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State to cut Medicaid payments to medical providers

Copyright © 2016 Albuquerque Journal

SANTA FE – Faced with limited dollars and skyrocketing Medicaid enrollment, the New Mexico Human Services Department announced Tuesday it plans to generate as much as $33.5 million in savings by cutting provider rates for doctors, hospitals and dentists around the state.

The rate cuts, which would take effect in July, include several changes from a recommendation rolled out earlier this month by an 11-member panel that was made up of health care industry executives and practitioners from around the state.

Specifically, the HSD proposal would spare mental health and substance-abuse providers from being affected, but would single out the University of New Mexico Hospital for a steeper hit – including an 8 percent cut in inpatient services – than other hospitals.

When asked about the decision, Human Services spokesman Kyler Nerison said the UNM Hospital received a massive funding windfall after the state opted to participate in Medicaid expansion in 2014 and also gets roughly $90 million annually in taxpayer dollars to pay for indigent care services.

“Our priority was, and remains, protecting benefits for those who need health care the most – not big government bureaucracies,” Nerison told the Journal.

In response, a UNM Health Sciences Center spokesman said hospital officials will review HSD’s plan and weigh in on it during a formal public comment period. Most parts of the plan also require federal government approval.

“All hospitals in New Mexico, including UNMH, received additional revenue based on the expansion of Medicaid and as a result of thousands of New Mexicans receiving medical coverage,” Health Sciences spokesman John Arnold said Tuesday.

The proposed rate cuts are a fallout of the state’s budget crunch and were mandated by the Legislature in a $6.2 billion budget passed during this year’s 30-day legislative session.

While the HSD provider cuts could bring savings in state dollars, they would also mean New Mexico would lose out on as much as $127.5 million in federal funds. That’s because the federal government pays New Mexico between $3 to $4 for every dollar it spends on Medicaid services.

“By making these cuts, you’re really losing out on the federal dollars that mean a lot to the state and to the economy,” said Abuko Estrada, a staff attorney with the New Mexico Center on Law and Poverty.

He and other critics claim slashing Medicaid provider rates could also hurt patients’ access to health care and the level of care available, in large part because clinics might turn away Medicaid patients or trim their staffing levels.

But Human Services Department officials insisted Tuesday they’re trying to make sure New Mexicans enrolled in Medicaid don’t lose any benefits under their health care coverage.

“We have developed a proposal that complies with the Legislature’s mandate, saves the state $33 million and involves no cuts to benefits for New Mexicans who need it the most,” Nerison said. “Moving forward, we’re committed to adhering to the budget passed by the Legislature in an open and transparent way that protects Medicaid for New Mexicans who need it most.”

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. Under Medicaid expansion, which Gov. Susana Martinez decided in 2013 to accept, benefits were also extended to low-income adults.

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.

The Human Services Department’s provider rate proposal includes:

• A 3 percent cut for dentists – that would generate up to $1 million in state savings.

• A cut of between 2 to 4 percent for doctors – up to $1.5 million in savings.

• A 5 percent cut for hospital inpatient services, though the reduction would be 8 percent for such services at UNM Hospital – up to $10 million in savings.

• A 3 percent cut for hospital outpatient services, which would be 5 percent for UNM Hospital – up to $4 million in savings.

In addition to provider rate reductions, the agency is studying other possible cost-saving steps, including higher Medicaid eligibility guidelines and new mandatory payments for some patients, though those options would likely take longer to implement.

Meanwhile, New Mexico isn’t the only cash-strapped state grappling with possible Medicaid provider rate cuts. Oklahoma’s state Medicaid agency proposed slashing provider rates by 25 percent earlier this year.

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