(a) If the department finds that the costs of medical assistance for all persons eligible under this chapter will exceed the amount allocated in the state budget for a fiscal year, the department may implement cost containment measures to reduce anticipated program costs for that fiscal year as authorized under this section.

(b) The department, in implementing this section, shall take all reasonable steps to implement cost containment measures that do not eliminate program eligibility or the scope of services required or authorized under AS 47.07.020 and 47.07.030 before implementing cost containment measures under (c) of this section that directly affect program eligibility or coverage of services. The cost containment measures taken under this subsection may include new utilization review procedures, changes in provider payment rates, precertification requirements for coverage of services, and agreements with federal officials under which the federal government will assume responsibility for coverage of some individuals or some services for some individuals through such federal programs as the Indian Health Service or Medicare.

(c) If cost containment measures authorized under (b) of this section are insufficient to reduce the anticipated program costs for a fiscal year to the amount allocated in the state budget for the program for that fiscal year, the department may, to the extent authorized under federal law and the state's constitution, deny any or all optional services listed in AS 47.07.030(b) - (d) to a person eligible for services under AS 47.07.020 or deny program eligibility to a person who is eligible for the medical assistance program under the optional coverage provisions of AS 47.07.020(b) - (i). However, the department may not eliminate program participation of a person who is eligible for coverage under AS 47.07.020(a), nor may the department deny coverage of a service described in AS 47.07.030(a) for a person who is eligible for the medical assistance program under AS 47.07.020.

(d) Notwithstanding (a) - (c) of this section, the department may

(1) apply for a section 1915(i) option under 42 U.S.C. 1396n to improve services and care through home and community-based services to obtain, at a minimum, a 50 percent federal match;

(2) apply for a section 1915(k) option under 42 U.S.C. 1396n to provide home and community-based services and support to increase the federal match for these programs from 50 percent to 56 percent;

(3) apply for a section 1945 option under 42 U.S.C. 1396w-4 to provide coordinated care through health homes for individuals with chronic conditions and to increase the federal match for the services to 90 percent for the first eight quarters the required state plan amendment is in effect;

(4) evaluate and seek permission from the United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, to participate in various demonstration projects, including payment reform, care management programs, workforce development and innovation, and innovative services delivery models; and

(5) provide incentives for telehealth, including increasing the capability for and reimbursement of telehealth for recipients.

(e) Notwithstanding (a) - (c) of this section, and in addition to the projects and services described under (d) and (f) of this section, the department shall apply for a section 1115 waiver under 42 U.S.C. 1315(a) to establish one or more demonstration projects focused on innovative payment models for one or more groups of medical assistance recipients in one or more specific geographic areas. The demonstration project or projects may include

(1) managed care organizations as described under 42 U.S.C. 1396u-2;

(2) community care organizations;

(3) patient-centered medical homes as described under 42 U.S.C. 256a-1; or

(4) other innovative payment models that ensure access to health care without reducing the quality of care.

(f) Notwithstanding (a) - (c) of this section, and in addition to the projects and services described under (d) and (e) of this section, the department shall apply for a section 1115 waiver under 42 U.S.C. 1315(a) to establish one or more demonstration projects focused on improving the state's behavioral health system for medical assistance recipients. The department shall engage stakeholders and the community in the development of a project or projects under this subsection. The demonstration project or projects must

(1) be consistent with the comprehensive and integrated behavioral health program described under AS 47.05.270(b); and

(2) include continuing cooperation with the grant-funded community mental health clinics and drug and alcohol treatment centers that have historically provided care to recipients of behavioral health services.

(g) In this section, “telehealth” has the meaning given in AS 47.05.270(e).