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Alaska Psychiatric Institute cites DSH reduction, staffing vacancies; agency plans coding review and SHARP funding
Summary
DFCS officials told lawmakers that CMS's reduction to the Disproportionate Share Hospital allotment and declining revenue collections could create a roughly $4.6 million gap for the Alaska Psychiatric Institute in FY26; the department said it hired a contractor to improve coding and billing and is proposing $200,000 for the SHARP recruitment program to address staffing shortages.
Department of Family and Community Services officials told the House Finance Family and Community Services Subcommittee on Feb. 6 that the Alaska Psychiatric Institute faces a projected revenue shortfall in FY26 and is pursuing billing and recruitment measures to close the gap.
Assistant Commissioner Marion Sweet said the department received notice from the Centers for Medicare & Medicaid Services that the Disproportionate Share Hospital (DSH) allotment for federal fiscal year 2026 will be reduced by just under $1 million. Coupled with current revenue-collection trends, she said the institute is projecting about a $4.6 million reduction in needed revenues for FY26.
"We hired a contractor to come in, and they're reviewing our coding and billing process, as well as our chargemaster," Sweet said, adding the analysis should help ensure API is claiming all billable services. Sweet also said the department is looking at expenditures and staffing to reduce costs without harming patient care.
On staffing, Sweet reported an overall vacancy rate at API of 21.2% across job classes and identified nurses and senior-level psychiatrist positions as particularly difficult to recruit. She told lawmakers the department is pursuing recruitment tools, has trimmed the use of locum tenens staff and is proposing a $200,000 general fund mental health authority appropriation for the SHARP program to support recruitment and retention.
Lawmakers asked whether spot bonuses or higher starting steps would be a faster fix; Sweet said DFCS has used options to offer higher starting salaries in some cases and is tracking the SHARP program's enrollment and expected yield.
Next steps: DFCS offered to provide turnover-cost estimates and more detailed recruitment metrics at a future briefing. The subcommittee did not take votes on the API funding items at the Feb. 6 meeting.
