Federal Medicaid Extension Still Leaves $100 Million Gap

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Sep 9th, 2010

Federal Medicaid Extension Still Leaves $100 Million Gap

Gov. Beshear asks legislative work groups to recommend savings

Governor Steve Beshear announced today that he has submitted the state’s application for just over $137 million in Medicaid support, but warned that the federal funds still leave a $100 million hole in the state Medicaid budget.  Gov. Beshear asked two legislative work groups to review and recommend ways to make up that shortfall.

State funding for Medicaid is matched at roughly a four to one basis, which means the $100 million gap represents a $470 million total program shortfall. 

The General Assembly assumed in the budget for this fiscal year that Congress would pass legislation to continue additional funding for cash-strapped state Medicaid programs.  Some 30 other states made similar assumptions.  The budget passed by the General Assembly assumed $238 million would be provided for Kentucky from the federal government this year.  Congress passed the Education Jobs and Medicaid Assistance Act in mid August, which extends the enhanced federal matching rates (FMAP) for Medicaid programs to June 30, 2011.  Kentucky will receive about $137 million for its program, about 58 percent of what was assumed.  That additional funding is $100 million less than the state budget projected.

The General Assembly created two groups to focus on Medicaid issues, the Medicaid Oversight and Advisory Committee and the Task Force on Medicaid Cost Containment.   These committees have been meeting jointly to discuss the Medicaid program and are poised to make recommendations about the program to the 2011 General Assembly.

“I’m calling on those groups – today – to immediately begin working on recommendations to address this budget shortfall created by the General Assembly,” said Gov. Beshear.  “With those recommendations, we can then begin to come together to find solutions to this problem.”

The Cabinet for Health and Family Services, under the direction of Secretary Janie Miller, has already announced a first round of such measures, which includes steps such as:

·         to reduce the unnecessary use of medical services, treatments and ER visits;

·         to eliminate the ability of some patients to “doctor-shop” in order to obtain unnecessary drugs to manage pharmacy costs more effectively

·         to increase efforts to collect  payments from liable third parties for Medicaid services provided

·         to stop paying hospitals for hospital acquired infections and errors

·         to recoup payments to providers by partnering with the Department of Revenue, and

·         to more aggressively identify fraud and abuse.

The Cabinet is working on the second round of actions to account for the remaining budgeted target for cost containment, and will be moving forward in the near future on these necessary actions.  Gov. Beshear said that the Cabinet will be available to discuss current cost containment plans and offer necessary support for the legislative task forces as they continue their work.

The Courier Journal (Tom Loftus) reported that Gov. Beshear blamed the Medicaid shortfall on the General Assembly. The shortfall in Medicaid, a $5.2 billion program that provides health care for 800,000 poor and
disabled Kentuckians, results from an inaccurate estimate of anticipated federal assistance in the 2010-12 budget approved by the General Assembly in May.

Senate President David Williams, R-Burkesville, and House Speaker Greg Stumbo, D-Prestonsburg, said the Beshear administration has failed to provide cost-cutting plans and program data to the legislature’s continuing Medicaid Cost Containment Task Force. “We’re very frustrated with the (Health and Family Services) Cabinet for not coming forward with this information,” Williams said at a news conference.

Stumbo said in a statement, “I believe the governor when he says his administration is willing to work with us. We are hopeful that same spirit of cooperation will trickle down to his cabinet.”

Beshear pledged to cooperate with two legislative panels studying the issue. He said he expected recommendations that likely will have to be approved by the 2011 General Assembly.  But Williams said that Beshear has the authority to make such cuts without action by the legislature, and that he should act quickly because less than 10 months are left in the fiscal year.

Sheila Schuster, a mental health and health care advocate, said “it’s without a doubt a difficult, difficult situation. ... But in cutting costs I think it’s important to consider … the cost to people.”

Rich Seckel, director of the Kentucky Equal Justice Center and co-chair of Kentucky Voices
for Health, agreed it’s a tough problem. He said he hopes it can be partly addressed by innovative approaches to improve management of the program.

But he also said some members of Kentucky Voices for Health “would be more than happy to revisit the tobacco tax.”

The 2009 General Assembly raised the cigarette tax to 60 cents a pack, from 30 cents. And a tax increase was the only option that Beshear ruled out as a way to solve the problem.

Williams, who like Beshear is running for governor in 2011, said it was a good thing that a tax increase has been ruled out.

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