibility, Medicaid will reimburse those medical expenses up to the application date,” Etheridge told Alaska Public Media last month. “And under certain circumstances, we can retroactively look at an additional three months to see if you had any medical expenses.”

But that's not enough to actually give people access to health care, says Ott's attorney, James Davis, a partner at the civil rights law firm Northern Justice Project. Davis says he's been getting calls about the issue for months, and he says telling Medicaid families to beg doctors to wait months for payment — or to pay the bills themselves — isn't a viable solution.

“That's why they apply for Medicaid. They don't have that kind of money,” he said by phone Thursday. “The retroactive coverage pretends that the person has health insurance in the meantime. But … the fact is that the person doesn't get health insurance in the meantime.”

This is just the latest problem in a long line of cases in which low-income families are prevented from receiving benefits to which they are entitled by law, Davis said.

Thousands fell behind on the state's Supplemental Nutrition Assistance Program just this year, prompting Davis's company to file a separate lawsuit. And the Alaska Beacon reported in March that the state was also struggling to stay current on its heating subsidy program.

Davis said the families hardest hit are those who can least afford it.

“All I can tell you is, if the folks in Turnagain or Hillside in Anchorage didn't get their Permanent Fund dividends on time and had to wait for months, all hell would break loose,” Davis said. “Heads would roll.”

In cases where an upfront payment is required, DPA Director Etheridge told Alaska Public Media that applicants can request an expedited application, which is approved within hours. Many applicants can also be automatically approved online at Healthcare.gov if they meet income requirements.

But Ott never asked for her application to be expedited. She didn't know that option existed. People applying for benefits shouldn't have to say a few magic words like “expedite my application” to get their coverage, Davis said — the state should just follow the law.

Anna Harden

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