DHH Announces Mid-Year Forecast for Medicaid Spending for FY 2011-12
Deficit of $126.7 million to be addressed through means of financing adjustments, programmatic changes to slow growth in highest-growth programs

Tuesday, Nov. 1, 2011  |  Contact: Lisa R. Faust; (225) 342-7913 or (225) 252-3579 (cell)

BATON ROUGE - The Louisiana Department of Health and Hospitals today released its first forecast for Medicaid spending for SFY 2011-12. The forecast is projecting a $126.7 million state funding deficit for FY 2011-12, the entirety of which will be addressed through a series of funding adjustments, management tools and initiatives to slow the growth of certain programs. The plan does not include provider rate cuts or reductions in existing services.

After several years of robust growth in Medicaid enrollment due to the national economy, the rate of growth has slowed except in some of the highest cost areas such as among people with disabilities. The most recent deficit projection was driven by a combination of influences including increases in the volume of services being provided.

The funding shortfall represents about 5 percent of state funding in the Medicaid program, which provides a means of financing health care for low-income adults and their children, and people with certain disabilities.

"For the past 3 years, we've explained why it's critical to bring coordinated care and predictable costs to the Medicaid program; this forecast underscores once again just how important it is that we move away from a strictly fee-for-service system that continues to reward volume over value," Secretary Bruce D. Greenstein said. "We are vulnerable to these kinds of spending swings each year due to the unpredictable nature of a fee-for-service program combined with federal regulations that significantly limit the state's ability to fully manage rising costs in this large entitlement program.

"Within those limitations, we have prescribed a series of program charges and money management tools to protect both access to services and provider rates while balancing our budget."

To address the deficit, Medicaid is implementing several measures:

• Recoup money from CommunityCare 2.0 providers who failed to make a good faith effort to attain national certification after receiving payment for doing so
• Implement strategies to manage prior authorizations in the Mental Health Rehab program as the Louisiana Behavioral Health Partnership is phased in
• Employ means of financing adjustments related to expenditures of the Deficit Reduction Act and ARRA-related expenses
• Use funds associated with the LSU DSH audit rule as authorized by the Legislature
• Use federal match from cost reports as certified match

Additionally, the Department will work with recipients, stakeholders, advocates and providers to identify an additional $3.4 million (about 2.6 percent of the total deficit) of savings in the Waiver programs.

The Louisiana Department of Health and Hospitals strives to protect and promote health statewide and to ensure access to medical, preventive and rehabilitative services for all state citizens. To learn more about DHH, visit http://www.dhh.louisiana.gov. For up-to-date health information, news and emergency updates, follow DHH's blog, Twitter account and Facebook.