Medicaid under scrutiny in tight budget year

WASHINGTON-Despite tight budgets and ballooning enrollment, Medicaid programs in Connecticut and across the country were able to preserve or even expand health care services to the poor in 2010, according to a new report released Tuesday.

But 2011 could be dramatically different.

Arizona officials have already moved to cut off Medicaid coverage for people in need of organ transplants, resulting in the deaths of two patients. Officials in Texas have pondered dropping out of the Medicaid program all together.

And 33 governors, all Republicans, have asked federal officials to lift a requirement that bars states from tightening Medicaid eligibility standards and thus reducing enrollment.

In Connecticut, Gov. Dannel P. Malloy said he’s weighing all his options for dealing with an exploding Medicaid tab.

In October, the Department of Social Services released a preliminary budget request that projected a nearly $1 billion increase in Medicaid costs starting this July. (The federal government provides a 50 percent reimbursement to Connecticut for its Medicaid expenses.)

“Medicaid in Connecticut represents the largest single increase in projected expenses going into the next fiscal year, in excess of $500 million in a state that’s going to experience about a $3.5 billion deficit,” Malloy said during a visit to Washington last month, before he was officially sworn in. “So that kind of tells you what the scope of the problem is.”

As for possible solutions, Malloy said, “everything’s on the table.”

“We need to examine what services we deliver, to whom we deliver them, and how cost effective that delivery system is,” Malloy said.

He noted that any cuts or changes would have to take into consideration the fact that the people who use Medicaid are dependent on “state government for their existence, their survival.” And he emphasized that his administration would be looking for ways to improve care, while cutting delivery costs.

Last fall, the Commission on Enhancing Agency Outcomes, a legislative panel charged with boosting government efficiency, recommended changes to Medicaid that officials said would result in about $70 million in savings.

“I’m hopeful our state will look at our Medicaid spending and just be smarter about it,” said Sen. Gayle Slossberg, D-Milford, co-chair of the commission. “People rely on this program so significantly for their basic needs… so we need to take advantage of opportunities where we know we can stretch a dollar.”

Sen. Toni Harp, co-chair of the Appropriations Committee, similarly said any attempt to trim the Medicaid budget should to done without curtailing access for the state’s neediest patients.

“Medicaid is working as a safety net program, and we really can’t afford to limit coverage in any way at that would erode the program,” Harp said.  “We can cut around the edges … but it’s a nearly $4 billion program. We’re not going to find $1 billion in savings.”

During a Tuesday conference call on the new Medicaid report, officials in Washington tried to send a reassuring message to anxious leaders like Malloy about the tough decisions to come.

Cindy Mann, a top official at the federal Centers for Medicare & Medicaid Services, acknowledged that the program would be coming under intense scrutiny in state capitals across the country, as governors look for ways to relieve budget pressures.

“We’re hoping to be really active partners with states to help them find ways of doing that [in a way] that will improve care as well as lower costs,” Mann said, during the conference call organized by the Kaiser Family Foundation, which produced Tuesday’s Medicaid analysis. “We’re very open… to hearing states’ ideas and seeing where we can accommodate initiatives that states come up with.”

She said the health care reform law offers new tools for states to pioneer they way they deliver health care. Citing new grant opportunities for demonstration projects and other initiatives, Mann said her agency would be working “energetically” to make sure governors were aware of all their options.

Asked about the GOP governors’ request to loosen the so-called “maintenance of effort” requirement, which forces them to preserve current eligibility guidelines, Mann did not give a definitive answer. But she signaled said federal officials would look much more favorably on efforts to innovative, rather than efforts to slash.

“We all know that cutting back on coverage doesn’t move us toward better quality of care and lowering costs,” she said.

As the Kaiser report indicates, states were able to preserve their Medicaid programs last year in large part because of a massive cash infusion from Congress. Lawmakers twice passed legislation sending extra federal matching funds to the states for Medicaid, with the maintenance-of-effort provisions attached as a condition of receiving the federal funds.

As a result, the Kaiser survey found that 49 states, including Connecticut, “held steady or made targeted improvements” in their Medicaid eligibility rules and enrollment procedures. “Without the enhanced federal funding and maintenance-of-effort requirements in the ARRA and health reform laws, it is likely that more states would have made cutbacks in coverage to cope with budget pressures,” the Kaiser report found.

But that extra cash runs out at the end of June, threatening to put states at the edge of a fiscal cliff.

Tricia Brooks, senior fellow at the Georgetown University Health Policy Institute Center for Children and Families, said on Tuesday’s conference call that governors should press for another found of federal assistance, instead of lobbying for the ability to cut eligibility.

“It would be one of the best ways to help states through this time, until they fully recover,” Brooks said. “And it certainly would be the best way to make sure children don’t return to the ranks of the uninsured.”

Malloy said he’d love another bailout, but added, “I’m not holding my breath.”

He may not make any major decisions on changes to Medicaid until he has a full-fledged commissioner in place at the Department of Social Services. His administration is conducting a national search for a new DSS leader. In the meantime, Rell’s pick, Michael Starkowski, is continuing in that post as interim chief.

“We’re all hoping he finds a commissioner as soon as possible… but I don’t want him to take just anybody,” said Harp. “I want him to make a very considered decision. There’s a lot of work to do in that department.”