Under the stimulus law, Congress agreed to temporarily cover more of the nation's Medicaid bill, which is jointly financed by federal and state taxes. The infusion runs out in December, though states and hospitals have pushed aggressively for an extension. Obama's budget has called for an additional $25 billion, but Congress would have to agree to that when a budget bill is passed into law for it to take effect.
States face a significant gap should aid expire as scheduled. More than half of the states will see their share of Medicaid financing soar by at least 10 percentage points once federal funding reverts to pre-recession ratios. Lingering effects of the recession have fueled Medicaid demand and crippled state revenue. (A federal commission charged with reviewing Medicaid access and payment policies has yet to be funded. Nationwide, Medicaid grew by a record 3.28 million individuals for the year that ended in June 2009, said a report released last week by the Kaiser Commission on Medicaid and the Uninsured. For the first time since the early 1990s, every state saw enrollment climb, with Maryland, Utah and Wisconsin seeing the biggest percentage increases.
Demand and costs for the safety net insurer had surpassed 2010 projections in 44 states and the District of Columbia, according to state Medicaid directors surveyed by Kaiser roughly six months into the fiscal year, which began July 1 for most states. More than two dozen states saw or expected midyear budget cuts. Among those likely to further squeeze spending, 21 states said Medicaid provider reimbursement was a target.
Nevada hospitals expect to see Medicaid reimbursement cut by at least 5% when the state Legislature meets in an emergency budget session this week, said Bill Welch, president and CEO of the Nevada Hospital Association.
Nevada must close a projected $890 million biennial budget gap through June 30, 2011, the largest in the state's history. Welch said the state is banking on an extension of the stimulus Medicaid funding to plug $90 million of the shortfall. “Being a betting state, I guess that makes it appropriate,” he said.
Governors in several states, including California and Massachusetts, have placed similar bets.
Without an extension, Welch said he expects Medicaid reimbursement cuts beyond the $19 million proposed.
Nevada saw one of the largest increases to the federal share of its Medicaid budget under the stimulus law, which tied aid to unemployment. The state paid 36% of its Medicaid bill in 2009 and 2010 compared with 50% prior to the act.
Without an extension, health-policy makers say states may make it harder to be eligible for the safety net insurance. The stimulus law prohibited states from curbing access to Medicaid.
Incentives for electronic health records—which make up most of stimulus spending for health IT—may be more than 18 months away, but a trickle of stimulus health IT spending has begun. Earlier this month, HHS Secretary Kathleen Sebelius awarded $761 million of $1.2 billion earmarked to create 70 regional support centers and boost state investment in health IT.
Next month, HHS is expected to announce awards for $60 million set aside for health IT research and another $235 million to establish demonstrations of quality, efficiency or public health uses for IT in 15 communities. In all, the recent and upcoming awards account for more than half of the $2 billion included in the act for such initiatives, workforce training and related efforts. Of those awards, just $45,000 had been paid out by the end of January. The Labor Department has also announced $225 million to train workers in high-growth fields such as nursing and IT. And HHS in September released $27.8 million for health-center controlled networks and multistate health centers.
Future health IT payouts may be sharply curtailed by recently proposed criteria for EHR incentives, hospital and physician groups argue.
Incentives for EHR use under Medicare, estimated to be $14 billion to $27 billion, are scheduled to begin in 2011. The payouts taper off over five years and are replaced with penalties.
Don May, vice president for policy of the American Hospital Association, said initial criteria to qualify for incentives, released last December, demand too much of providers too quickly and the trade group endorses an approach that would allow hospitals to meet a gradually increasing percentage of the criteria between 2011 and 2017.
May said the trade group supports criteria to show hospitals and doctors use EHRs meaningfully, as required under the stimulus law, but said the timeline and lack of flexibility set out to meet the requirements will leave many unable to qualify for incentives. The American Hospital Association supports allowing hospitals to meet 25% of meaningful use criteria in 2011-12; 50% in the following two years; 75% in 2015-16; and nearly all in 2017 to receive incentives, May said.
Doctors may consider accepting penalties rather than face the cost and disruption of trying to achieve the incentive criteria as proposed, said Robert Tennant, senior policy adviser to the Medical Group Management Association.
Rural hospitals also see obstacles to stimulus health IT spending.
Terry Hill, executive director of the National Rural Health Resource Center in Duluth, Minn., said stimulus incentives for EHRs, as recently proposed, largely fail to help rural hospitals in greatest need of assistance.
EHRs at isolated, small hospitals—those federally designated as critical-access hospitals—lag those of larger hospitals or health systems, he said. Remote rural hospitals also frequently lack a dedicated technology staff to prepare them to take advantage of stimulus incentives and face challenges recruiting sought-after health IT professionals.