Louisiana cuts Medicaid pay again as state faces budget shortfall

Louisiana, facing an $50 million Medicaid budget deficit, announced Oct. 22 that it will cut physician and hospital Medicaid pay by 2% and end a Medicaid care coordination program that paid primary care physicians a $3 per-member, per-month fee, among other actions.

The 2% Medicaid cut is the fourth since August 2009. "Increasing costs and utilization continue to stress the program," Louisiana Dept. of Health and Hospitals Secretary Bruce D. Greenstein said in a statement.

The $5.7 million Medicaid cut is part of reductions ordered by Louisiana Gov. Bobby Jindal to help close a $50 million Medicaid budget deficit for fiscal year 2011. Pharmacists will receive a 3% Medicaid cut, while home and community-based health care will be cut by 5.8%. The Medicaid deficit was not a surprise, said DHH spokeswoman Lisa Faust. Earlier this year DHH requested but did not receive additional Medicaid funding to cover higher utilization and enrollment, she said. Medicaid enrollment is 4.4% higher now on average compared with last year.

The 2% fee cut is effective Dec. 1, but Medicaid pay will not be reduced immediately because of the time required to program the changes into the state's 30-year-old computer system, Faust said. Louisiana cut physician pay three other times since August 2009 for a total reduction of more than 10%, but the Medicaid agency is still implementing pay cuts that were to take place in August 2010.

The Louisiana State Medical Society is concerned about financial issues and other matters plaguing the state's Medicaid program, said Sadie Wilks, spokeswoman for the medical society.

"We believe that this [cut] is going to further impact access to care for patients. And it's confusing on top of that," Wilks said. Without the cut, Medicaid pay for primary care is 70% of Medicare rates. Obstetrician-gynecologists receive at least 85% of Medicare rates, while pediatricians receive 90%, said LSMS President Patrick C. Breaux, MD. Louisiana has more than 1.16 million Medicaid enrollees.

Due to the delays implementing the Medicaid cuts, the state overpaid physicians at least $24 million between August 2009 and June 2010, Faust said. The state is seeking to recover that money by reducing Medicaid pay slightly -- based on how much each physician received -- until the overpayments are recovered by June 30, 2011.

In response, the LSMS Executive Committee voted on Oct. 6 to sue DHH to stop the agency from recovering the Medicaid payments, according to an LSMS statement. "LSMS believes that it must act now to protect Medicaid patients' access to quality medical care and to preserve the financial viability of the physicians who care for them."

Faust said that federal law supports the agency's plans to recover the money. Wilks said LSMS attorneys are still crafting their legal arguments.

Other physician Medicaid cuts are on the way. The state will save $3 million in the last half of fiscal 2011 by ending monthly care coordination fees in Medicaid. Greenstein said the state care coordination program CommunityCARE -- which has paid primary care physicians $3 per-member, per-month fees since 2003 -- has not improved the health status of Medicaid enrollees.

"For our $6 million per-year investment ... CommunityCARE has done nothing to make people healthier," Greenstein said. "In fact, we've actually seen reductions in some key health measures under the program. We can't continue to invest in programs that do not deliver value by improving the health of the people they serve.'

In response, LSMS said in a statement that Greenstein has not yet released data to support his characterization of CommunityCARE. LSMS stands ready to work with Greenstein and stakeholders to craft a health care model that provides equal access to quality medical care for all patients at that represents a good value to Louisiana taxpayers.

CommunityCARE will end Dec. 1, Faust said. More than 1,700 physicians and nearly 600 physician assistants and others receive the fee, but the state spent 44-cents to administer each $3 payment, she said.

Coalition for care system

Physicians, hospitals and other health professionals are joining forces to protect the state's health care safety net. LSMS, the Louisiana Ambulance Alliance, Louisiana Hospital Assn., MedicineLouisiana and the Metropolitan Hospital Council of New Orleans announced on Oct. 18 that they were joining together to form the Coalition to Protect Louisiana's Healthcare to protect health care services for the state's most vulnerable patients.

"We strongly urge our elected officials to support short- and long-term strategies to ease cuts to community hospitals and physicians," Dr. Breaux said.

The coalition may have had an impact already. After receiving a letter of concern from the coalition, the state announced on Oct. 20 that it is withdrawing an emergency rule that allowed implementation of a medical home program called Coordinated Care Networks that was to start in April 2011. Managed care plans, contracting with physician groups, were to form CCNs paid at capitated rates for a variety of services. Faust said DHH delayed the program to have more dialogue with stakeholders.

Dr. Breaux said physicians and hospitals were concerned that CCNs had been designed and would be implemented without sufficient input from doctors and hospitals. LSMS supports injecting more private-sector-driven reforms into the state's Medicaid program. But the state had begun negotiating with managed care plans without notifying physicians how CCNs would pay doctors, Dr. Breaux said. Also, LSMS wants more information about how the state's Medicaid program will be able to handle the increased enrollment expected when a federal Medicaid expansion takes effect in 2014.