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Doctors could take hits as Medicaid struggles in sinking economy

By Diana Manos

Medicaid enrollment is up and state budgets are down, making for some tough times in state Medicaid programs, according to an annual Kaiser Family Foundation Medicaid report released Monday.

Some Medicaid program directors said this could force them to make cuts to physician payments.

According to the new Kaiser study of all 100 state Medicaid programs, Medicaid enrollment is rising more rapidly than in the recent past, growing by 2.1 percent in fiscal year 2008. At the same time, states saw a spending growth of 5.3 percent, up significantly from the previous two years.

At a press briefing Monday, Vern Smith, principal at Health Management Associates and a co-author of the report, said physician reimbursement is the most likely target for state-imposed cuts after administrative cuts "because states can get the most immediate return the quickest."

"We're just beginning to see the impact of the economic slowdown," said Diane Rowland, executive vice president of the Kaiser Family Foundation.

Doug Porter, assistant secretary at the Medical Assistance Administration in the Washington State Department of Social & Health Services, said the main goal under trying financial times is to try to keep as much of the program as possible, cutting eligibility as a last resort. Porter said he may have to roll back some of the 14 percent increase given to doctors last year.

"We're in a survival mode here, trying to protect the core part of our program," he said.

According to the study, in fiscal year 2009 states expect to see even larger increases in Medicaid enrollment (3.5 percent), and spending will rise to 5.8 percent. Thirty states are reported to have "significant budget shortfalls" as they prepare their fiscal year 2009 budgets.

David Parrella, director of the Medical Care Administration for the Connecticut Department of Social Services, said his state is even more hard hit by the downturn because Wall Street directly affects his tax base. He said he's going to try and "do more with less," beginning with cuts to his administrative budget.

A greater problem he faces, however, is the shortage of primary care physicians to participate in Medicaid.

Porter called the survey "a reality check," and said he isn't surprised to find difficulties nationwide for Medicaid. But he doesn't expect much aid to come by way of the federal government.

"The relationship between the federal government and states on this program is supposed to be in partnership, but it has never been worse," he said. "Their distrust of the states and their agenda to withhold federal support and grind down what we can pay our providers is impacting our program's integrity."

Porter said there is always a lot of talk about cracking down on fraud and abuse to pay for shortfalls. But recovered money from fraud and abuse investigations only accounts for up to 3 percent of a state's Medicaid expenditures. That money shouldn't be overlooked, he said, but it's not enough to salvage a struggling program.

Parella said states are always looking to collect on fraud and abuse in good economic times and bad. "It's a myth when people think the reason states are having budget difficulties is only because of fraud; a lot of other factors play in," he said.

Both Medicaid directors said they will try to tighten their Medicaid computer billing edits to catch more accidentally misbilled claims.

How will Medicaid cuts affect your state and your practice? Send comments to Senior Editor Diana Manos at diana.manos@medtechpublishing.com