No backup for cuts in Medicaid, state says

Thursday, November 29, 2012

— The state has no backup plan for as many as 15,000 nursing-home residents and those receiving community and home-based care who need help in feeding, walking and other basic needs if $329 million in proposed Medicaid cuts proceed, the state’s Medicaid director told lawmakers Wednesday.

Cuts in fiscal 2014 and 2015 would likely force many to leave nursing homes, said Director Andy Allison.

But expanding Medicaid by up to 250,000 people would take in enough federal money to avoid those cuts, he said.

“We do not have a plan to provide services from some alternative program or funding source,” said Allison, referring to the elimination of Level 3 nursing care, which provides services to between 10,000 and 15,000 people. The cuts in Level 3 care, the largest of nearly a dozen broad groupings of freezes, reductions and eliminations in Medicaid, would help resolve an anticipated $298 million deficit.

Gov. Mike Beebe has proposed $160 million in general revenue and one-time savings to pare the gap to $138 million in fiscal 2014.

Those eligible for Level 3 care have already “spent down” their financial resources to an asset total of $2,000 for individuals and $3,000 for couples to qualify for Medicaid, said Department of Human Services officials.

Nursing homes, particularly in rural areas, could close if the spigot of Medicaid dollars for the nursing-care stops, Allison said, but he had no firm estimates on how many would close if the cuts go into effect.

State Rep. Hank Wilkins IV, a Pine Bluff Democrat, said he was “horrified” at the prospect of throwing senior citizens out of nursing homes.

“We’ve got to have some alternatives to put on the table so that legislators can say, ‘OK, we can eliminate this, this and this’ in order to make sure that we don’t have — literally — people wandering the streets, possibly thousands of them, who don’t have a place to go.”

Allison said his staff considered other cuts but found them even more harsh. Federal restrictions largely prohibit cuts in programs that serve children, and other cuts would create costs that could widen the deficit, he said.

“We simply did not have in front of us an option to reduce spending this much without causing extraordinary harm,” he said.

He gave an example of a low-income parent with a “sudden and enormous” medical expense.

“We would be removing support for them in literally their moment of crisis and need, which is something that they can’t prepare for. Even though we anticipate certain harm from eliminating Level 3 care, there is at least the advance notice and time between now and then,” Allison said.

Expanding Medicaid by 250,000 people as allowed by the Patient Protection and Affordable Care Act would “offset or more than offset” the proposed cuts in Level 3 care, Allison said.

The state Department of Human Services has estimated that expansion would net $159 million for state coffers by 2015. The Level 3 cuts are estimated to save $143 million over the same period.

Republicans have mostly opposed a Medicaid expansion so far, but Sen. Randy Laverty, a Jasper Democrat, said opponents of expansion “have never heard what they’re going to hear from folks if this plan moves forward.”

After Allison said that expanding Medicaid would remove the need to eliminate Level 3 care, Rep. Tim Summers, a Bentonville Republican, said he hoped the Beebe administration wasn’t misleading lawmakers and the public.

“I certainly hope that this doesn’t come out to where this is some kind of political game. I think that would be a terrible thing to do to people in the nursing homes and the families and that would be a very immoral thing,” Summers said.

Allison said his staff conducted an extensive review of possible cuts and the reductions they decided to propose were the best possible option.

The $5 billion Medicaid program covers about 780,000 state residents, including the disabled, the elderly, pregnant women and low-income children. The state currently pays about 30 cents of every Medicaid dollar. The federal government picks up the rest of the cost.

Even with the $329 million in proposed service cuts over the next two years, the program is expected to grow to $5.2 billion in 2014, mostly because of rising medical costs.

After a 50-minute discussion, state Sen. David Johnson, a Democrat from Little Rock, said his panel, the Human Services Subcommittee of the Arkansas Legislative Council/Joint Budget Committee, would meet at 9 a.m. on Dec. 18 to continue talking about the Medicaid cuts.

Arkansas, Pages 9 on 11/29/2012