Mo. governor wants to stop deal giving hospitals extra Medicaid dollars

Missouri hospitals have received hundreds of millions of extra Medicaid dollars over the past few years as a result of a quiet deal intended to soften the blow of 2005 Medicaid cuts.

Democratic Gov. Jay Nixon's administration is seeking to halt the arrangement, with hopes of redirecting the money toward a renewed attempt at expanding Medicaid coverage for low-income families. Documents obtained by The Associated Press show officials at the Department of Social Services have raised concerns that the funding arrangement "results in inflated estimates" of Medicaid patients—and thus overpays hospitals. Last week, the department published a proposed rule change that could curb Medicaid payments to hospitals more than $100 million annually.

In 2005, the Republican-led Legislature and GOP Gov. Matt Blunt eliminated Medicaid eligibility for about 100,000 people and reduced the benefits available to hundreds of thousands more, a move. "To soften the impact," the Missouri Hospital Association approached the Department of Social Services and proposed an alternative method of calculating hospital Medicaid payments, said Steve Renne, who is a vice president of the association. The department agreed to it, Renne said, because the plan used a special hospital tax—not general state revenues—to draw down matching federal Medicaid money.

A Department of Social Services analysis of 130 hospitals, obtained by the AP under an open-records request, shows they were overpaid nearly $79 million in the 2008 fiscal year when their actual patient counts were compared to the figures used to calculate their payments. The CMS said it had approved Missouri's hospital payment method. But the agency wants to ratchet back the calculations used for hospital payments to avoid potential problems with the federal government, said Scott Rowson, spokesman for the state Department of Social Services.

The proposed rule change published Sept. 1 also would eliminate a provision in place since the mid-1990s that has paid hospitals additional money to offset the implementation of managed care systems. The two funding changes proposed by the department are estimated to reduce Missouri's roughly $1.6 billion of Medicaid payments to hospitals by $139 million on an annual basis. The new regulations likely would take effect Jan. 1.

What do you think? Post a comment on this article and share your opinion with other readers. Submit your comments to Modern Healthcare Online at [email protected]. Please be sure to include your hometown and state, along with your organization and title.