More states to cut provider payments: Kaiser study
More states are expected to restrict Medicaid provider payments in fiscal 2012 as they grapple with swelling enrollment and a loss of funding. That was among the findings of the Kaiser Family Foundation’s annual study of Medicaid budgets. The report said overall state Medicaid spending is expected to rise by a record 28.7% in fiscal 2012 to counteract the loss of $103 billion in federal stimulus funding that states had received for the past two and a half years.
This year’s Kaiser study, which was conducted in July and August, reflects concern about the impact of the still-weak economy, as well as the loss of the stimulus funds that expired in June. More than 40 states have used stimulus money to close or reduce Medicaid budget shortfalls for the past two fiscal years. State spending on Medicaid rose 10.8% in fiscal 2011 after it fell in 2009 and 2010.
The nearly 29% projected growth in state spending for 2012 is “by far the largest annual increase in the state cost of Medicaid in its history,” Vernon Smith, principal at management consultancy Health Management Associates, which conducted the survey with Kaiser, said during a conference call with reporters.
Forty-six states reported that they will restrict provider rates in 2012, up from the 39 states that did so in 2011. Fourteen states will increase co-payments or implement new copayments this year, compared with the five states that increased and implemented copayments for beneficiaries in 2011. And some states said they will cut or restrict a number of benefits for adults.
“The big question is whether states will be able to keep their rate of growth to the average rate of 2.2%,” Smith said.
Overall, Medicaid spending, which includes state and federal funding, is slated to grow by only 2.2% in fiscal 2012. Total Medicaid spending has been rising since 2006, when the study reported it grew by 1.3%. One bright spot for the states is the expected decline in enrollment growth. The study estimates that average Medicaid enrollment growth will slow to 4.1% in fiscal 2012. Average Medicaid enrollment growth hovered around 7% for two years before dropping to 5.5% in fiscal 2011.
While states are looking for ways to reduce costs, they are also seeking to increase quality, Valerie Harr, director of medical assistance and health services for the New Jersey Department of Human Services, said during the call.
Tracy Gordon, a fellow at the Brookings Institution, agreed. “States can innovate,” she said. “They can change policy a lot quicker than the federal government.”