Medicaid Cuts in PA, Other States

On February 20, 2008, the Times-Leader (Wilkes-Barre/Scranton, PA) posted an Associated Press article entitled "Pa. nursing homes protest Medicaid reimbursement proposal", by Martha Raffaele, that reported reactions by nursing home operators to Governor Edward Rendell's one-year freeze for Medicaid subsidies, as contained in his budget proposal.

Nursing homes had agreed for two years to accept lower payments to help the state cope with budget crises, but the operators had believed future state reimbursements would fully cover the cost of caring for low-income Medicaid patients, said Anne Wantz, chief operating officer of the Pennsylvania Health Care Association.

"Not only does the governor's proposed 2008-09 budget not fulfill this promise, it goes in the opposite direction," Wantz said Wednesday during a Capitol news conference. "Because of the increasing costs of caring for ever sicker (Medicaid) residents, the zero percent increase ... is a cut in funding."

The state would maintain its current average daily reimbursement rate at $180 per resident under the state budget Rendell presented to lawmakers earlier this month.

Wantz's organization and other nursing-home groups are beginning a statewide campaign to push for more funding. Over the last three fiscal years, the state's Medicaid program paid nearly $290 million less than it owed for nursing home care, Wantz said. About 80,000 of Pennsylvania's 1.9 million Medicaid recipients live in nursing homes. * * *

The article, which also appeared in The Sentinel (Carlisle, PA), reported the administration's viewpoint in offering the proposal:

Officials are anticipating a more difficult budget year for 2008-09, and they have decided to maintain current levels of Medicaid reimbursements for all health care providers, with a few exceptions, said Michael Hall, deputy secretary of long-term living for the Department of Public Welfare.

"We're trying to figure out how to build a budget in an environment where it appears the economy is dropping into a recession," Hall said. "State revenues will likely be in decline by the time this budget is enacted." * * *

State officials forming a budget must react to fiscal pressures created by national economics & demographics that increase demand, and also by federal regulatory changes that intend reductions in program costs nationally. The level of benefits has outstripped inflation, and likely cannot continue in scope. See: PA EE&F Law Blog posting, "USA Today on Costs of Seniors' Programs" (02/21/08).

The Kaiser Daily Health Policy Report issued by The Kaiser Family Foundation (KFF) on February 20, 2008, entitled, "New Medicaid Rules Will Hurt States During Economic Downturn, Critics Say", reported that similar stressful fiscal situations exist in other states.

Critics of Medicaid regulations that will begin to take effect on March 3 contend that implementing the rules during an economic downturn "will only worsen the fiscal situation for already strapped state budgets," CQ HealthBeat [Johnson, February 19, 2008) reports.

Speaking at a forum sponsored by the Alliance for Health Reform and the Kaiser Family Foundation's Commission on Medicaid and the Uninsured, Barbara Edwards of the National Association of State Medicaid Directors said that as the economy weakens, more workers are becoming unemployed and some are enrolling in Medicaid because they have no alternatives for coverage.

At the same time, state revenues are declining, and states are faced with more demands for Medicaid services and fewer resources, Edwards said, adding that the timing "almost couldn't be worse for states for many reasons." * * *

For descriptions, by state, of Medicaid programs and other useful online resources offered by the KFF, see: "State By State Descriptions and Plans"; and "State Medicaid Fact Sheets".

An excellent source of information online regarding Pennsylvania's application of the Medicaid program is the Pennsylvania Medicaid Policy Center, operated by the Graduate School of Public Health, at the University of Pittsburgh. For background, see: PA EE&F Law Blog posting, PMPC's "Faces of PA Medicaid Program" (03/16/07).

The Philadelphia Inquirer published an article recently reflecting another form of Medicaid cost-cutting in Pennsylvania directed towards care providers.

In "Medicaid will not cover errors in Pa." (01/28/08), Josh Goldstein reported: "Gov. Rendell said hospitals will no longer be paid for costs to correct serious medical mistakes."

Taxpayers will no longer pick up the tab for extra care due to serious preventable hospital errors, Gov. Rendell said yesterday, a move that continues Pennsylvania's status as a leader of the growing national push to reduce mistakes in health care.

The state Department of Public Welfare launched a program last week to identify and stop Medicaid payments to hospitals when patients are seriously injured by mistakes. The policy also prohibits hospitals from passing the charges on to patients.

The agency will review hospital bills for 27 so-called never events, such as operations conducted on the wrong patient, medication errors that result in death or disability, and bad blood transfusions.

"This is another milestone in improving the quality of care," Estelle Richman, secretary of the Department of Public Welfare, said at a news conference in Harrisburg yesterday.

Pennsylvania is among a handful of states, including Minnesota and Massachusetts, to enact such measures. * * *

The new PA DPW policy is set forth in Medical Assistance Bulletin No. 01-07-11, re "Preventable Serious Adverse Events", issued January 14, 2008 (6 pages, PDF).

The nursing home providers warn that they are being stressed to a point of crisis in their ability to provide the intended services, according to a quote in the AP article:

“This safety net is in danger of disappearing within a few years if a concerted effort is not made by the commonwealth to adequately fund our facilities,” [Claremont Nursing and Rehab Center (Carlisle, PA) Administrator, Joanne] Wible said.

Update: 03/02/08:

On March 2, 2008, The Morning Call (Allentown, PA) posted an editorial, entitled "As Medicaid funds shrink, Pa. needs a plan", which highlighted the states' problems with Medicaid, as discussed last week in sesssions at National Governors Association:

The meetings of the National Governors Association follow a pretty standard agenda. The governors, Republicans and Democrats alike, discuss issues important to the statehouses and use the podiums that the association provides to make sure the federal government hears about them, too.

At the meeting held last week, the cost of health care was in the forefront. Specifically, the governors are worried about proposed cuts in Medicaid money to the states in President Bush's 2008-2009 budget.

Pennsylvania Gov. Ed Rendell joined other governors last week in asking Senate Majority Leader Harry Reid, Minority Leader Mitch McConnell, Speaker Nancy Pelosi and House Minority Leader John Boehner to block the implementation of new rules that would reduce federal dollars going to the states for Medicaid.

The pending changes were announced by the federal Centers for Medicare and Medicaid Services, CMS, which administers those programs. However, it isn't clear that Congress will be able to do anything. * * *

The editorial concluded:

Gov. Rendell has offered a plan to make improvements in the state's health-care plans and to cope with the looming Medicaid cuts.

Funding for his proposal would come from additional tobacco taxes and about $266 million over 10 years from the growing surplus in the ''Mcare fund,'' which was created in 2003 to help physicians pay for medical malpractice insurance. About one third of the Mcare surplus could be applied to Medicaid shortfalls, he said.

Given that the state has imposed other operating economies on Medicaid programs here, this is a sound proposal.

He needs the Legislature's support if all the poor, disabled and elderly Pennsylvanians who need Medicaid services are to be able to keep getting them as the dollars from Washington keep shrinking.