Click below to read the full article from AP reporter John Miller on the implications of the Medicaid budget that JFAC set this morning. Overall, it'll require Medicaid to come up with more than $47.2 million in savings next year to meet its reduced budget, possibly requiring Gov. Butch Otter to order midyear law changes. Meanwhile, Medicaid rolls have swelled 10 percent since last July. As part of the budget plan, Idaho hospitals would be assessed $25 million to cover part of the shortfall; legislation on that is in the works.

Idaho must find $47M savings to prop up Medicaid
By JOHN MILLER, Associated Press Writer

BOISE, Idaho (AP) — Idaho's Medicaid program that serves some 150,000 poor children must come up with more than $47.2 million in savings to meet its reduced fiscal year 2011 budget, possibly requiring Gov. C.L. "Butch" Otter to order midyear law changes to balance the bottom line.

The Joint Finance-Appropriations Committee voted 16-2 Thursday for a total $1.55 billion budget, including a $298 million state general fund share. That's about 3.5 percent less than a year ago. The cuts come while Idaho's economy is at a low point; Medicaid rolls have increased 10 percent since last July, or about 20,000 people, to 215,000.

To help fill the hole, Idaho aims to assess Idaho hospitals $25 million to cover more than half the deficit. The hospitals, Medicaid's biggest expense, plan to contribute that amount in each of the next two years. They fear that if they don't, Idaho will lose about $100 million annually in federal money that covers patients those facilities must care for whether there is cash to do so or not. The federal government now pays 80 percent of Medicaid.

The remaining $22 million would come from expanded Department of Health and Welfare efforts to negotiate reduced payments to providers of mental health, drug abuse and other services, rather than merely slashing optional programs.

With the economic downturn, Idaho's federal-state health insurance program for the poor and disabled is losing ground to increased numbers of clients. Some of its programs are mandatory and based on federal financial eligibility requirements, though others, including dental and eye exams, mental health services for adults, or chiropractic care, have optional components.

Even with efforts to negotiate new prices, Rep. Fred Wood, R-Burley, still believes some of those services will fall by the wayside.

"As we don't like it, we have to be creative in trying to figure out how we can maintain as many services as we can — the most essential services — and yet reduce the services to the point we can actually afford it," said Wood, who is a physician.

Health and Welfare Director Dick Armstrong, who said this is the first time he's seen his final budget, wasn't sure if he'll be able to persuade providers to lower their rates, but said he'll try. Rates are already being frozen for a second year in a row. What's more, the federal government would have to approve many of the changes, he said.

"That's our challenge," Armstrong said. "Payment reductions will be surgically done."

With increased enrollment in Medicaid, Armstrong's agency says its budget actually reflects what amounts to a cut of $190 million for the year starting in July. Across the Department of Health and Welfare, which helps oversee Medicaid, Armstrong plans to cut 120 jobs and close one-third of his agency's 30 statewide offices.

According to the 2011 budget, which still must win House and Senate approval, Otter would be given authority to issue executive orders to modify state laws to accommodate savings identified by the agency. With this new power, however, Otter would have to indicate what's being modified, the reason behind the changes and their duration.

The Republican would also have to immediately notify the Senate and House Health and Welfare committees, which would review his actions next January before they become permanent.

During the budget hearing, Sen. Nicole LeFavour, D-Boise, blasted the 20-member committee for "reducing the budget beyond where we know how to make it work" and leaving difficult decisions up to the Department of Health and Welfare — and possibly Otter — rather than tackling them now.

"We're taking a pass on that obligation and that responsibility," LeFavour said.

With the plan, the budget committee has prioritized how it expects Armstrong and Medicaid Administrator Leslie Clement to go about reducing costs. They're being told to ensure no provider is being reimbursed at rates higher than those for Medicare, the federal health care program for seniors.

If the state has overpaid for services in the past, those should be reduced.

And all providers are being asked to the bargaining table, rather than trying to force the changes on them. If no agreements can be reached, however, "then future options for the Legislature to continue are removal of whole categories of options services," according to the plan.

Sen. Dean Cameron, R-Rupert, said he's heard that many are already willing to cooperate.

"They understand there are not many choices," he said.

Copyright 2010 The Associated Press.

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