Drugs, Provider Payments Popular Targets of Budget Ax

On January 13 the Kaiser Commission on Medicaid and the Uninsured (KCMU) released a report showing that 49 states had planned or implemented Medicaid cuts in Fiscal 2003.

Thirty-two states had planned or implemented a second round of cuts. Actions implemented or planned include the following (see chart on Original article: page 1):

• Provider payment reductions (37 states), including freezing provider rates or reducing rates or increases.

• Prescription drug cost controls (45 states), including prior authorization, preferred drug lists, monthly prescription limits, new or higher beneficiary copayments, and mandating generics.

• Reducing benefits (25 states), including restricting or eliminating mental health and substance abuse benefits, dental coverage, occupational or physical therapy, and inpatient hospital days.

• Eligibility cuts and restrictions (27 states).

• Increasing beneficiary copayments (17 states), including emergency room, emergency transportation, and physician visits.

In addition, 17 states had planned or taken action to reduce spending on long-term care, both in nursing homes and community-based settings.

The current state fiscal crisis has entered its third year, according to KCMU, and the longer the crisis continues, the greater the increase on budgets. Deeper program cuts are likely, when states deplete “rainy day” funds.

“Daily Health Policy Reports” of www.kaisernetwork.org for January 15, January 22, and March 7 report on specific actions taken by states:

• Kentucky’s Governor Paul Patton (D) announced plans to end some Medicaid coverage for nursing home and at-home care, impose fees for dental and other health care, and cut reimbursement for outpatient hospital care. Even with the cuts, the program has a projected deficit of $200 million.

• Tennessee’s Medicaid managed care program has a budget deficit of $258 million, according to the program director. After receiving a federal waiver in 2002 to restructure TennCare benefits and eligibility, the state reverified eligibility. Projected savings were less than anticipated, and the budget deficit might increase if the state loses a legal suit concerning reinstatement of benefits.

• Florida State Senate President Jim King (R) said that the state will need to consider cutting benefits and eligibility. State lawmakers met to discuss the Medicaid budget problems at a health care summit in January.

• Iowa faces a $76 million Medicaid budget deficit in Fiscal 2003 and a $100 million deficit in Fiscal 2004. State lawmakers are considering changing prior authorization rules, cutting pharmacy reimbursement rates, capping the number of prescriptions per beneficiary, and changing copayment requirements.

• New Jersey legislators introduced a bill that would implement a preferred drug list for the Medicaid and drug assistance programs. If enacted, the legislation is projected to save $80 million a year. In 2002 the state spent $840 million on prescription drugs in the two programs.

“Medicaid Spending Growth: A 50-State Update for FY 2003” is posted on the Web at www.kff.org/kcmu. ▪