Governor Beverly Perdue released her budget proposal on Tuesday.  With an expected $3.5 Billion shortfall for the 2009 – 2010 budget, the Governor had to make a number of significant cuts.  The Department of Health and Human Services (DHHS) took a hit of just over $250 million dollars.  Fifty-four percent of the cuts made in the DHHS budget came from adjustments in Medicaid spending.  The physician, as well as other providers, reimbursement inflation adjustment was frozen, resulting in no inflation adjustment for 2009 – 2010. 

The larger impact of this cut is borne at the local community.  By cutting $101 million dollars from inflation adjustments, NC losses the federal match of another $300 million for Medicaid services.  When you take into account that the vast majority of Medicaid reimbursement for provider services goes toward salaries at the local level, you begin to see the significance of this cut.  Add to that the fact that salary dollars are spent 2 to 3 times in a community on groceries, car payments, house payments and the impact is ultimately a loss of between $800 million and $1.2 billion dollars in local spending, all from this one line item in the budget.

Thankfully, the reimbursement rate of 95% of Medicare was not harmed in the Governor’s budget proposal.  A cut there, compounded at the local community would spell disaster for countless jobs in large and small practices across North Carolina.  Many rural practices have Medicaid patients accounting for over 30% of their entire patient population.  For this and many other reasons, it is vital that our physicians communicate with their Senators about the importance of maintaining the Medicaid rate.  The Senate will be the next body to make a proposal.  It is expected that the Senate will not take long to move on this issue.  With April revenue numbers looming, no one in the General Assembly is under the impression that time will give them more money to work out a solution.  Stay up to date on this issue by visiting the NCMS MEDPAC Minute Podcast.

Let us know what you think!