Medicaid Budget Problems Continue; May Run Low on Funds

Andy Willis answers questions at Gov Ops meeting 2As reported in the past, the North Carolina Department of Health and Human Services (DHHS) has been working to manage cash flow within their approved budget while juggling a number of fines, penalties and lawsuits. This external pressure along with increased enrollment led to the announcement yesterday, April 4, 2012, at the North Carolina General Assembly (NCGA) that DHHS, and more specifically the Division of Medical Assistance (DMA), will likely run out of money at the end of this month to pay for services for Medicaid patients.

Governor Beverly Perdue’s Budget Director, Andy Willis, testified before the Joint Legislative Oversight Committee on Government Operations during a meeting dedicated to the Medicaid budget. Mr. Willis reported that money would run short at the end of this month but that DHHS had found $45 million within their state appropriation to continue to reimburse for services until the NCGA reconvenes on May 16

Senator Pete Brunstetter (R-Forsyth), one of the Appropriations Chairs for the North Carolina Senate said, “This is something that we are going to have to address quickly, in the first few days when we return in May.” 

The problem that he refers to is a limitation in the DHHS Budget that says the department must balance within its’ own budget. That provision essentially means that no money can be shifted from any other general funds (i.e., Transportation, the Rainy Day Fund) to balance Medicaid. The provision was included by budget writers in part because of a history of problems like this where overspending required the State Office of Budget Management to redirect additional general fund dollars to cover Medicaid overages.

Even with the various overages experienced this year, Medicaid is within three percent of the budgeted target for the roughly $12 billion program, of which the state funds about $3.4 billion. Many legislators agree that is a significant improvement over previous years. Lawmakers continue to look for ways to better predict these health care expenditures, which is difficult because of varying enrollment, fluctuating utilization and additional burdens steadily flowing down from the Federal Government due in part to the health reform law.

Your NCMS continues to work with legislators and other health care partners to identify savings opportunities without jeopardizing access to care for your Medicaid patients or payment reductions. While lawmakers still view rate cuts as a possible solution, Wednesday’s conversation revealed that this initial budget problem would be handled with money from other sources in the state budget. At the same time, we will be facing budget corrections for the remaining biennium budget year.

Watch the Bulletin and other action alerts for opportunities to communicate with your legislators about this issue in the coming month.


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  • morfesis FA

    When I practiced in Kentucky more than fifteen years ago; Kentucky limited utilization of hospital facilities by requiring patients who had high ED utilization (and who did not suffer from catastrophic medical problems) to get approval from primary care providers before going to ED. I don’t know if this is currently an issue here in NC. It seems to me that hospitals are constantly promoting their emergency services…at some point this would be counter to health care reform efficiencies in my opinion.

  • John Rowe , MD

    I think more can be done around medication management. In the realm of pain meds, I think Medicaid should cover only the generic opiates, and not even make OxyContin an option. When there is more than one generic option in a drug class, that should be all that is offered. Then we can say, “if Nexium is the only thing that works for you, you will have to pay out of pocket.”

  • Dr R Carlson

    I don’t know what to do about this–I have lived and worked in Canada and Great Britain and they have their problems also–I’d be willing to pay more taxes