Louisiana last week slapped $80.4 million in Medicaid payment cuts on hospitals as state officials struggle with ways to shrink the Medicaid program by $900 million in the new fiscal year, which began this week.
"We haven't seen anything in the way of written rules," said John Juro-vich, vice president of the Louisiana Hospital Association, about the still-to-come cuts. "It's still sketchy."
Because of changes in the way the federal government dispenses Medicaid disproportionate funds, the state's $4 billion Medicaid program is shrinking to $3.1 billion.
The state tried to retain the size of the program by forming a public HMO, but that proposal was rejected by federal officials (June 12, p. 6).
Medicaid disproportionate-share funds, which are paid to hospitals that treat a disproportionate share of the poor, had been generous to some Louisiana providers, paying them as much as 400% of costs. Now, hospitals will be paid just 100% of costs.
In addition, the state last week was writing emergency rules to cut $130 million from provider reimbursements. Nursing homes will see a $38.7 million cut in reimbursement, and rates for intermediate-care and mental retardation facilities will be cut by $11.1 million.
For hospitals, here's how the $80.4 million in cuts breaks down:
$7.2 million will come from reducing the inflation increase to 3.5% from 4.9%.
$30 million from lowering prospective payment rates.
$25.1 million from reducing outpatient rates 0.17%.
$3.5 million from lowering payments to out-of-state hospitals used by Louisiana beneficiaries to 50% of billed charges from 72%.
$14.6 million from reducing the amount paid for catastrophic costs, or bills of more than $150,000, incurred by infants and children in hospitals. Only 55% of the excess cost will be reimbursed, rather than 100%.
The state also plans to issue cuts in rates for home healthcare, home medical equipment and physicians. Louisiana's charity hospital system is expected to be hit hard as well. Figures on estimated savings were not yet available.