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HSD urged not to cut Medicaid provider rates

SANTA FE – New Mexico doctors, nurses and health care advocacy groups spoke out Monday against the state Human Services Department’s plan to cut Medicaid provider rates, even as health care executives appeared resigned to the cost-saving move.

The proposed rate reductions, which were unveiled last month and would generate as much as $33.5 million in state-level savings, are a fallout of New Mexico’s budget crunch. They would take effect in July.

Lorie MacIver, an Albuquerque nurse and labor leader, was one of more than a dozen people who spoke at a Medicaid Advisory Committee hearing in Santa Fe. Like most of the others who spoke, she expressed concern about the state’s plan to address a daunting funding shortfall in the joint state-federal health care program.

“We are extremely concerned that the poorest and most vulnerable people of New Mexico are going to be hurt the worst,” MacIver said.

Meanwhile, Albuquerque physician Jennifer Anderson urged top HSD officials to consider ways to find more dollars instead of cutting costs, saying she’s concerned the provider rate cuts could hurt the state’s ability to recruit new physicians.

Human Services Secretary Brent Earnest told reporters after Monday’s hearing that the agency has asked advisory panels to study other possible cost-saving steps, but that those probably won’t be completed and submitted to the federal government for approval by July 1, the start of the state’s new budget year.

During the hearing, Earnest said the provider rate cuts and other steps – including Congress’ recent decision to waive insurance fees for one year – could make the agency’s Medicaid funding shortfall less daunting.

“We are satisfied we’re making progress on the budget, but it doesn’t mean we don’t have more work to do,” he said.

New Mexico’s Medicaid enrollment is skyrocketing – the agency now estimates there are roughly 877,000 New Mexicans on the state’s rolls and that number is expected to rise to more than 925,000 by July 2017.

The enrollment growth is due in part to Gov. Susana Martinez’s decision in 2013 to accept federal funding to pay for most of the cost of expanding New Mexico’s Medicaid program to low-income adults. Historically, the program has provided health care coverage primarily for low-income children, pregnant women, disabled adults and the elderly.

But paying for Medicaid growth has proved difficult, even as some advocates tout the economic benefits of Medicaid expansion.

Plummeting oil and natural gas prices prompted the Legislature to pare back state spending for the coming year, and although Medicaid spending is expected to rise, the funding level will not be enough to meet the Human Services Department’s request to keep up with enrollment growth.

Aware of the looming shortfall, lawmakers also mandated provider rate cuts in the $6.2 billion budget bill they passed. Overall, state Medicaid expenses will make up 15 percent of the state’s budget for the coming year – or roughly $929 million.

The proposed cuts – which would range from 1 percent to 8 percent – would apply to doctors, hospitals and dentists around the state, but would spare mental health and substance abuse providers from being affected. Although they could bring savings in state dollars, they would also mean that New Mexico would lose out on as much as $127.5 million in federal money. That’s because the federal government pays New Mexico between $3 and $4 for every dollar it spends on Medicaid services.

Lauren Reichelt, director of the Rio Arriba County Health and Human Services Department, told the Medicaid Advisory Committee on Monday that cost-cutting is misguided. (Eddie Moore/Journal)

Lauren Reichelt, director of the Rio Arriba County Health and Human Services Department, told the Medicaid Advisory Committee on Monday that cost-cutting is misguided. (Eddie Moore/Journal)

Lauren Reichelt, director of the Rio Arriba County Health and Human Services Department, said the health care sector makes up roughly a quarter of the jobs in the northern New Mexico county.

She also said during Monday’s hearing that focusing on cost savings, not more funding, is a misguided approach.

Meanwhile, in an open letter earlier this month, more than 20 health care advocacy and labor union groups also urged the Martinez administration and legislators to look at other funding sources for Medicaid.

“There are sensible options to increase revenues without harming New Mexico families,” the groups wrote in their letter. “The governor and lawmakers must consider options such as, but not limited to, raising tobacco or alcohol taxes.”

Martinez, however, has maintained a “no tax increase” stance since she took office in 2011.


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