Strained Medicaid in for cuts

State looks for savings via lower payments and cuts in service even as more people apply for help.

Staff WriterOctober 14, 2009 

North Carolina is trying to squeeze savings out of Medicaid, even as more people than anticipated sign up for coverage under the government health-care program for the poor.

So far, the cuts primarily mean that doctors, hospitals and providers are being paid less for their services, but state officials and others are warning that cuts to medical services and significant job losses in health care could be looming.

Cuts ordered by the legislature this year mean that Medicaid, which is funded jointly by federal and state government, will lose $1.5 billion this year.

Those cuts have touched nearly all areas of health care. Doctors and hospitals are being paid less to treat Medicaid patients, and the state is spending less on community mental health and personal care services for the elderly.

Meanwhile, more people are asking for help. About 8,000 more people than legislators budgeted for were signed up for the government insurance program in August, and September enrollment was 3,000 people higher than anticipated.

Unless there's a dramatic economic turnaround in the next year, the budget pressure could increase, said Lanier Cansler, head of the state Department of Health and Human Services, which oversees Medicaid.

The state is expected to get $440 million less next year from the federal government to fill Medicaid budget holes, he said, which may mean legislators will have to consider cutting medical services.

"We're at the point to where we're not going to be able to keep access in place if we reduce the budget substantially more," Cansler said Tuesday.

Department administrators also worry that some doctors may decide to stop treating Medicaid patients.

"We've got a tremendous challenge this year," Cansler said. "The challenge will just be multiple next year."

This year, most of the state's 1.4 million Medicaid recipients -- those who use the insurance for routine health care -- won't feel the pinch, Cansler said.

But doctors, hospitals and health agencies that care for them will get less money to do so, and paid caregivers will be watched more closely as the state tries to contain costs by making sure patients don't get treatments they don't need.

Hospitals, mental health providers and home health agencies anticipate thousands of job losses as a result of rate reductions and program constraints.

Mental health to be hit

Mental health providers who call the budget and program cuts "an avalanche of destruction" will hold a news conference today to demand the legislature call a special session to restore mental health money.

Late Tuesday, Gov. Beverly Perdue announced that DHHS has been told to find an additional $15 million to cushion the drop in community mental health spending. This year's Medicaid cuts in mental health came to $400 million.

Hospitals expect to cut about 400 jobs because of the cut in Medicaid payments, said Don Dalton, spokesman for the N.C. Hospital Association. Most of those losses will be from rural hospitals.

The recession has already forced hospitals to cut staff, Dalton said, and lower Medicaid payments only add more pressure.

"These will force administrators and trustees to make hard decisions on what services to eliminate in their communities," he said.

The home health care industry expects substantial job losses, with fewer patients receiving home care and agencies earning less money for them.

Up to one-fifth of the state's 100,000 home health employees could lose their jobs as a result of state and federal cuts, with the state budget reductions responsible for about 80 percent of the loss, said Tim Rogers, chief executive officer for the Association for Home & Hospice Care of North Carolina.

For elderly people who have trouble getting in and out of a bathtub or using the bathroom, the state wants to replace home care workers with bathroom bars and raised toilet seats, Rogers said.

"They're trying to replace caregivers with pieces of equipment," he said. "That's not the right thing to do."

Everyone wants Medicaid services to stay the same, Cansler said, but it's not possible.

"The system can't stay the same when we're taking the amount of dollars out of it the legislature has required us to take out of the system because of the budget crisis," he said.

lynn.bonner@newsobserver.com or 919-829-4821

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