Arkansas Medicaid Director Andy Allison told reporters Wednesday that $329 million in cuts to the $5 billion program over the next two fiscal years would be “awful but realistic.”
He and his staff examined every Medicaid dollar that the federal government doesn’t require the state to spend and made difficult choices, he said. It was the most systemic, meticulous review ever undertaken by the Department of Human Services, he said.
“We’re facing the largest fiscal crisis that system has faced. We’re at a watershed in health-care system reform and it merits that level of engagement,” Allison said.
When deciding what to pare, his team decided to avoid options that would cause immediate harm or death and those that would affect children, he said.
The cuts are designed to plug a fiscal hole of $138 million in the state’s Medicaid program or about 13 percent of the state’s share of the program costs. The state currently pays about 30 cents out ofevery dollar it receives in federal Medicaid funding. About 75,000 people in all will be affected, according to the Department of Human Services. Currently, Medicaid covers about 780,000 people.
The proposed cuts that have received the most attention are the elimination of Level 3 nursing facility care, which covers people who are totally dependent or need extensive assistance with one of the following conditions: feeding, moving or relieving themselves. Alzheimer’s disease ordementia also currently qualifies someone for Level 3 care. So does a diagnosed medical condition that requires daily monitoring if it would be life-threatening without it, Allison said.
About 10,000 to 15,000 people would be affected if that level of care was eliminated.
Last week, the Department of Human Services presented its list of cuts to the Legislature. Agency Director John Selig told lawmakers that some of the worst effects of the cuts could be avoided if the state participated in a federally-assisted expansion of the Medicaid program, adding to the rolls 250,000 people who earn up to 138 percent of poverty.
On Wednesday, Allison estimated that the net effect in 2014 of expanding Medicaid would be $44 million in increased revenue from increased tax revenue, switching some Medicaid recipients to the expanding population - to be covered fully by Washington, D.C., until 2017 with the state gradually paying for 10 percent of the costs by 2020. The economic effect of expansion would increase to $115 million in 2015.
The proposed cuts to the Level 3 nursing facility care and home and communitybased care have been estimated to be $42 million in 2014 and $101 million in 2015, Allison said.
Gov. Mike Beebe said last week that expanding Medicaid would forestall the need to get rid of Level 3 nursing care. Republican leaders have expressed skepticism that the Department of Human Services will actually make the threatened cuts.
On Wednesday, Beebe’s spokesman Matt DeCample reiterated that avoiding a shutdown of Level 3 nursing care is the “governor’s first priority.”
There also will be heightened restrictions or eligibility freezes in a host of other Medicaid programs, including dental services, outpatient rehabilitation services and prescription drugs for children in the ArKids A and B programs.
A 3-percent cut in Medicaid reimbursement to providers has also been announced. Allison said he was reluctant to impose deeper reductions in the midst of a payment overhaul that requires providers to switch from the traditional “fee for service” model where they are paid for each test and procedure to an “episodes of care” model where they are rewarded or punished financially for how efficiently they deliver care.
“I am very concerned about proposing a rate reduction at the same time that we are asking providers.. to accept a new role. It’s very difficult to do both of those things at the same time,” Allison said.
But Allison spent the most time discussing potentially life-threatening consequences for elderly Medicaid recipients who would be affected by the Level 3 nursing care cuts.
One real-life example, would be a 78-year-old with chronic obstructive pulmonary disease, diabetes and congestive heart failure who uses a walker. The person can eat without assistance and change their own adult diapers. The individual has been hospitalized four times in the last six months and is on multiple medications and oxygen.
That person would no longer receive the constant monitoring he now has and it would be “life-threatening,” Allison said.
DHS hasn’t estimated how many current Medicaid recipients might die if Level 3 care were eliminated, he said.
“We have not. I wouldn’t know how to do that. We know that these reductions cause harm,” Allison said.
Northwest Arkansas, Pages 15 on 11/22/2012