An­other Med­i­caid boost ...

… but states shouldn’t plan on get­ting any more

Modern Healthcare - - The Week In Healthcare - Matthew Do­Bias

State of­fi­cials got a re­prieve from the fed­eral govern­ment last week af­ter Congress cleared leg­is­la­tion that ex­tends a higher share of the Med­i­caid match­ing rate. But af­ter a lengthy bat­tle on Capi­tol Hill, few ex­pect to see any more ex­ten­sions.

The en­hanced pay­ments, cour­tesy of a broad eco­nomic stim­u­lus pack­age passed in 2009 but set to ex­pire at year-end, in­stead will ex­tend through June 2011.

Start­ing at a rate equal to about a 6.2% bump in pay, the bonus pay­ments will be phased out over two quar­ters next year, first down to 3.2% and then to 1.2%.

For cash-starved states, which had al­ready come to de­pend on the fed­eral bump, the en­hanced fund­ing could help them stave off job cuts and re­stric­tions to care.

Ann Kohler, di­rec­tor of the Na­tional As­so­ci­a­tion of State Med­i­caid Di­rec­tors, warned, how­ever, that more needs to be done. “It will fill in some of the deficits that states are fac­ing right now,” she said. “With­out it, states prob­a­bly would have made some pretty dra­co­nian cuts.”

Even so, the six-month ex­ten­sion likely won’t be enough to back­fill money that states have lost af­ter a pro­longed eco­nomic slump. “This will not fill their en­tire deficits,” Kohler said.

In a re­port re­leased by the Kaiser Com­mis­sion on Med­i­caid and the Unin­sured, re­searchers found that even as the over­all econ­omy slowly be­gins to re­cover, Med­i­caid caseload and spend­ing growth re­main high at a time when state rev­enue growth re­mains weak.

Al­most all of the states are likely to con­tinue to see bud­get gaps head­ing into their fis­cal 2011, the re­port adds. “It’s re­ally crit­i­cal,” Kohler said of the fund­ing. “States are in a ter­ri­ble fi­nan­cial bind right now.”

State gov­er­nors were left in a hold­ing pat­tern af­ter pas­sage of the leg­is­la­tion took de­cid­edly longer than ex­pected. In New York, state of­fi­cials had bud­geted for an ad­di­tional $800 mil­lion in Med­i­caid dol­lars, but had to craft an al­ter­na­tive plan just in case it wouldn’t come. That would have re­sulted in deep pay­ment cuts to health­care providers and schools.

Laura Ap­pel, vice pres­i­dent of fed­eral pol­icy and ad­vo­cacy for the Michi­gan Health & Hos­pi­tal As­so­ci­a­tion, said that added money helps, but does lit­tle to im­prove the al­ready slim mar­gins that providers work un­der.

When the orig­i­nal en­hanced Med­i­caid pay­ments rolled in to Michi­gan, Ap­pel said they were able to fund a growth in caseload and uti­liza­tion—but just barely.

The state re­ceived about $1 bil­lion in ad­di­tional funds in fis­cal 2010, but even so, with the slug­gish econ­omy the pro­gram was op­er­at­ing

Ap­pel: “I think it’s re­al­is­tic to as­sume that this is it for a while.”

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