Issue 3: The Equitable Distribution of Resources to Rural Communities

Goal: Examine and implement differential funding mechanisms for rural mental health services.


Community mental health programs throughout the state are predominately funded through Division of Mental Health and Developmental Disabilities grants, Medicaid and other third party sources. While grant funds have been reduced in recent years, there has been a substantial increase in Medicaid funding for mental health services. This growth in Medicaid has occurred primarily within the more urban areas of Alaska. An unintended consequence of cost-shifting from grants to Medicaid is that most rural communities are not full participants in Medicaid refinancing, and are therefore not receiving adequate financial support to address pressing and fundamental mental health needs.

Though many rural mental health programs may be eligible for third party and Medicaid reimbursement for services, these revenue sources have proven to be insufficient and unreliable in supporting program operations. In many cases, the pool of Medicaid and third party clients is small in rural communities, which creates a disincentive for pursuing these reimbursement options. In addition, rural programs often lack the personnel resources and administrative infrastructure to capture Medicaid reimbursement, and are reluctant to divert scant existing resources away from direct client services. It is also difficult to receive Medicaid and third party reimbursement for prevention and early intervention efforts, which are perceived as essential in rural communities.

The advent of managed behavioral health care presents another potential threat to an already eroding funding base for rural mental health services. Under typical managed care arrangements, providers enter into fee-for-service arrangements with managed care organizations which function as intermediaries between funding agencies and the service providers. Many rural programs would not be able to maintain their current base of services in conventional managed care arrangements due to the remoteness of their programs, limited personnel, and small client populations.

The combined impact of diminishing grant funds, Medicaid inaccessibility and expectation to implement managed care strategies threaten the ability of rural mental health programs to respond to pressing community needs. In contrast to urban areas where there are often choices among services and service providers, rural mental health programs are often the only programs available to address a variety of mental-health related issues. To maintain this basic safety net, it is essential that there be discrete funding alternatives for rural communities to address fundamental community mental health needs.


135. Maintain/increase the grant-in-aid funding process for rural programs.

136. Monitor combined grant and Medicaid funding to programs or regions and adjust grant funding as Medicaid revenues increase or decrease.

137. Require that rural representatives be appointed to all grant review and funding decision processes for community mental health services.

138. Determine which rural programs have potential for greater participation in the Medicaid program.

139. For those programs identified under #4, establish specific mechanisms to enhance capacity for Medicaid reimbursement, e.g., assistance/resources with Medicaid billings.

140. Ensure that funding decisions fully recognize and respond to the higher cost of travel and other aspects of service provision in rural communities.
Responsible party (actions 1-6): Division of Mental Health and Developmental Disabilities, Division of Alcoholism and Drug Abuse, Division of Family and Youth Services, Alaska Mental Health Board, Governor's Advisory Board on Alcoholism and Drug Abuse, Alaska Mental Health Trust Authority

141. Explore the feasibility of establishing a greater structural focus within the Department of Health and Social Services on rural health services, including rural mental health programs, e.g., a division or office focusing on rural issues.
Responsible party: Department of Health and Social Services Commissioner's Office

142. Assist rural communities in determining which programs could successfully implement and sustain managed mental health care approaches to service provision.

143. If managed care is implemented for rural programs, ensure that adequate resources are available for responding to the needs of high-risk clients.
Responsible party (actions 8-9): Division of Mental Health and Developmental Disabilities, Division of Medical Assistance, Alaska Mental Health Board