Wednesday, August 03, 2011

Meanwhile, on the Medicaid front

Here's the latest on Medicaid funding in Massachusetts, which seems to be typical of many states.  I guess this is part of the promise of President Obama and others to lower "costs," i.e., appropriations, as part of health care reform.

Note, this came before this week's deficit reduction legislation.

The FY 2012 budget includes $10.4 billion for MassHealth — an increase of just $155 million over current FY 2011 projected spending. The FY 2012 budget assumes significant constraints in the MassHealth program, and relies on significant cuts and savings, most of which were part of the Administration’s original FY 2012 budget proposal. . . . All told, the FY 2012 GAA includes approximately $770 million in cuts and savings to the MassHealth program.

Cutting spending to such a large degree within one fiscal year will be very challenging, particularly as the MassHealth administrative budget to implement such initiatives is also being cut. Furthermore, the federal maintenance of effort (MOE) requirement removes the ability to modify eligibility or cap enrollment as an option to addressing budget gaps, unless
a hardship waiver is sought. This leaves provider and managed care capitation rate cuts and reductions in benefits as the main tools available to quickly achieve the large level of savings needed.

Based on assumptions included in the Administration’s original budget proposal, these savings are to be achieved primarily through new procurement strategies aimed at those currently enrolled in managed care as well as other controls on provider and managed care organization rates and payments. It is important to note that if MassHealth does not meet these savings targets, other significant programcuts might be necessary to stay within budget, or additional funding may need to be appropriated later in the year.

1 comment:

Barry Carol said...

If it were up to me, I would focus on the most expensive 5% of beneficiaries that account for 50% of program costs, especially the dual-eligibles. I wonder how many of these patients are in managed care as opposed to unmanaged care now. There could be a lot of potential for savings in everything from better hospital discharge planning to better supervision of care provided by nursing homes. Good case management should be able to both add value and reduce costs in caring for these high cost patients.