Re­strain­ing Med­i­caid

More states to cut provider pay­ments: Kaiser study

Modern Healthcare - - THE WEEK IN HEALTHCARE - Jaimy Lee

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.”

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