Finding ways to curb Medicaid growth may be toughest task

Aug. 28--JACKSON -- Perhaps no task is more daunting for legislators looking for ways to rein in state spending than the budget for the Division of Medicaid.

The "working groups" formed by Lt. Gov. and House Speaker Philip Gunn to look at state spending issues recently took the first step in dealing with the federal-state Medicaid program.

"How do we reduce the size of the dollars" going to Medicaid, Gunn asked the agency's executive director, David Dzielak, at a recent hearing of the working group.

"We're starting in a pretty big hole," Dzielak replied. "We are 50th in every (health care) category," meaning Mississippi has a lot of unhealthy people who are placing a drain on the state's revenue.

That drain has been apparent for a number of years. For more than a decade, legislators and multiple governors have struggled to fund the budget for the Division of Medicaid, a federal-state program that provides health care in Mississippi for the disabled, poor pregnant women, poor children and certain segments of the elderly.

According to a graph presented by Gunn and Reeves, state-support funding for the Division of Medicaid has increased 61 percent since fiscal 2012, from $588.2 million to $948.6 million.

Those numbers, though, appear not to tell the entire picture. According to the fiscal year 2013 budget book published by the staff of the Legislative Budget Committee, total state-support funding for the Division of Medicaid in fiscal year 2012 was $763 million or $174.8 million more than represented by Gunn and Reeves, meaning the 61 percent rate of growth is misleading. Still, no one is disputing the fact state spending on Medicaid is one of the fastest-growing areas of state government.

Dzielak said two factors are driving the increase in Medicaid spending. The largest, he said, is simple health care inflation -- resulting in 11.6 percent of the 24.1 increase in expenditures Dzielak said has occurred since 2012.

The bulk of the rest of the increase, 9.6 percent, is attributable to the Patient Protection and Affordable Care Act, better known as Obamacare, Dzielak said.

That increase occurred primarily because the method of determining eligibility was changed by the ACA, making more people eligible for Medicaid.

Dzielak said the biggest expenditures for the Division of Medicaid in order are:

--In-patient hospital care

--Long-term care, such as nursing home care, including for the elderly

--Drugs

--Physician reimbursements

Rep. Joel Bomgar, R-Madison, said in looking to reduce costs in the program, the Legislature should re-examine which programs the states must offer if they participate in the federal Medicaid program and which are optional. Dzielak said that would be fine, but pointed out providing drugs is an optional service that he said would be a mistake to eliminate.

Bomgar also suggested appropriating a set amount of revenue for the program and, when the funds run out, not provide the deficit appropriation the Legislature normally provides. It is not clear, though, how that would impact the elderly living in nursing homes or the disabled on life-saving treatments.

Rep. Omeria Scott, D-Laurel, suggested changing the law to make it more difficult for people, particularly the elderly, to divest of their property such as homes, by giving them to relatives and then being admitted to a nursing home where all the costs are paid by the Division of Medicaid. The homes could be used to pay part of the costs of the nursing home care, she said.

Dzielak said, in general, it will be difficult too curb costs in the program.

"We need to start educating people about healthy lifestyles and let it be their choice," he said.

Dzielak said he is hopeful the managed care model the Division of Medicaid is now using helps curb the costs. Under the program, managed care companies are paid a set amount of money to provide all the health care services for Medicaid recipients instead of the agency paying health care providers individually for each service rendered to the recipient.

He said about 65 percent of the recipients are in the managed care program. Dzielak said the recent expansion of the program to in-patient hospital care could have a big impact. The program does not encompass nursing homes at the current time.

The goal is for managed care providers to stress preventive care that is less expensive than providing treatment only when someone gets sick.

"We are looking for them (managed care companies) to be not just case managers, but care mangers," he said.

Currently, about 772,300 Mississippians are enrolled in the Medicaid program, including 50,000 in the Children's Health Insurance Program for the children of the working poor. Currently, the federal government pays 74.1 percent of the cost of providing care to Medicaid recipients -- the highest match rate in the country -- and 100 percent of the costs for CHIP enrollees.

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Twitter: @BobbyHarrison9

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