40 states to cut, freeze Medicaid payments in 2012

With virtually every state cutting costs in anticipation of increased Medicaid spending, a new Kaiser Commission on Medicaid and the Uninsured report finds that 28 states cut or froze hospital Medicaid payment rates in fiscal year 2011, and 40 states plan to in 2012, reports AHA News Now.

According to yesterday's report, state Medicaid spending is estimated to increase 28.7 percent this fiscal year to make up for the loss of federal funds, even with the temporary relief under the American Recovery and Reinvestment Act.

"Unemployment remains high with increasing numbers of poor and uninsured keeping pressure on state budgets and Medicaid programs to meet growing needs," said Diane Rowland, Kaiser Family Foundation executive vice president and Foundation Commission executive director, in a press release. "But the cumulative effect of two recessions since 2001 and a decade of constrained spending has left no cushion and many of the latest cuts will hit at the core of the Medicaid program."

How are states coping with reduced Medicaid payments? Hospitals have reacted with layoffs or clinic closings, cutting off care to Medicaid patients. A dominant theme of the report revealed that states are taking cost-containment efforts, including provider rate restrictions, benefit reductions, and higher copays for beneficiaries. Thirty-nine states restricted provider rates in 2011, and 46 states plan to next year. Almost all states cited making changes to Medicaid pharmacy programs. And five states this year increased copayments or imposed new ones, with 14 states planning to do so in 2012.

States also are relying on Medicaid managed care, moving away from long-term care models to community-based care, and streamlining enrollment procedures, according to the report.

For more information:
- read the AHA News Now brief
- here's the press release
- check out the report (.pdf)

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