Kaiser Daily Health Policy Report Rounds Up Recent Developments in State Medicaid Programs

The following is a summary of recent developments in states' Medicaid programs.

• Arkansas: In response to a $12.8 million cut to the Medicaid program imposed by Gov. Mike Huckabee (R), state Sen. Mike Beebe is seeking support among state senators for a plan that would restore the funding by using the state's tobacco settlement fund. Because Medicaid costs exceeded the funding that was budgeted for the program last spring, Huckabee ordered the state to make "administrative adjustments," charge copayments and tighten eligibility standards; Huckabee also used other parts of the state budget to cover the shortfall. Beebe and House Speaker Shane Broadway (D) instead have proposed using tobacco settlement funds earmarked for anti-smoking advertising to finance Medicaid. State voters already approved the allocation of the tobacco funds for anti-smoking efforts; to shift the allocation from anti-smoking programs to Medicaid requires 24 votes in the Senate. However, the state Legislature currently is not in session and thus cannot vote on the proposal. Only Huckabee has the power to call a special session, and he has said he will not do so because he is "unconvinced" enough senators support the plan. Beebe, however, said 25 senators are committed to the plan, adding that there would be more if Huckabee publicly supported the measure (Simmons, Arkansas Democrat-Gazette, 2/1).
• Indiana: Cuts in Medicaid payments to Indiana nursing homes were halted on Jan. 30 by a court order. Responding to a "huge" budget shortfall for the Medicaid program in this fiscal year, Gov. Frank O'Bannon (D) ordered state officials to cut $660 million from the program by 2003. Of that amount, state officials planned to cut $120 million from payments to nursing homes. The first phase was to include $22.5 million in cuts, $15.8 million of which have been implemented since October. The Indiana Health Care Association responded to the cuts by suing the state, alleging that the state failed to follow "proper procedures" in making the cuts. The court agreed and put on hold the remaining $6.7 million in cuts from the first phase. Medicaid Director Melanie Bella said the state plans to "correct its procedures" and impose the remaining cuts by April (Barton, Indianapolis Star, 1/31).
• Louisiana: An audit of the state's Medicaid managed care program, called CommunityCARE, found that the system is cutting costs by reducing emergency room visits, but that the state needs to do a "better job" of monitoring the program. The state plans by the end of 2003 to have all 500,000 Medicaid beneficiaries in CommunityCARE. The program now covers about 75,000 beneficiaries who live in rural localities. The state had implemented CommunityCARE to encourage beneficiaries to receive most of their medical care at a doctor's office rather than in an emergency room, where costs are more expensive. Between 1999 and 2000, the program saved about $13.7 million, according to the audit. Before the state expands the program to more beneficiaries, the state Department of Health and Hospitals should create guidelines for care so the state can better review the services that doctors offer, the audit recommends (Maggi, New Orleans Times-Picayune, 1/29).
• Mississippi: With the state's Medicaid program facing a $148 million budget shortfall this fiscal year, the state House on Feb. 1 approved a package that would cover about $120 million of the shortfall (AP/Memphis Commercial Appeal, 2/2). Under the bill, $108 million would be shifted from the state's tobacco settlement fund to Medicaid, and reimbursements and services would be cut to save an additional $50 million to $60 million. The bill also would reduce payments to Medicaid providers by 5%. For beneficiaries, prescription drug copayments would increase from $1 to $3; the number of prescriptions covered in a month would drop from 10 to seven; and eyeglass purchases would be limited to every five years instead of three (Branson, Memphis Commercial Appeal, 1/31). Lawmakers say they are looking for additional measures to cover the remainder of the budget shortfall. The state Senate has been waiting for the state House to complete action on Medicaid before it takes up the issue (Wagster, AP/Memphis Commercial Appeal, 2/1).
• Nevada: Gov. Kenny Guinn (R) has indicated that a "dramatic" increase in Medicaid's caseload may force the state to delay scheduled program expansions. While Guinn did not indicate what services would be delayed, a breast and cervical cancer screening benefit for uninsured women, as well as reimbursement increases for providers, could be among the cutbacks, the Las Vegas Review-Journal reports. In response to the caseload increase, the Legislature's Interim Finance Committee -- which can make budget changes even though lawmakers are currently out of session -- is meeting Feb. 5 to examine the program's enrollment and projections. Guinn said the state also is likely to use all of Medicaid's reserve fund to finance the program through February 2003 (Whaley, Las Vegas Review-Journal, 2/4). Guinn added that if "demand levels off" for Medicaid, the program will be able to "squeak through" without running a budget deficit (AP/Las Vegas Sun, 2/4).
• Oregon: Republican leaders in the state Legislature are criticizing Gov. John Kitzhaber's (D) plan to increase enrollment in the state's Medicaid program, called the Oregon Health Plan. The plan, which requires approval by the federal government, would expand income eligibility limits from 170% of the federal poverty level for pregnant women and children and 80% of the poverty level for others, to 185% for all. Kitzhaber's proposal also would require new beneficiaries to pay copayments for various services, such as $2 per generic medication and $250 per hospital admission. Some lawmakers have said providers will not be able to collect the copayments from beneficiaries and thus must absorb those costs. In addition, lawmakers pointed out that the Health Plan faces a $765 million shortfall in the current two-year budget cycle. Kitzhaber has requested that the Legislative Emergency Board authorize him to seek federal approval (Beggs, AP/Eugene Register-Guard, 1/30).
• Texas: To force the state to increase Medicaid payments to nursing homes, two Texas nursing home organizations have joined a lawsuit against the state Department of Health and Human Services. The Texas Association of Homes and Services for the Aging and the Texas Health Care Association filed a "friend of the court" briefing on Jan. 29 that said the state is not adhering to an agreement reached in 1997 to increase Medicaid reimbursements for nursing homes. The original lawsuit was filed by the Texas Alliance for Nursing Homes. The nursing homes say they lose $12 per day caring for Medicaid beneficiaries (Moritz, Ft. Worth Star-Telegram, 1/31).