2% Medicaid Provider Rate Cut?

The NCMS has been a part of ongoing discussions with both the General Assembly and the Department of Health and Human Services (DHHS) to avoid further reductions to Medicaid provider rates. These cuts have been threatened due to a $139 million shortfall in this year’s Medicaid budget. At this time NCMS advocacy efforts have been successful, and for the time-being provider rates have been spared.

The Joint Legislative Oversight Committee on Health and Human Services met on Tuesday, November 8, 2011, to receive a progress update regarding the $359 million in reductions required of the DHHS in this year’s budget. DHHS Secretary Lanier Cansler reported to the Committee that a majority of the necessary budget reductions have been successfully implemented and that aside from significant Medicaid shortfalls the Department was on track to meet legislative targets. Most of those shortfalls have arisen from one-time costs and unbudgeted liabilities, including overdrawn federal receipts. View DHHS’s update on the budget here.

A key partner in reducing recurring costs in the Medicaid budget is Community Care of North Carolina (CCNC). Allen Dobson, MD, presented on behalf of CCNC pointing out areas of expansion as well as a number of new initiatives by various physician, hospital and other provider groups in partnership with CCNC. View CCNC’s presentation to the Committee here.

Total reductions within the Medicaid program have fallen short of expectations due in part to the Department’s slow enrollment of high-cost patients into CCNC, who has been tasked with saving the state $180 million over the two year budget cycle. CCNC is currently on track to exceed that goal according to Sec. Cansler. However, this slow enrollment in the first year of the biennium and the Department’s other unbudgeted liabilities caused the Secretary to solicit the Committee’s guidance on how to best address the 2011 shortfall that now totals $139 million.

Further cuts to optional services and an 18% reduction in provider rates were discussed as an option for DHHS to close the gap. Ultimately, legislators agreed that cuts to neither provider rates nor optional services were feasible in order to maintain a viable Medicaid provider network and recommended that lawmakers and the Department work together to further cut costs and perhaps use cash reserves to remedy the one-time shortfall.


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