This is budget-writing time for many state legislatures around the United States, and this year almost every state is planning significant cuts to healthcare programs. Medicaid reimbursement is always one of the first targets when legislators need to cut, and this year the cuts are more painful than in recent memory. With communities battered by the recession, hospitals have seen an increase in bad debt and charity care. Medicaid cuts hurt healthcare facilities, and more importantly, the patients they serve. The examples from Louisiana, Mississippi and Washington detailed below are only a few of the many we come across each week.
CALIFORNIA
Health Net of California has agreed to pay at least $1.95 million to settle claims with hospitals that did not receive payments following the rescission of patients' policies. Under terms of the settlement agreement that was preliminarily approved by the court, Health Net will establish a "Facility Compensation Fund" and mechanisms to reimburse hospitals for the services they provided to rescinded health plan members. In addition, Health Net will provide each affected hospital with a list of the patients whose policies were rescinded so that the hospitals and the patients can receive closure regarding the rescissions.
LOUISIANA
Alan Levine, Louisiana's Health and Hospitals Secretary, defended his plans to close the New Orleans Adolescent Hospital before the state Senate's Finance Committee last week. He also predicted that the budget problems his agency faces will grow even worse in future years. Louisiana Gov. Bobby Jindal (R) has proposed closing Adolescent Hospital and moving its inpatient beds to Southeast Louisiana Hospital in Mandeville, La. Jindal says the move would save money without reducing the total number of available beds. New Orleans legislators are fighting the move, and the state House Appropriations Committee has added $14 million to the state budget to keep the hospital open through the 2009-10 fiscal year. Levine said the decision to restore money could eliminate funds that would otherwise go to community mental health programs. Regardless of the decision on Adolescent Hospital, state health services will likely see $375 million in budget reductions. Most of those cuts will be to Medicaid providers.
MICHIGAN
Michigan Attorney General Mike Cox has filed a petition for a rate hearing with the state Office of Financial and Insurance Regulation to oppose Blue Cross and Blue Shield of Michigan's proposed 32 percent premium increase in its Medigap coverage for senior citizens. "This is all about revenue for Blue Cross, not healthcare for Michigan seniors," said Cox in a statement. OFIR has 30 days from June 2 to begin the hearing process. BCBS of Michigan filed a request in January with OFIR to increase rates 55 percent for individual plans, 42 percent for group conversion plans and 32 percent for Medigap plans.
MICHIGAN, II
St. Joseph Mercy Health System plans to cut 350 full-time jobs from four hospitals in southeastern Michigan as its faces a severe budget deficit in the upcoming fiscal year. The seven-hospital health system announced that the cuts would come at its facilities in Ann Arbor, Saline, Howell and Livonia, Mich. Robert Casalou, St. Joseph Mercy's CEO, said the projected budget shortfall is $52 million. Casalou said about one-third of the cuts would come from reductions in overtime and part-time and temporary staff, and will amount to about $25 million over the coming year. According to the Ann Arbor News, the cuts represent about 6 percent of the work force across the four institutions.
MISSISSIPPI
State legislators in Mississippi have not been able to reach a compromise on a hospital tax to help fund the state's Medicaid program. Gov. Haley Barbor (R) is asking for a $90 million annual tax on hospitals. House and Senate negotiators agreed on a $60 million tax, but the deal was killed by Democratic insistence that the legislature commit to not cutting hospital Medicaid reimbursement rates. The Mississippi Hospital Association has indicated that its members would support a $45 million tax as long as the "no-cuts" condition was part of the legislation.
NEW JERSEY
Nurses at Cooper University Hospital in Camden, N.J., have voted overwhelmingly to ratify a new union contract with the medical center. The Health Professionals and Allied Employees union represents 1,100 nurses and managers at Cooper University Hospital. The two-year contract agreement, ratified by 98 percent of the nurses voting, addresses salary and benefits, the number of nurses needed for care, health insurance co-pays and participation in the Safe Patient Handling Program, a program developed by the National Institute for Occupational Safety. Financial terms of the contract were not disclosed.
NEW YORK
The city of New York has asked two Staten Island hospital systems – Staten Island University Hospital and Richmond University Medical Center - to submit a list of capital and infrastructure projects that they would fund using multi-million dollar low-interest, long-term loans from the city. The Staten Island Advance is reporting that the administration of Mayor Michael Bloomberg is considering the proposal. New York city councilman Vincent Ignizio said the hospitals are seeking loans in excess of $10 million, that would be backed by the healthcare trust fund for city employees by borrowing against capital spending funds available to the city or via loans through the state Dormitory Authority.
PENNSYLVANIA
Temple University Health System officials are moving ahead with their plan to close Philadelphia's Northeastern Hospital, after delaying a final decision for 30 days in the face of public outcry. TUHS will end all inpatient services at the hospital by June 30. Officials have said some employees have already been laid off. The hospital will reopen July 1 as an ambulatory care center. John Buckley, Northeastern's CEO, said the hospital lost $6.6 million in 2008, and was projected to lose $15 million this year.
WASHINGTON
ElderHealth Northwest, the largest provider of community-based care centers for elderly people in the state of Washington, has been forced to lay off nearly 40 people as a result of state budget cuts. The agency plans to close two of its six centers, which serve 800 seniors and disabled people, in the next few weeks. "Aside from my sadness that skilled and dedicated caregivers are losing their jobs, it is painful to make these cuts, because it will directly impact the quality of care that our seniors receive," said Nora Gibson, executive director of ElderHealth in a statement. "But we have no choice. The state has all but abandoned the vulnerable population we care for." ElderHealth's centers provide medical care, case management, rehabilitation therapies and opportunities for social interaction. The agency estimates that about half of the seniors it serves will lose coverage beginning July 1, when a 70 percent cut in Medicaid funding for low-income seniors takes effect.
WASHINGTON, II
Washington state officials are still attempting to cut Medicaid prescription reimbursement rates to drugstores, although not by as much as they originally wanted. The proposed rate as of July 1 would be 84 percent of the average wholesale price for brand-name drugs, 2 percentage points lower than the current 86 percent, according to a statement issued by the state Department of Social and Health Services. Doug Porter, Washington's Medicaid director, said the cut would save approximately $12 million per year. The state had attempted to cut the reimbursement rate to 80 percent of the average wholesale price, but a federal judge blocked the move.