Business Journal of the Triad: Despite federal aid, more Medicaid cuts coming to N.C. docs

The Business Journal of the Greater Triad Area – by Steve Ivey Staff writer

Health care providers in North Carolina are mobilizing in attempt to halt another round of Medicaid cuts in the state’s budget that could eliminate $100 million from the bottom line of doctors and hospitals statewide.

When legislators passed the annual budget in Raleigh this summer, it included contingency cuts to Medicaid if Congress didn’t pass an aid package to help states pay for health care, education and other necessary services.

Congress did pass the aid last week — including $643 million for North Carolina — but the N.C. Department of Health and Human Services has said it intends to still implement the $27 million contingency cut Sept. 1, which amounts to about a 1.4 percent reduction in payments to doctors, hospitals and other providers.

Because state Medicaid funds are matched by federal dollars, the total impact statewide will be $100 million less flowing to providers who treat patients on the low-income government insurance plan.

A little over half of the federal aid, $343 million, is targeted for Medicaid and other budget items, less than the state initially requested. But another $300 million was earmarked for education, which is about $124 million more than the state expected. Health care providers say the state should adjust its budgeted state funds to reflect the increased education funding and move that money over to Medicaid.

“We as a health system and hospital community are frustrated that these cuts are coming into effect,” said B.J. Miller, director of government affairs for Moses Cone Health System in Greensboro.

Providers say Medicaid only covers about 85 percent of their true out-of-pocket costs to treat those patients and don’t account for higher charges that might normally be assessed to patients with higher-paying private insurance. Moses Cone officials said, for example, that the system lost $27.1 million last year treating Medicaid patients.

The N.C. Hospital Association reports that hospitals statewide lost $572 million last year on Medicaid.

“For these cuts to continue, it’s a real impact on the business community,” Miller said. “We have to have a slim profit margin to invest in the people and technology we need. So the result is cost-shifting to private payers, whose premiums are covered by employers.”

Joanne Ruhland, vice president of government affairs at Wake Forest University Baptist Medical Center, said the cuts are especially disappointing given how hard health providers lobbied for the federal aid.

“With so much opposition to spending and concern about the deficit, it was a hard fight to get it,” Ruhland said. “We’re writing a lot of letters and making a lot of phone calls.”

Tight budgets

Brad Dean, spokesman for the state Department of Health and Human Services, said the cuts are necessary amid such a tight budget year because the recession and high unemployment has sent more patients onto the Medicaid rolls.

For example, the number of people eligible for Medicaid in the 12-county Triad stands at about 252,000 this month, up from 207,000 two years ago. Statewide, the number has risen from 1.28 million to 1.45 million.

“It’s going to be a lot more of a challenge in the coming years,” Dean said. “When health reform takes effect in 2014, many uninsured people are going to be covered through Medicaid, probably pushing our numbers up 40 percent.”

Health care providers say that because Medicaid has been cut to subsidize education in the past, the state should adjust its budget to include more of the federal aid for Medicaid this year.

“Medicaid is the most cost-effective way to treat these patients; otherwise they end up seeking care in the emergency room, which is far more costly to taxpayers and employers alike,” said Bob Seligson, CEO of the N.C. Medical Society. “The state says its hands are tied, but that’s not entirely true.”

Jim Tobalski, senior vice president of government affairs at Winston-Salem-based Novant Health , which lost $103 million on Medicaid last year, said providers will soon be faced with decisions about whether to see Medicaid patients at all.

“It’s at the heart of our mission, so we will continue,” Tobalski said. “But this downward spiral is going to affect everything we do. And because of the poor economy, our ability to cost-shift is going away.”

The state medical society has sent a letter to Gov. Bev Perdue and state Health Secretary Lanier Cansler asking them to halt the cuts. But Cansler has signaled the intent to implement them Sept. 1.

“We haven’t gotten a lot of positive response, but we hope they’ll turn the corner and realize this is the right thing to do,” Seligson said. “These patients need access. Our state needs to reassess what’s been done.”

Reach Steve Ivey at (336) 370-2909 or [email protected].


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