Medicaid advisory panel weighs cuts

State Medicaid officials and their advisory panel held their first public hearing today on proposals to cut services this year.

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Laura Leslie

State Medicaid officials and their advisory panel held their first public hearing today on proposals to cut services this year.

The 2011-12 state budget cuts about $350M from the program. But because federal dollars match state spending 2 to 1, the resulting loss to NC’s Medicaid services is about $1B. That’s a substantial loss for the program’s total combined funding of around $12.8 billion.

Presentations at the Medical Care Advisory Council meeting today painted a sobering picture of Medicaid’s financial future in the state. Officials expect program rolls, now at 1,500,000, will add another 100,000 by 2013 – a growth rate of about 6.6%. During the same biennium, program funding is slated to shrink by $2 billion, or about 7.8%.

Options on the table, according to today’s presentations, include lowering payments to providers, limiting patient access to services, limiting organ transplants, and potentially eliminating some “optional” programs entirely if the state can win federal approval to do so.

“Optional” services

“Optional” services are those the federal government does not require state Medicaid programs to offer. But many of them are anything but optional to the patients who depend on them. They include everything from mental health care and prescription coverage to physical therapy, adult dental care, and prosthetic limbs.

Other services are classified as mandatory, and many of them are expensive: hospitalization, doctor and nursing services, ambulance service, and labs and x-rays. The state must cover these in order to keep federal matching funds flowing.

But with growing Medicaid enrollment and a shrinking budget, the state will be forced to spend more and more money on mandatory services, leaving even less to cover optional services. And that’s where the state will have to focus to balance its books.

Complicating factors

As it turns out, state Medicaid leaders will have to cut even deeper just to catch up with what lawmakers expected them to save.

The state budget anticipated spending less on Medicaid through program cuts, efficiencies, and the elimination of overlapping services. But according to today’s financial presentation, those budget numbers aren’t likely to work out as planned.
  • It takes a long time to make changes in Medicaid. Federal officials have approve “waivers” if a state wants to offer fewer services or less access to them than in the past. In the budget, those “cost savings” were projected to start by October. But it could be January or later before federal officials grant permission for some of them. 
  • In other cases, Medicaid officials say state budget writers cut the same services twice, overestimating the amount of money the state would save.
  • Yet other cuts would be offset by higher costs elsewhere – for example, someone with an abscessed tooth who can’t get dental care may end up at the emergency room, where their care would end up costing even more.
  • And some cuts anticipated in the budget may not be feasible because they would violate other state or federal laws.

Overall, state Medicaid officials say, they’re looking at a potential difference of $118 million between what lawmakers said cuts would save the state, and what they actually might. The actual difference, whatever it is, will almost certainly have to come out of services.

Public input

The comments at today’s meeting came from patients and providers who stand to lose the most from proposed cuts to services.

Alex O’Connor told the committee she has multiple sclerosis, but only about five MS specialists are available to Medicaid patients like her from Raleigh to the coast. She says she only gets to see her doctor about once a year.

O’Connor asked the advisory committee not to cut provider rates. She says two of those five MS doctors want to retire, but haven’t because there’s no one to replace them. “No one wants to go into MS,” she told the committee, because Medicaid’s reimbursement rates are already so low.

Physician Peter Morris, board chairman of Action for Children NC, asked the advisory panel to change its focus. “Please incentivize what you want to see, rather than cutting away what you don’t,” he told them.

And Bob Hedrick, who leads the NC Providers Council, told the panel that cutting support services for mental health, substance abuse, and the developmentally disabled won’t reduce costs overall - it will simply shift them to hospitals, adult care homes, and prisons.

“These should not be discretionary services,” Hedrick said. “These are necessary services.”

The Medical Care Advisory Council will meet again in September to hear more public comments about proposed cuts to Medicaid. The date hasn’t yet been set.


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