Hospitals, nursing homes face deepest Medicaid cuts

PROVIDENCE – Gov. Gina M. Raimondo’s working group to “reinvent Medicaid” on Thursday delivered a report containing proposals to cut $91.1 million from the state program, largely at the expense of hospitals and nursing homes.
The savings total $148.5 million when including the program’s federal match to most of the proposed initiatives, according to the report.
Raimondo’s fiscal 2016 budget already included $45 million of the Medicaid cuts outlined by the working group. The rest of the $91.1 million in total cuts in state spending for the program she’s expected to propose to the General Assembly would come from the new working-group recommendations.
The 29-member working group, formed earlier this year, delivered a 39-page report to the governor detailing – in three categories – 36 proposed cuts and initiatives to the state’s current Medicaid system.
The working group found the largest portion of cuts and savings within the “payment and delivery system” of the program, which includes a 5 percent decrease from hospital payments and a 3 percent reduction from nursing homes.
The largest cut is a $15.7 million program to “reduce unnecessary hospital utilization.”
“Under current law, hospitals will receive a rate increase in [fiscal 2016]. Eliminating the planned rate increase and further reducing hospital rates by 5 percent would generate state savings that can be invested in programs to reduce unnecessary utilization and improve quality,” according to the report.
Another $13.3 million would come from reducing long stays and improving care quality and staffing at nursing homes, which would impact both fee-for-service and managed care services and reduce rates by 3 percent.
The report also proposes a 5.8 percent increase to hospital licensing fees, which the group estimates could save $11.2 million.
A total of $64 million in state spending would be taken from the payment and delivery system, according to the report.
The working group estimates another $4 million in savings could come from targeting waste, fraud and abuse, which comes through bolstering claims analytics, tracking systems and improving “the timeliness and quality of communication with Medicare,” according to the report.
Finally, the working group says another $23.1 million in savings could come from the administrative and operations of the state’s program, which comes largely from improving managed care contracts and increasing “Children’s Health Account” attachment point, according to the report.
Raimondo, in a statement, said the cuts would provide taxpayers and business with a more predictable and affordable future.
“Reinventing Medicaid will also create room for economic growth by tackling our structural deficit,” she said.
The group has a second deadline in July to recommend long-term changes to the program.

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  1. This will be a classic case of the “Law of Unintended Consequences”.
    Nursing homes, many owned by large corporations, will leave the state because they can’t make a decent return. Patients will be left with few choices and ultimately costs will increase.
    The real answer is to control the large amount of money spent on a small group of very sick patients whose families insist they get the best care at the end of life, no matter what the patients have deemed. Nursing homes and physicians have no recourse but to provide wasteful treatment where it is unwarranted or risk serious reprisal from the medical oversight groups and attorneys.