A bruising state legislative session ended with private hospitals, physicians and other providers facing $180 million in Medicaid reimbursement cuts. Now the hard part begins.
"The reductions are substantial, and I think it's been a tough year," said Alan Levine, secretary of the state Department of Health and Hospitals. "My bigger concern right now is what we're facing next year…. We're going to have to find $300 million to $500 million to make up for the loss of the federal match. That's just next year."
The following fiscal year, Louisiana will face a Medicaid shortfall of $1.2 billion, Levine said.
The reason is that the formula used to calculate the state's share of the Medicaid match involves per-capita income over a three-year period. Louisiana's post-hurricane growth and economic activity, fueled in large part by federal hurricane recovery funds, boosted per capita income, which in turn reduced the federal match.
"So we're sort of continuing to be victimized by Hurricane Katrina," Levine said.
The federal government now provides 80 percent of the state's $6.75 billion Medicaid funds. As a result of all the federal hurricane relief funds Louisiana received, the federal match would be cut to 63 percent from the current 72 percent level. Under Medicaid regulations, Louisiana would have to pick up the slack.
John Matessino, president and chief executive officer of the Louisiana Hospital Association, said he doesn't see how the state can have a Medicaid program after that kind of cut.
"You will have to totally eliminate some services. It will be devastating," Matessino said.
And that's before any of the national healthcare legislation, and the accompanying cuts in programs required to fund it, kick in, he said.
"People are very, very nervous about what's going on," Matessino said. "We're already having major problems funding healthcare in the state. We don't even know what Medicaid is going to look like in the future."
One of the options that politicians have discussed to pay for providing coverage for the uninsured is a reduction in the disproportionate share dollars, dollars Louisiana depends on to fund its rural and charity hospitals, Matessino said. Louisiana gets $800 million in disproportionate share funding.
"If suddenly those dollars are taken away, just think about what we'll do with charity hospitals. They will close tomorrow," Matessino said. "If you begin to look at it, some of those things look very much like doomsday scenarios for healthcare (in Louisiana)."
Matessino said the hospital association is working with Levine, who traveled to Washington, D.C. to lobby members of Congress, to come up with a solution.
Unfortunately, the rush for some sort of national healthcare reform means that some politicians are making decisions that they may not be qualified to make, Matessino said.
Levine and Louisiana's Congressional delegation want to pass legislation that would keep Louisiana's match at 28 percent. Levine said he does not know what the legislation's chances are of passing.
On the plus side, every member of the U.S. House of Representatives and the Senate that Levine has spoken to understands that Louisiana cannot absorb $1 billion of additional Medicaid cuts, and the urgency of the problem, he said.
Meanwhile, Matessino said private providers don't know exactly what's going to happen under the state's Medicaid reimbursement reductions.
Levine said he was happy that the state Legislature approved $213 million in hurricane relief funding, which will help hospitals statewide.
Although the bulk of the money will go to hospitals in the New Orleans area – hospitals in Orleans and Jefferson parishes will get $170 million – and in coastal parishes, Matessino said the funding will benefit hospitals statewide.
In addition, lawmakers put $26 million into the Medicaid private provider program, which could be used to bring in as much as $200 million in federal matching funds.
Providers won't know what kind of cuts they must absorb until Levine and DHH spell out the rules, such as what percentage in-patient hospitals or outpatient facilities will be cut, Matessino said.
"It's one of those things that has so many moving parts that it's very difficult to explain what the bottom line's going to be. We really don't know right now," he said.
The hospital association's members are anxiously awaiting the DHH formulas, so they can figure out whether they can absorb the cuts or will be forced to lay off workers, cut services or consolidate them, he said.
It's also unclear what the budget cuts will mean for physicians, he added. It was hard enough before to find physicians who would take on Medicaid patients.
Physicians face around $29 million in reimbursement cuts, Matessino said, but DHH will have to decide which specialties will take the hit.
Primary care physicians will likely be protected because Levine is trying to make sure that patients have access, Matessino said.