January 27, 2016 Department of Health and Hospitals outlines $131 million in cuts to meet anticipated budget shortfall

Baton Rouge, Louisiana, Jan 27, 2016 - Today, the Department of Health (DHH) submitted a plan to the Division of Administration that outlines how $131 million in cuts would be spread across the Medicaid program to address the current budget shortfall. LDH Secretary Rebekah E. Gee, MD, MPH said cuts of this magnitude are a worst-case scenario and would only be implemented if the Legislature failed to find additional revenues to address this year's anticipated shortfall.

"We have outlined two options that will reduce Medicaid spending," Gee said. "The reality is both plans will have a catastrophic impact to those served by Medicaid; insurance companies who administer the Bayou Health Plan, hospitals and other providers, and to the patients and people with disabilities who rely on Medicaid for their health care."

LDH developed two reduction plans, one that targets seven specific programs and a second option that eliminates all optional Medicaid programs. Both plans cut $131 million in state funds. In addition, because these state funds attract federal matching dollars, the total impact of both plans are $346.5 million.

Under Option One, the proposed reductions are as follows:

• Public-Private Partnerships - Reduce spending on the Public-Private Partnerships by $119.1 million in state funding. This equals a $315 million total reduction when federal matching funds are lost. The reductions will be as follows:
  - Eliminate $45 million in state funding ($119.1 million total) in supplemental payments to the partner hospitals that were included in the 2016 Appropriations Act.
  - Eliminate an additional reduction of $9.5 million ($25 million total) to the New Orleans partner hospital in its supplemental payments that were included in the 2016 Appropriations Act.
  - Further reduce the payments to partner hospitals by 12.7 percent. This reduction is $64.6 million in state dollars, $170.9 million total.
• Reduce Payments to Bayou Health Insurers - This represents a reduction in the per member per month payments to Bayou Health. The reduction is $10.4 million in state funds, $27.4 million total.
• Eliminate the Pediatric Day Health Care Program - This program serves 612 medically fragile children between the ages of birth to their 21^st birthday. It is anticipated that these services could be continued by other Medicaid providers or by school districts. The reduction is $1.6 million in state funds, $4.2 million total.

Under Option Two, the following programs would be eliminated:

• Reduce Payments to Bayou Health Insurers - This is the same reduction outlined in Option One; $10.4 million in state funds, $27.4 million total.
• Pediatric Day Health Care Program - This is the same reduction discussed under Option One; is $1.6 million in state funds, $4.2 million total.
• Hospice Program - Impacts 6,282 hospice recipients. State savings of $200,000, total reduction of $600,000.
• Children's Choice Waiver - Impacts 1,227 children with developmental disabilities who receive community-based services. State savings of $1.2 million, total reduction of $3.2 million.
• Adult Day Health Care Waiver - Impacts 900 people who currently receive community-based services as an alternative to nursing home care, and another 4,000 people who are on the waiting list for these services. State savings of $700,000, total reduction of $1.8 million.
• Residential Options Waiver - This is a program that serves 26 people who are former long-time residents of adult foster care but who now receive home-based care. State savings of $100,000, total reduction of $300,000.
• PACE Program - PACE is the Program for All-Inclusive Care for the Elderly. PACE offers health care and social services to nursing home-eligible seniors in an adult day care environment. The program currently serves 235 seniors and has a maximum capacity of 600 participants. State savings of $1.2 million, total reduction of $3.1 million.
• Supports Waiver - This program provides specific, activity-focused services to individuals with disabilities in their homes. The program will impact 1,739 people currently receiving services as of January 2016. State savings of $1.2 million, total reduction of $3.2 million.
• Long Term Personal Care Services - This service provides hands-on assistance with basic self-care tasks such as eating, bathing, dressing, grooming, and toileting to low-income elders and people with adult-onset disabilities. Elimination of this program will impact more than 17,300 recipients. State savings of $16.6 million, total reduction of $44 million.
• Community Choices Waiver - This is the primary home and community-based waiver program serving as an alternative to nursing facility care for seniors and people with adult onset disabilities. As of November 2015, there were 5,581 people in the program and another 33,000 individuals on the waiting list. State savings of $10.8 million, total reduction of $28.7 million.
• Intermediate Care Facilities - These are institutions that serve people with developmental disabilities in a 24-hour managed care environment. Elimination of this program will impact 4,914 recipients currently receiving services. State savings of $24.9 million, total reduction of $66 million.
• NOW Waiver - The New Opportunities Waiver (NOW) allows people with developmental disabilities to be served in community and home based settings instead of an institution. Elimination of this program will impact 8,686 people currently receiving services. State savings of $42.7 million, total reduction of $113 million.
• Ambulatory Surgical Center Program - Provides day surgery procedures to an estimated 16,172 recipients. State savings of $200,000, total reduction of $500,000.
• Hemodialysis Program - Provides free-standing End Stage Renal Disease services to 5,904 recipients. State savings of $3.3 million, total reduction of $8.82 million.
• Prescription Limits in Adult Pharmacy Program - Medicaid pays for prescription drugs for Medicaid beneficiaries with a limit of four prescriptions per patient (recipient) per calendar month. But, there is an option to get more prescriptions under the "medically necessary override" provision. Eliminating this provision is expected to save $15.9 million in state funds, and $42.1 million total.

In addition to these two options, the Department might also consider a combination of some reductions and program eliminations to achieve the necessary savings.

"Both of these options are worst-case scenarios that we hope will not have to be implemented. The Department has always worked to address the yearly budget shortfalls without cutting provider fees and by minimizing program impacts by using various internal solutions. However, this year's budget reality is monumental, and the potential cuts and their results are staggering," said Gee. "If this reduction plan becomes a reality, its impact will be felt by almost all residents. Vital health care services across Louisiana will be completely eliminated or diminished if additional revenue is not identified in the upcoming special session." 

To learn more about LDH, visit http://www.dhh.louisiana.gov.

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