First Medicare, Now Medicaid

Facing unprecedented fiscal challenges, state Medicaid officials have been actively working to reduce the program’s growth and spending. All 50 states have implemented Medicaid cost containment measures in fiscal year 2003, according to the Kaiser Commission on Medicaid and the Uninsured.

If you have not focused on your state Medicaid program, and the potential changes to it that probably are already impacting your business, don’t delay.

Some notable facts about Medicaid, according to the Kaiser Commission:

• Over the past three years, every state has acted to control drug costs and to reduce or freeze provider payments; 34 states have restricted program eligibility; 35 have reduced benefits; and 32 have increased copayments for beneficiaries.
• The primary cause of the state-level fiscal crisis is a fall-off in state tax revenue of $62 billion, while spending increased $7 billion in FY 2002.
• Despite slower enrollment growth for the elderly and individuals with disabilities, these populations’ increased use of health care services accounted for almost 60 percent of Medicaid spending growth between 2000 and 2002.
• By July 2004, 37 states will be unable to balance their budgets and are looking at ways to achieve massive reductions in Medicaid spending.

The Medicaid program, a state-federal government partnership, was enacted into law in 1965, in the same package of legislation that created the Medicare program. There are essentially four types of Medicaid populations: the “categorically needy,” such as those who meet the Aid to Families with Dependent Children (AFDC) requirements; the “medically needy”; special groups such as “dual eligibles” or “qualified Medicare beneficiaries (QMBs)”; and participants in the State Children’s Health Insurance Program (SCHIP).

50 Different Programs

Federal Medicaid law defines a standard set of health care services that state Medicaid programs must provide, including hospital, pediatric and family nurse practitioners, nursing facility, family planning, physician, dental, pregnancy and home health, including medical equipment.

Beyond that, each state Medicaid program is dramatically different. Many states choose to provide “optional services,” such as group homes for people with mental retardation or developmental disabilities, hospice care or personal attendant services. Federal Medicaid waiver programs allow states significant flexibility in providing different health services to their populations.

The Medicaid recipient population is growing — it reached approximately 47 million in 2002. Seventy (70) percent of low-income children with disabilities are Medicaid recipients; 40 percent of low-income adults with disabilities are Medicaid recipients.

In 2002, the states and federal government spent about $280 billion on the Medicaid program. Typically, Medicaid is the second largest state budget item (education is typically first), averaging 20 percent of a state’s budget.

When a state is confronted with budget issues, it has limited options to reduce Medicaid spending. The state can (1) cut covered populations; (2) cut covered health services; and/or (3) cut payment rates to providers.

What to do? First, educate yourself on your state’s Medicaid program. Obtain a copy of your state’s Medicaid plan, which describes the covered population, covered services and payment rates. Find out what policies and procedures govern changes to each of these categories, and who has the authority to make these changes.

Next, partner with consumer groups to help plead your cause, particularly if those consumers come from districts of committee members. Third, always be prepared with solutions and innovative approaches.

Finally, come to the table ready to give up something. The budget crises are real; budget dollars are going away.

A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is vice president, government relations, for Invacare Corp., Elyria, Ohio. Bachenheimer previously worked at the law firm of Epstein, Becker & Green in Washington,D.C., and at the American Association for Homecare and the Health Industry Distributors Association. You can reach her by phone at 440/329-6226 or e-mail at [email protected].