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Panel proposes rate cuts to Medicaid providers

Copyright © 2016 Albuquerque Journal

SANTA FE – New Mexico hospitals, dentists, doctors, long-term care facilities and behavioral health providers would see their Medicaid reimbursement rates slashed under a recommendation that could save the state up to $114 million in total funds but potentially hurt staffing numbers and the level of care available.

The proposed rate cuts are a fallout of the state’s budget crunch – specifically a $417 million Medicaid shortfall over the next 15 months – and were mandated by the Legislature in a $6.2 billion budget passed during this year’s 30-day legislative session.

“It’s not easy, but it has to happen,” said Joie Glenn, executive director of the New Mexico Association for Home and Hospice Care, who served as chairwoman for the panel that signed off on the recommendation earlier this week.

The rate cuts – which range from 1 to 5 percent – have not been formally adopted by the Human Services Department. The agency is currently reviewing the recommendation and is expected to make its proposal next week, HSD’s Medical Assistance Division Director Nancy Smith-Leslie wrote in a letter to advisory committee members. The rate changes would take effect July 1.

However, at least one member of the 11-member panel that came up with the rate reduction recommendation – after holding several weekly meetings – said Thursday she’s still hopeful the Human Services Department will not move forward with it.

Linda Sechovec, executive director of the New Mexico Health Care Association, said the reimbursement rate cuts could exacerbate staffing problems many long-term care facilities are already experiencing by forcing them to reduce staff hours.

Other health care providers have warned that cuts to their reimbursement rates could result in clinics turning away Medicaid patients and physicians leaving the state.

“This is just devastating,” Sechovec told the Journal, adding that more than half of the developmentally disabled patients at New Mexico long-term care facilities are enrolled in Medicaid.

While the reimbursement rate cuts may appear to be a foregone conclusion, she said she still prefers looking at revenue-generating options to bridge the looming shortfall.

In addition to provider rate reductions, other options are being studied, including higher Medicaid eligibility guidelines and new mandatory payments for some patients, though those steps would likely take longer to implement.

Meanwhile, this year’s budget crunch comes at a time when the state’s Medicaid enrollment is skyrocketing – roughly 850,000 New Mexicans are on the state’s rolls and that number is expected to rise to more than 925,000 by July 2017.

Medicaid is a joint federal-state health care program that has historically provided health care coverage primarily for low-income children, pregnant women, disabled adults and the elderly.

The 11-member panel, or subcommittee, tasked with coming up with provider rate recommendations was made up of health care industry executives and practitioners from around the state. It drew criticism from a few Democratic lawmakers for holding its meetings in private.

The panel’s specific recommendations included:

  • A 5 percent cut for hospital inpatient treatment.
  • A 3 percent cut for hospital outpatient services.
  • A 3 percent cut for nursing facilities and intermediate care facilities for patients with intellectual disabilities.
  • A 2 percent cut for dental providers.
  • A 1 percent cut for behavioral health providers and agencies.

The gaping shortfall the state is facing is due to a combination of factors, including the skyrocketing enrollment, a pending decrease in the federal matching rate and soaring drug costs.

The budget for the fiscal year starting in July includes $928.5 million in state funds for Medicaid in the coming year – a $20.8 million increase over this year’s levels.

However, the Human Services Department had requested an $85.2 million increase to keep up with enrollment growth and the looming decrease in the federal matching rate for states such as New Mexico that opted to expand their Medicaid programs.

The resulting gap balloons to a total of $417 million because the less-than-requested state spending means fewer federal dollars flowing to the state – the federal government pays New Mexico between $3 to $4 for every dollar it spends on Medicaid services.

“Some of these things have to go into effect because there’s a deficit,” Glenn said Thursday of the state’s Medicaid funding woes. “It was a difficult process, but we really wanted to make informed decisions.”

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