Underfunding, High Medical Costs Lead to $150M Medicaid Debt in Maryland

A new Maryland legislative report has found that the state's Medicaid program is now $150 million in debt, which could "force" lawmakers to reduce benefits, the Washington Post reports. The report, slated to be released later this month, finds that Gov. Parris Glendening (D) "underestimated" both the number of Medicaid beneficiaries who would enroll in the state's managed care program, HealthChoice, and the costs of these individuals' treatment and medication, according to David Romans, a legislative budget analyst who helped prepare the study. Glendening, the Post reports, allocated enough funding for 428,000 Medicaid beneficiaries, but the actual number has neared 458,000 and "is expected to rise" as the economy worsens. In addition, managed care organizations participating in HealthChoice have "complain[ed]" that reimbursements from the state are too low to cover the cost of care. Some health plans are considering ending their participation in HealthChoice, which, according to Del. John Hurson (D), would create "chaos" for Medicaid beneficiaries, forcing them to find physicians "willing to accept direct reimbursement from the state often at extremely low rates." House Speaker Casper Taylor (D), one of the "architects of Maryland's public health care system," said, "We have two choices. Either find more money for health care programs, or (make cuts)" in Medicaid.

Mental Health and Nursing Homes Endangered
While some observers believe that cuts are "inevitable," the Glendening administration has said it wants to make "targeted cuts" to reduce the program's debt "gradually," the Post reports. "We have been focusing entirely on being more efficient," Deborah Chang, deputy secretary for health care financing, said, adding, "We have carefully structured our proposals to not affect the quality of care." However, the Post reports that the Medicaid shortfall is "straining" other state health programs, particularly the mental health system and nursing homes. The former is running a $30 million debt, and mental health providers, which serve Medicaid beneficiaries on a fee-for-service basis, also say that reimbursements are too low. Twenty percent of the state's 250 nursing care facilities have filed for bankruptcy. According to Romans, nursing homes have cost the state $33 million above what was budgeted. "The costs to the Medicaid program for nursing facility services are escalating at a pace that is unsustainable," Chang said (Mosk, Washington Post, 10/2).