Kentucky’s Projected Medicaid Budget Shortfall Shrinks by $117M Due To Cost-Cutting Measures

New cost-cutting measures have caused the projected shortfall for Kentucky's Medicaid program next year to drop from $280 million to $163.2 million, Kathy Kustra, a "special Medicaid adviser" to Gov. Paul Patton (D), announced last week. To trim the deficit, which could still reach $220 million in 2003, state officials have reduced the dispensing fee paid to pharmacists, secured greater federal matching funds and frozen the introduction of new health programs statewide. The state also has taken "advantage of some one-time savings," such as changing the way hospitals are reimbursed for outpatient services from a fixed-payment system to a case-by-case basis. In addition, Kustra said that Patton will likely sign an executive order to establish a pharmacy and therapeutic committee, which would advise the Cabinet for Health Services on prescription drugs. Last year, prescription medications accounted for $433 million of the state's $3.2 billion Medicaid budget. State officials also are looking to expand a managed care program to control costs. Despite the decreased shortfall, Kustra warned that deficit projections could rise if the economy continues to decline (Associated Press, 9/27).