More on the missing Medicaid money

The background video and documents behind our story Monday on the battle over Medicaid cuts.

Posted 5:47 p.m. Dec 6, 2011 — Updated 3:38 p.m. Dec 7, 2011

Laura Leslie

DHHS leaders have been telling legislators they can’t accomplish all the Medicaid cuts they were ordered to make in this year’s budget. Secretary Lanier Cansler and others have said repeatedly that the only way they can reach the spending levels required by the budget is to make deep cuts to Medicaid services and rates.

Legislative leaders have said publicly they don’t want DHHS to make those deep cuts to Medicaid, and they’ll find extra money to help patch the shortfall if needed.

But privately, they’re telling Cansler the money isn’t coming.

Here’s a timeline of what’s happened so far:

On October 27th, at a Gov Ops oversight meeting, DHHS Deputy Secretary Michael Watson told the committee that the Medicaid program is facing a cash flow shortfall of $139 million dollars. To make that up, Watson warned, would require the elimination of most “optional services” and a provider rate cut of as much as 18% for the final quarter of the fiscal year.

That meeting led to a round of fingerpointing: lawmakers said they weren’t told that some of the cuts they asked for were unrealistic, or that there were several outstanding “off-budget” items from years past that the program still has to pay for.

DHHS denied both those arguments.

After that meeting, House Speaker Thom Tillis told reporters better-than-expected state revenues could be used to help patch the shortfall.

“We’re working on a $150 million dollar surplus that could be appropriated for those areas where we’re coming up short without necessarily having to go back and cut any reimbursement rates or programs, which was suggested by somebody in the press. Makes no sense if we can avoid it,” Tillis said.

“And there are other measures. People have to realize that we’ve put money in the rainy day fund, $125 million, and other areas that could be potential sources for some of these things where we may just have to bridge the gap before the waivers are granted and the savings are actually being accrued,” Tillis added.

At the same meeting, House HHS Budget Chair Nelson Dollar, R-Wake, said he doubted federal Medicaid officials would approve the drastic cuts, anyway. “The amount of reduction in rate that would have to be approved by CMS would be beyond what I would think CMS would contemplate approving," he told reporters.

On Nov. 8th, at a Joint HHS Oversight Committee, Cansler repeated Watson’s warning about the cuts that would be needed to cover the shortfall, and asked the committee for direction.

Dollar told him not to move forward with those cuts. "We are not going to cut services, and we are not going to cut rates to make up for one-time liabilities," said Dollar.

A week later, on Nov. 15th, Cansler sent this letter to Speaker Tillis and Senate Leader Phil Berger, asking for more details on their plans to help offset the Medicaid shortfall.

On Nov. 17th, Tillis and Berger sent Cansler this reply, essentially saying that Cansler should move forward with cuts because no additional money would be forthcoming from the legislature.

Asked for clarification, Tillis’s spokesman Jordan Shaw said GOP leaders have been “pretty consistent” in their actions.

“We came back into session and you notice we didn’t send them any money,” Shaw pointed out.

Regarding Tillis’s remarks about using other funds to bridge the gap, Shaw said, "I hate to mince words, but he did say that it could be appropriated. He didn’t say that it would be."

Shaw said Tillis's comment “was kind of a hopeful and a best-case scenario."

"There’s a lot that goes into these types of discussions," he added. "What I can speak to as far as the letter and our action, they’ve been consistent with one another."

Rep. Dollar told Bruce Mildwurf yesterday that Cansler and the governor should look to other areas within the HHS budget to find the cash needed to cover the shortfall.

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