Medicaid Cuts Across the Country

The following is a synopsis based on new data provided by the American Hospital Association.

“It’s grim times for state Medicaid programs: Thirty-three states have proposed cutting Medicaid payments to providers in fiscal 2012, according to a new survey conducted by the National Governors Association and the National Association of State Budget Officers. The trend suggests that hospitals will have to cope with ongoing funding cuts for low-income patients for the foreseeable future.

The survey concluded that Medicaid was the single largest expenditure on the state level, representing about 22 percent of all spending. It also found that 16 states have proposed freezing provider payments and 12 have proposed raising provider taxes or fees in fiscal 2012, while 10 others already plan to raise taxes and fees in fiscal 2011.

The clamor for cuts to Medicaid programs comes despite the fact that overall enrollment grew an enormous 8.1 percent in fiscal 2010, and is expected to grow more than 5 percent in this fiscal year and nearly 4 percent in 2012. Persistent unemployment, an overhang from the Great Recession, is to blame, along with the end to federal stimulus funds.

Without the stimulus, federal funding for Medicaid is expected to decline 13 percent in fiscal 2012. State funding for the program is expected to increase 18.6 percent.”

What’s troubling about some of the conclusions in certain states, and even inferenced in the synopsis above, is the notion that Medicaid has to be cut because free federal subsidies are no longer available (aka Stimulus). Some, as Oregon’s Governor Kitzhaber (amazingly a physician himself) have proposed massive reductions in reimbursement to providers as the solution to the shortfall.

“Oregon’s proposal would reduce Medicaid rates by 19% in fiscal 2012, which begins July 1, and could require an additional 15% cut in fiscal 2013 if a new care coordination program fails to produce enough savings, according to estimates by the Oregon Assn. of Hospital and Health Systems.

Oregon Medicaid physician pay rates already are as low as 60% of what Medicare pays, said Betsy Boyd-Flynn, spokeswoman for the Oregon Medical Assn. These cuts “would really reduce access, and they would probably drive more physicians into retirement.”

Hospital Medicaid rates cover only about 70% of costs, said Andy Van Pelt, a spokesman for the hospital association.

Some primary care doctors already limit their Medicaid participation. In 2009, 53% of all Oregon physicians accepted new Medicaid patients without restrictions, 30% limited their Medicaid load and 17% were closed to new Medicaid patients, according to a physician work force survey by the Oregon Dept. of Health Services. Unrestricted participation rates were lower for family doctors and internists.”

Beware of unintended consequences. Said proactively, we need to elect leaders who understand how to balance budgets while not drubbing the incentives of those who produce the goods/services.

Read the Fierce Health Finance story HERE

Get more of the details on Oregon’s plan from amid news HERE

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