Alluvion Health is reducing staff and furloughing management due to reductions in their revenue stream related to Medicaid claim processing.

Trista Besich, Alluvion’s director, told The Electric that significant delays in the state Medicaid system processing their claims and contracts have significantly impacted their cash flow for operations.

She said that about 50 percent of Alluvion’s patients are on Medicaid and those reimbursements make up about 70 percent of the organizations patient revenue.

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Besich said they started cost cutting measures earlier this year such as canceling marketing contracts and they’re looking at least agreements and real estate to consolidate their physical footprint, but it came to a point that they needed to make bigger cuts.

She said the organization has eliminated 12 positions, which affected five employees.

She said some of those other positions were created from resignations or retirements and they opted not to fill some vacancies. Most of the eliminated positions were management level, she said.

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Alluvion’s chief financial officer recently resigned. Besich said she couldn’t comment further on a specific personnel matter.

About 40 total staff will begin taking furloughs on Oct. 1.

Alluvion currently employs 230 people, Besich said.

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Alluvion has also suspend construction on the Rocky Mountain Building at the corner of Central Avenue and 6th Street.

Besich said the state Medicaid system has indicated it will take about 90 days to resolve the immediate processing issues, but could take six to nine months to address the larger issues created by the Legislature’s payer rate increase to the state Medicaid program earlier this year.

“A state-commissioned study found the reimbursement rates the state paid Medicaid providers failed to cover the average cost of doing business – meaning providers were losing money when caring for Montana’s most vulnerable. Some facilities will now only take people who can pay more through private insurance,” Montana Public Radio reported in August. “Legislators and Gov. Greg Gianforte decided to raise the Medicaid rates to 100 percent of the identified gap by 2025. That totals $339 million over the next two years.”

Besich said other providers, primarily those other that hospitals, are facing similar Medicaid issues and also having to make cuts.

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She said the state Medicaid program is understaffed, had issues with their third party processing company, system update issues and the change in payer pay rates that are compounding and causing the significant backlog in processing claims. She said the program is asking people to refile claims, further adding to the backlog.

The Medicaid issues have also impacted Alluvion’s mobile response team, which responds with law enforcement to assist or identify when a person is in crisis.

Besich said that program is funded through a state grant, but the contract has been sitting on a desk at the state awaiting a signature. Without the funds, she said they had to suspend the after-hours mobile response team services.

She said Alluvion is still doing homeless outreach through their grant-funded PATH program.

Once the Medicaid issues are resolved and revenue streams stabilize, Besich said she hopes to add staff back and resume normal operations.

Besich said they communicated with affected employees first and tried to protect their most vulnerable employees recognizing the difficulty of the current economic climate.

Alluvion is still working on plans to develop the Roosevelt School, which they purchased from the Great Falls Public Schools district earlier this year.

Currently, Alluvion is leasing the first floor of the building to Opportunities, Inc. for their Head Start program, which includes 96 children.

Opportunities was in the process of replacing and updating the heating system at their Head Start building and in late July, were told the work wouldn’t be completed before the start of the school year.