Bloomberg News

States Streamline Medicaid Using U.S. Funds to Cut Costs

January 23, 2012

(Updates with comments from Florida governor in 12th paragraph.)

Jan. 18 (Bloomberg) -- A stipulation in the 2010 health- care law that bans U.S. states from dropping Medicaid patients has forced them to be more efficient in managing the program to save money, according to a report today.

While Medicaid, the joint U.S.-state health plan for low- income people, is among the biggest expenses for states in a flagging economy, the law prevents them from dropping members or tightening eligibility. A Kaiser Family Foundation survey found that 29 states have streamlined their programs, with most using U.S. incentives to add new technology.

States and the federal government were projected to spend about $442 billion combined on Medicaid in 2011, with about 61 percent covered by the U.S. Twenty-six states challenging the constitutionality of the 2010 law at the U.S. Supreme Court contend the overhaul will saddle them with higher spending when it broadens Medicaid eligibility in 2014.

“It is likely that in the absence of the requirement,” keeping states from dropping Medicaid members, “more states would have limited eligibility for tightened enrollment procedures given ongoing budget pressures,” the report found.

Instead, enrollment in Medicaid and the children’s health program, called CHIP, grew or held steady in 48 of 50 states, according to the report. About half of states now provide Medicaid to uninsured children whose family income is as much as 250 percent over the poverty line, the report showed.

Parents Denied

At the same time, 33 states limit the eligibility of parents of children in the CHIP program to those whose incomes fall below the poverty level, and 43 continue to deny Medicaid benefits to low-income adults who don’t have children, regardless of their income, the researchers said.

States are facing “an extraordinary amount of pressure” because of budget constraints, Cindy Mann, director of Medicaid at the U.S. Centers for Medicare and Medicaid Services, said today at a briefing on the Kaiser report. “It does cause issues, but it also stimulates creativity.”

Twenty-nine states improved their management of Medicaid cases in one way or another, the report found. Some created online applications and improved verification systems to streamline access to the health programs, or used electronic databases rather than paperwork submissions from families to verify incomes.

Georgia and South Carolina used information from their nutrition assistance programs to speed eligibility.

“Medicaid and CHIP remain key sources of coverage for low- and moderate-income children,” the report said. “Coverage for parents, while remaining constant in 2011, continues to lag far behind that of their children.”

Premiums, Copayments

While the law allows states to control program costs by increasing premiums and copayments for Medicaid and CHIP beneficiaries, most states didn’t, according to the report.

In Florida, Republican Governor Rick Scott credited state agencies, not the federal law, with making health-care delivery more efficient.

Taxpayers “think we have to do what the private sector’s done,” Scott told reporters today in Tallahassee, the state capital. “We’ve got to figure out how to reduce the cost of things.”

Scott, a former chief executive of HCA Holdings Inc., the largest U.S. hospital operator, created the nonprofit group Conservatives for Patients Rights in 2009 to campaign against the U.S. health-care law. He was elected governor the following year, after Florida challenged the law in court, saying it was unconstitutional and a burden on states.

Arizona, Nevada Exemptions

Arizona and Nevada reduced eligibility for low-income adults under exemptions in the 2010 law, according to the report. Policies Arizona implemented in the last two years, including freezing enrollment for single childless adults, have saved the state about $500 million a year, said Matthew Benson, a spokesman for Republican Governor Jan Brewer.

“The governor recognizes the impact these decisions have on real people but also believes that the state has been successful in preserving its underlying Medicaid program for more than 1 million Arizonans who depend upon it,” Benson said.

Nevada’s program reductions affected about 200 recipients of a total Medicaid population of more than 300,000, said Charles Duarte, administrator of the state Division of Health Care Financing and Policy.

Duarte couldn’t provide dollar savings. The cuts mostly affected services for pregnant women who can seek care in state and federally subsidized health centers, he said.

--With assistance from Chris Christoff in Lansing, Amanda J. Crawford in Phoenix, Christopher Palmeri in Los Angeles, Michael C. Bender in Tallahassee and Alex Wayne in Washington. Editors: Adriel Bettelheim, Andrew Pollack

To contact the reporter on this story: Molly Peterson in Washington at mpeterson9@bloomberg.net

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net


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