Healthcare providers in South Carolina will face their first payment cut in three years after Gov. Nikki Haley signed a bill repealing a 2008 proviso in state law that prevented the Department of Health and Human Services from lowering Medicaid reimbursement rates.
The 3 percent rate cut, set to go into effect on April 8, will save the state an estimated $80,000 per day and as much as $7.5 million by the end of the 2011 fiscal year. The move allows the state to maintain its current coverage.
"You heard me say in the state of the state that we were the only state in the country that didn't allow our Health and Human Services director the flexibility he needed to drive costs out of the system," said Haley at a bil-signing press conference. "What you are seeing when we sign this bill is that the patients come first, the providers are secondary, and through that we will prevent further service reductions."
[See also: HHS offers states advice on achieving Medicaid savings; State budgets groan under weight of Medicaid expenditures]
Proponents of the measure say it will put an end to Medicaid program cuts that have included dropping coverage for eye exams, dental care and some therapies for people with disabilities.
Further program cuts were not going to yield significant savings, according to HHS Director Tony Keck.
"We're getting to a point with optional services where it does us more harm probably than good to actually cut pharmacy, to cut hospice and do some other things," he said earlier this year amid efforts to rework the state's Medicaid budget.
Doctors in the state and some legislators who voted against the reimbursement cut warn it could create access issues, particularly in rural areas.
"We understand sacrifice and know that we must have some part in helping to balance the Medicaid budget," said Republican Rep. Todd Atwater, who is also CEO of the South Carolina Medical Association, "but even this 3 percent cut may be too much for physicians to bear, particularly those in rural areas."
To allay those fears, Keck released a statement after the legislation passed. "We've committed to the Legislature that this will be a data-driven process with patient outcomes and access first and foremost in our decisions," he said.
The move to lower reimbursements comes less than a month after state officials approved a $100 million bailout of the Medicaid system. It was the second $100 million infusion from the state to prop up Medicaid's budget; high unemployment in the state has increased the number of people in the program.
Even with the bailout money, $3 million in savings from dropped optional coverage and the projected $7.5 million in savings from the reimbursement cuts, the program is still likely to come up $17 million short for the fiscal year, which runs through the end of June. The state will likely need to take additional action to close the gap, as current funding is expected to last only through mid-May.