La. Medicaid funding unexpectedly slashed by $859M


BATON ROUGE, La. (AP) - Louisiana's health department was working Monday to strip $859 million from the state's Medicaid program for the poor and uninsured, cutting 11 percent of the funding for health services after Congress unexpectedly slashed the state's Medicaid payment.

The cuts to the budget came as a surprise to Gov. Bobby Jindal's administration and lawmakers, cropping up last week when Congress reduced Medicaid funding to the state in the just-passed federal transportation bill as part of Republicans' efforts to offset some of the expense in highway funding.

Congressional action blows a hole in the health care budget crafted by the administration and lawmakers for the fiscal year that began Sunday. On the chopping block are charity hospitals, hospice care and Medicaid providers who thought they had escaped deep reductions in the 2012-13 budget.

"I think we're going to have to make some tough decisions," said House Appropriations Committee Chairman Jim Fannin, D-Jonesboro.

The Jindal administration outlined expected cuts last week topping $1 billion, from the $7.7 billion Medicaid budget that provides services to the poor, elderly and disabled. The congressional cuts caused a ripple effect about $240 million below the worst-case scenario outlined last week, according to information provided by the Division of Administration.

"We'll deal with it as quick as possible," said Commissioner of Administration Paul Rainwater, the governor's top budget adviser. "It's going to be tough. You have to prioritize."

Requests by The Associated Press to speak with Health and Hospitals Secretary Bruce Greenstein were denied.

Greenstein last week outlined cuts that will eliminate programs that care for women with breast and cervical cancer, provide hospice care and offer adult dentures to the poor and uninsured.

Funding to the LSU public hospitals and rural hospitals will be slashed, threatening some facilities with closure. The rates paid to the doctors, clinics and other health providers who care for Medicaid patients would be slashed up to 10 percent.

"I'm not sure that that's exactly where things will wind up. And I say that because I simply think that was too quick to have put a lot of thought and a lot of effort into it," Fannin said.

Rainwater said the cuts described last week are the "general outline" for the types of reductions that will be made in the final plan. He didn't offer a timeline for when the cuts will be made.

The health department had a $650 million increase in its budget this year before the Medicaid funding was cut by Congress. Greenstein told lawmakers that boost in funding didn't keep up with medical inflation and reflected increases in the use of Medicaid services by those eligible. Even with that increase, the department still was making reductions to keep its budget in balance - before the new cuts forced by Congress.

Fannin said the Jindal administration hadn't yet contacted him to discuss the cuts. Because the reductions are tied to a direct reduction in federal Medicaid funding, they can be done in the Department of Health and Hospitals without legislative decision-making involved. But Fannin said he expects lawmakers to be included in deciding the cuts.

Health care providers who receive money from the Medicaid program were bracing for deep reductions - and waiting Monday for figures to show how much spending would be slashed from their programs.

"We haven't been a given number or target. At this point, we're very concerned, but we don't know what the implications are," said Roxane Townsend, head of the LSU Health Care Services Division, which oversees a network of public hospitals and clinics.

Townsend said half her division's budget is tied to uncompensated care funding that helps cover the costs of providing services to the uninsured, funding that Greenstein has said will be cut. Townsend said elimination of much of that funding could close some of the hospitals.

A statement issued by Jerry Phillips, undersecretary of the health department, said the agency was working with the governor's budget office to balance the budget and cope with the congressional reduction, but offered no details.

Congress targeted a provision that U.S. Sen. Mary Landrieu added to the federal health care overhaul law that was designed to buffer Louisiana from a Medicaid rate drop because of the influx of rebuilding dollars after hurricanes Katrina and Rita in 2005. An error in the writing of the provision has sent hundreds of millions more to Louisiana than what was initially expected.

In the federal highway bill, House Republicans sought to reverse the error, dropping the state's federal Medicaid match rate. That means the state must put up more money to generate all the federal Medicaid money included in this year's budget. Since the state didn't have the extra money to put up, it causes the $859 million hole, forcing cuts.

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