Medicaid panel hears options for extra cuts

Associated PressAugust 6, 2011 

— Organ transplants could be limited, HIV drugs covered only with prior authorization, and dental care eliminated for 256,000 people if North Carolina's Medicaid agency is forced into a second round of budget cuts this year, state officials said Friday.

The Division of Medical Assistance outlined a range of extra cuts it could be forced to make as it falls short of the $356 million decrease that state budget writers ordered this year.

Several of the legislature's cost-cutting instructions require federal approval, which could take up to six months for some changes, said Lanier Cansler, the state secretary of health and human services, whose agency oversees the Medicaid program. That means the savings will be smaller than lawmakers forecast, forcing still more cuts on the program's nearly 1.5 million recipients and more than 70,000 doctors, therapists and other providers.

"The problem is that we can't do it quick enough to actually save $350 million," said Cansler, a former Republican state senator. "We're going to have a budget shortfall that we're going to have to make cuts beyond the $350 million."

That means the state will have to find another $32 million to $118 million in savings in the health care plan for poor children, older adults, and the disabled, he said.

Cuts are magnified

The overall impact of state spending cuts is magnified because for every $1 of state spending on Medicaid services, the federal government pays $2. That means this year's reduced state spending will take more than $1 billion out of North Carolina's Medicaid program, which is budgeted to spend $12.8 billion.

A $118 million cut in state Medicaid spending could amount to another $354 million in overall losses.

Legislative budget writers directed Cansler and Democratic Gov. Bev Perdue's administration to find other savings to keep within Medicaid's allotted funding. So Cansler's agency laid out Friday where those cuts could come from at the first of what will be monthly public forums to generate ideas for savings.

"We want the public to understand the complexities of the Medicaid program and how this will affect decisions to come," Cansler said.

Cuts to providers

Options include rate reductions to medical providers that could be 2 percent across the board or targeted to services like hospital outpatient care and private duty nursing. Hearing aids, mental health treatment and home personal care could be dropped for thousands of people.

Eliminating a service won't eliminate the expense for things like dental or mental health care because some recipients will seek help in emergency rooms or from other providers, the agency said.

"These things end up hurting people in the long run, and they are not always very logical," said John Carson of Raleigh, whose 31-year-old daughter Emily Carson receives dozens of hours of Medicaid help each week because her cerebral palsy keeps her in a wheelchair.

State lawmakers knew that federal approval for cutting what doctors and other providers are paid and other belt-tightening would take months, so many weren't expected to take effect until three months into the fiscal year that started in July, said Rep. Nelson Dollar, a Wake County Republican and key House budget-writer who worked on Medicaid funding. Perdue should press the Obama administration to speed the state's waiver requests, he said.

"Everyone knows that all of the states are having challenges with their budgets," Dollar said. "The department needs to continue to work hard on the areas that we identified as areas of potential savings."

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