State, federal Medicaid debates closely watched

Jan. 29--TUPELO -- The people who take care of Medicaid recipients are watching both state and federal lawmakers closely.

In the short term, Mississippi legislators have to handle a nearly $90 million deficit in the state's funding. Any cuts trigger decreases in federal matching funds and cuts to providers.

For the longer term, they are watching debates at the federal level, where shifting Medicaid funding to federal block grants could significantly reshape the money available.

In Mississippi, Medicaid touches one in four people, including poor children, the disabled and grandparents in nursing homes.

"The recipients are your neighbors," said Roy Mitchell, executive director of the Mississippi Health Advocacy Program, which advocates for health consumers.

It takes $5.88 billion to cover more than 779,000 Mississippians. Children make up the largest group on Medicaid, but the highest costs come from taking care of those who need long term care in nursing homes.

The federal government pays the largest share -- $4.35 billion -- and makes many of the rules about who should be covered. The anticipated Medicaid cost to the state for 2016 fiscal year is $1.008 billion.

State deficit

The Legislature allocated $919 million, creating the $88.9 million deficit. The deficits aren't unusual, and legislators usually find ways to cover them.

"Medicaid has always funded long-term care and believes in taking care of the elders of the state," said Christie Vance, chief financial officer at Mississippi Methodist Senior Services, which relies on Medicaid to cover the costs for 65 percent of the people who need long-term care at Traceway Retirement Community and its other campuses around the state.

But the deficits create heartburn for providers who have to worry about cuts to rates.

"It's really hard to plan just to survive, much less grow," when you are worried about cuts, said Marilyn Sumerford, executive director of Access Family Health, which operates federally qualified community health centers in Smithville, Tremont, Houlka and Tupelo. Medicaid covers about a third of their patients.

North Mississippi Health Services chief executive officer Shane Spees is already noticing troubling trends. Last year, the Tupelo-based health system provided 10 percent more services to Medicaid patients, but was reimbursed at the same level as the previous year. Medicaid contributes about 12 percent of the hospital's revenue.

"We lost $7 million taking care of Medicaid patients," Spees said.

Additionally, Medicaid just announced changes to its formula for reimbursing pharmacies that will significantly impact the hospital's costs for expensive chemotherapy drugs if it is implemented as presented, Spees said.

Before Medicaid cuts providers, Spees said he would like to see them look closely at the insurance companies overseeing Medicaid managed care programs that are getting 11 to 15 percent administration fees plus a 2 percent profit.

"Why would the first place you look to make cuts be the major financiers of the program" Spees said, as a tax on hospitals provides a major source of the matching funds for Medicaid.

Federal changes

Bigger changes could come as Congress considers how to allocate federal funds for Medicaid. In a state already challenged to meet the current obligations, taking on a greater share of costs doesn't seem tenable.

Mitchell is particularly alarmed.

"The goal is to dramatically reduce the federal Medicaid costs and shift the burden to the states," Mitchell said. "The gravity of this is huge. If they pass block grants, there's no turning back" because of the large amounts of money involved.

Others are taking a wait and see approach.

"It's too soon to really estimate the impact," Spees said. "There's too many variables."

The block grants would potentially offer more flexibility for states to meet the needs and avoid a cumbersome process for waiver applications.

"I'm not totally closed-minded to the opportunities to be creative," Sumerford said.

Community health centers have received strong support from both sides of the political aisle because they can show benefits, Sumerford said. She's concerned that smaller allocations could trim the preventive services that aid patients and save money.

It's much less expensive to manage someone's blood pressure at the clinic level than to treat a stroke at the hospital, Sumerford said. If someone becomes disabled because of a health issue, the difference in costs is even deeper.

"You don't want to miss the opportunity to make the investment to keep people well," Sumerford said.

The only thing for certain is that change is coming.

"No matter what changes the industry sees over the next few years, we will work with the Division of Medicaid to ensure the needs of our elders are met with the highest quality of care possible," Vance said.

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