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AHCCCS director says health care math doesn’t add up

Tom Betlach calls himself a “numbers geek,” which is a really good thing considering he’s in charge of managing Arizona’s Medicaid system while the state’s finances are in the gutter and while the federal government is requiring an even larger investment in health care.

Having worked in the budgeting offices of two former governors, Betlach had to develop an ability to take a big step back and survey how to best use finite resources. And he says he developed his budget skills by working under a series of great mentors.

Now, though, even Betlach says he isn’t sure how to balance the need to do more with less. He says dropping out of the Medicaid program would be disastrous, but he also says the state doesn’t have enough money to meet its federal obligations. It’s a $1 billion problem that so far lacks a solution.

When you first decided to go into government work, was health care something you wanted to get into, or were you just looking at public administration generally?

When I came out of the University of Arizona, I was interested in budgeting and finance, so the budget office served as a natural place to start.

Also the great thing about the budgeting office is you can be in a meeting talking about transportation policy, then the next hour you go to education, the next you go to health care, so you get a broad spectrum of what the state government has to deal with.

What was the most important lesson you learned from working in strategic budgeting at the state level?

In any environment you work in, one of the key things you need is good mentors. I’ve been fortunate to have good mentors everywhere I’ve gone. It’s really the ability to get exposed to different types of leadership styles and methods, and the ability to learn from those different methods. So I think back over the years, and it’s not just the budgeting aspect, but the ability to get exposed to those types of leaders.

So what defines your style of leadership?

At the end of the day, I’m kind of a numbers geek, and I want to see data.

I tend to ask my managers to provide me with information so that if we have to make decisions — you’re never going to have all the information that you need — but that you have the best data available and that you’re making decisions based upon that information.

So it’s inclusive, wanting to get input from the managers at all times, but also trying to get the data we need so we can make the most appropriate decisions. And then providing those to the governor and the Legislature, because they need that data to make decisions as well, especially during these difficult budget times.

Government administration of health care is a pretty hot topic this year. When you tell people what you do for a living, what reaction do you get?

I usually do get a reaction.

The good news is, when you say you’re the director of AHCCCS, almost everybody has a story. Most of them are positive in some way. If it’s negative, they usually have some positive aspect and some negative aspect that they want to transmit to you.

So, I think it is an area, especially recently with the health care reform debate and those types of things, that people have a pretty set opinion. But when you look at health care and what the government’s role is — and the government is involved to the tune of about 50 percent in terms of the payments related to health care — I think we can have a whole interesting policy debate about that. But at the same time, providers are dependent on Medicare and Medicaid to support the same health care infrastructure that the commercial side has and that private employers use as well.

So, you know, government is an important player, and the policies government adopts in regard to health care will impact everybody in that system, and I think that everyone needs to recognize that.

You just spoke about the stories people have dealing with AHCCCS. What story sticks out for you?

I think we have those types of impacts on a daily basis, especially with the budget challenges we’re going through.

We are cutting a number of benefits as a result of the budget challenges. You’ve got the KidsCare program that is now frozen, and we now have a wait list of over 30,000 individuals.

We’ve got a number of challenges that exist throughout the system, and trying to make that work is a difficult balancing act, and the Legislature and governor have had to deal with that as part of their policymaking in establishing the budget.

But I can’t give you a specific example other than to say that when you sit at home at night or you wake up in the middle of the night you’re just thinking through all of these issues.

You know, we cover 1.3 million Arizonans. That’s one in six, roughly. So that impact is felt throughout the state of Arizona in terms of impacts that we’re making, and that state government is having to make do with where we’re at from our fiscal perspective.

You said you’re a numbers and data geek. Are you most comfortable dealing with that, taking the larger perspective on issues, or do you like to get in the trenches and deal with what’s happening on the front lines?

Well, the role as director is different than what it is as a deputy director. So, as a deputy director, I was involved in a lot of operations. I was able to get down into the nitty gritty of a lot of what we were doing as an agency and how we were implementing various changes throughout the organization.

When you are the director, you have to deal a lot more with stakeholders, so you have to make sure that communication is going back and forth between AHCCCS and the health plans, the AHCCCS program and the advisers, the AHCCCS program and the policymakers down the street.

So the role has changed somewhat, and it’s adapting to the change that has been part of this transition process, but it’s still something I enjoy and it’s something that needs to get done when you’re a $9.5 billion program and you interface with so many different parties and people have a vested interest in what’s going on in this program.

Was there a lot of hand-wringing while the new federal health care bill was being debated and discussed?

I don’t know that I’d say there was hand-wringing.

Well what was it like for you during those months?

We have these two parallel universes.

You have the state budget that was moving along. The governor and Legislature were trying to deal with the multi-billion dollar structural challenge they had to face and make decisions about. So they were making progress, and the governor released her budget in January, and they moved forward and finally adopted that budget.

At the same time, you had these ebbs and flows at the federal level. The hand wringing — the concerns we have as a program, are some of the fiscal ramifications as it relates to the program, and that we aren’t able to make changes on the eligibility side so that we got locked into place with a program that was at pre-recessionary levels, and now it’s difficult for the state to afford it, when you look at the grand scheme of things.

So, how was the state going to continue to pay for the coverage levels that currently exist? And Arizona is only one of five states that cover childless adults up to 100 percent of the poverty level, so how are we going to afford that between now and January 1, 2014, before we see any benefit from the federal government in terms of additional assistance?

I think that the hand-wringing — or concern — is how are we going to keep in place the program that we have, given where the state’s overall finances are and then when you look at all the other challenges for health care reform, and a staff that’s down 30 percent, and no additional resources coming from the federal government, how are we going to deal with all of those mandates?

That’s what we tried to communicate with the Governor’s Office throughout the year when the health care debate raged on at the national level. And I think that’s the concern that the governor conveyed to the congressional delegation and even the president in the many letters that she sent and forwarded to them outlining all the concerns that she sees as the state’s chief executive.

So those are the types of issues that we really had concerns about as it relates to health care reform, and still do. The state’s looking at having to come up with, if you assume that the federal government will continue the stimulus funding until June 30 — we’ve got to come up with a billion dollars in 2012.

So that’s a challenge.

So once the federal health care bill was passed, were you able to sleep better, at least knowing what the outcome was?

I don’t know that I’m sleeping any better now, because now you have 2,500 pages, and depending on what happens with all the lawsuits the organization has three years to do all these things.

So from that perspective, we did a lot of things in terms of analysis. But now you’re talking about many changes that will have to exist throughout the organization on the IT side, the eligibility side, working with other stakeholders as it relates to what the state is going to do with an exchange. And how’s that going to get set up? Medicaid has to play some role in that.

So that’s the list of things that keeps you up at night now. All that needs to get done over the next three years, which sounds like a long time, but it really isn’t when you look at the significant changes that need to take place.

Can Arizona afford what we’ve been given in the new initiative, or can we not afford to take those directives?

Well, let’s start with the first question: Can Arizona afford to walk away from Medicaid?

That’s really the choice the federal government has given states. You either participate in Medicaid, or you don’t participate in Medicaid.

So what are the ramifications of not participating in Medicaid? I think they’re pretty significant; you’re talking about pulling $7 billion out of the health care system in the state of Arizona.

That’s the same health care infrastructure, the same hospitals, the same set of providers that everybody relies on in the state. So the impact of walking away from Medicaid is enormous.

I think that’s why you’ve seen general support from the Legislature to move forward with the KidsCare restoration, and the fact that we’re going to have to support Proposition 204. So that’s the answer to the first question. It seems to be getting answered: “Yes, we need to continue the Medicaid program,” which I think is the right decision, given the impact throughout health care.

Can the state afford the program that is currently established? I think that the answer, given where we’re at economically and the budget gaps that exist, that’s going to be be a real challenge for us.

If Congress extends the stimulus dollars, we’re OK for 2011, but in fiscal year 2012, there’s going to be a sizable hole and challenge there for policymakers.

I don’t think the state, given its current structure can afford Medicaid, but it’s going to have to come up with an answer.

What’s the biggest misunderstanding the public has about AHCCCS?

I don’t think people recognize the model that we have, in terms of leveraging the private sector. So while you’ve got the AHCCCS administration in place, and we set policy, and we have fiduciary oversight over the dollars, at the end of the day, 99 percent of our dollars are getting contracted out through competitive bid process with our health plans.

We have for-profit and non-profit health plans that come into the market, and every 5 years we have to compete to retain that business. They’re the ones that are responsible for going out and contracting the networks and doing all that other stuff.

So, the Arizona model … is really a public-private partnership and really leverages the competition of the private sector so that at the end of the day, we’re able to keep our cost trends down below what other states have recognized.

And you incentivize positive outcomes, like the fact that we have a very high percentage of our long-term care membership in the home- and community-based setting rather than sitting in institutions.

And, again, I’m not trying to take any credit for this because people a lot smarter than me established the model and worked hard to make sure it was up and running. My job is to not screw it up.

Your office is right next to Chase Field.

Yeah. It’s pretty depressing actually. Want to know why?

Because you’d rather be there than in here?

Yeah. They have these day games. Since I’ve been here, for eight years now, I haven’t been to one day game. You sit here and watch people go by, and wonder, “What did I do wrong with my life?”

These thousands of people are parking here, walking over to watch a baseball game, maybe have a beer, and I’m sitting in here at my office. Isn’t that pathetic? It’s sad.

Let’s do some word association I’ll say something, you fire right back.

Reduced eligibility:

Maintenance of effort battles

Federal funding:

Two-thirds to three-fourths

Eileen Klein:

Smart lady

Budget cuts:

Never-ending cycle

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