April 03, 2003 DHH Cuts Medicaid Spending

BATON ROUGE, Apr 03, 2003 - Tuesday, the Department of Health took more steps to balance its Medicaid budget by implementing spending cuts that will save approximately $8.3 million this current fiscal year. LDH is still investigating other ways to solve the current shortfall in the Medicaid program that is estimated to be at least $70 million.

LDH implemented the cuts by reducing payments by 15 percent to private for profit intermediate care facilities for the mentally retarded (group homes), for outpatient hospital services provided in out-of-state hospitals and for inpatient acute care hospitals (excluding small rural hospitals). Payments to nonprofit group homes were reduced by 7.5 percent.

The cuts were done by emergency rule and went into effect April 1. LDH must also seek approval from the U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services. CMS is the federal agency that oversees Medicaid.

At a meeting yesterday of the joint Health and Welfare Committee, LDH Secretary David Hood said the agency is working to identify additional revenues to help offset cuts.

"The reality is there are no easy choices when it comes to managing either the current year’s budget or planning for next year," he said. "This was made apparent at Wednesday’s Health and Welfare Committee meeting where these relatively small cuts created just as much objection as next year’s monumental cuts."

Hood has told lawmakers that DHH’s last option too address this year’s problem would be to withhold payments from providers in June.

"Of course, this option only extends the problem into the next fiscal year where the budget is already $1.4 billion short," he acknowledged.

LDH just recently cut $48 million in state general funds ($168 million in total funds) in order to comply with an Executive Order issued by Governor Mike Foster last October. Those cuts included reductions in disproportionate share payments to charity hospitals, reductions in several other payments to private hospitals, prescription drug limits and the transfer of funds from the Elderly Trust Fund.