December 6, 2012

State’s Budget Cuts Hit Health Care Providers

The bulk of Gov. Deval Patrick's emergency budget cuts hit providers of care to Medicaid recipients, with over half of the spending reductions being taken from rates paid to MassHealth providers.

Managed care organizations, nursing homes and fee-for-service providers saw the pot of money available for payments slashed by over $128 million on Tuesday. On Wednesday, state health officials said the cuts should not impact patient access to care.

"Nobody is getting paid less than they did in 2012," Health and Human Services Secretary JudyAnn Bigby said, noting the savings are achieved by reducing increases in the reimbursement rates baked into the fiscal 2013 budget.

While Patrick's hand was forced by tax receipts that fell short of budget needs, some providers worry that a trend of turning to Medicaid rates to solve the state's budget troubles could lead to patient access problems in the future if rates are not increased in the coming years.

"We continue to be concerned about not this specific cut, but the trend in the gap between what Medicaid pays and what it costs to care for patients. If we don't begin to address that gap, yes, we think it will have an impact on patient care and staff and the ability of facilities to hire," said Tara Gregorio, vice president of government relations for the Massachusetts Senior Care Association.

Patrick used his emergency budget-cutting powers to slash $225 million in executive branch spending, including $220 million in line item cuts. The reductions targeted special education funding, money for parks, and community residential services for the disabled, among many other accounts.

But more than half of the cuts came from MassHealth, including $86 million for managed care, $26.8 million for MassHealth fee-for-service payments and $15.1 million for nursing home supplemental rates.

The cuts amount to about a 2 percent decrease in spending on those accounts, and reduced by one half the rate increases approved by the Legislative and signed off on by the governor in the fiscal 2013 state budget.

"Our first priority as we approached trying to support this effort to align expenditures with revenues was to think about how to prioritize, first, members and you saw no member benefit cuts in any of the initiatives we proposed and on the provide side no provider actually experienced a cut. The changes we made were adjusting what would have been increases over fiscal year 2012 so we have no concerns that it's going to create access concerns for our members," said Dr. Julian Harris, director of the state Office of Medicaid.

Bigby said preserving access to care, particularly as the state implements an overhaul of the health care payment system with an emphasis on coordination and primary care intervention, factored into the administration's decision making.

Gregorio said senior care and nursing facilities operate with a $32-per-day gap between MassHealth reimbursements and the cost of providing care to patients. If left untouched, the rate increases would have shaved $2-per-day off the gap.

Gregorio said the Patrick administration kept the Senior Care Association apprised of its plans and has already invited the group to participate in planning for the fiscal 2014 budget. "In some ways fiscal 2013 has been written for us and we're looking toward 2014," she said.

The Massachusetts Hospital Association said the latest round of Medicaid cuts "comes on top of a long list of reimbursement reductions that place many hospitals and the programs they provide in greater jeopardy."

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