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Thursday, November 29, 2012

Make Medicaid more efficient? It's already in the budget

Posted By on Thu, Nov 29, 2012 at 4:14 PM

Bruce Westerman
  • Bruce Westerman

The cuts recommended by the Department of Human Services to plug the state Medicaid program’s budget shortfall in 2014 and 2015 have caused a stir because they include cuts to Level 3 nursing-facility care, as we noted in this week’s Reporter. The image of grannies getting the boot from nursing homes is, to say the least, not politically popular, but Republican lawmakers insist that these cuts will not really come to pass.

“Personally, I don’t think it will have to be cut,” House Majority Leader Bruce Westerman told me today. “I think there are other ways to find the money in the system to make it more efficient and effective.”

One thing to keep in mind as Republicans allege that making Medicaid more efficient could plug the budget hole (the old “waste, fraud, and abuse” line) is that DHS’s proposed budget already factors in significant savings from the program’s new Payment Improvement Initiative, a major reform of the payment system that would seek efficiencies both in how providers are paid and how services are provided. This is worth highlighting: that idea of saving money by making Medicaid more efficient and combatting waste, fraud, and abuse—it’s already in the budget! Indeed, Arkansas Medicaid Director Andy Allison told me last week that the projected savings from the Initiative—$15 million in 2014 and $65 million in 2015—are “very aggressive.”

Republicans' insistence that there are other ways for the state Medicaid program to save money comes despite a program review undertaken by Allison and his staff that examined every possible avenue of cuts. Allison, a health economist with more than a decade of experience researching and running Medicaid programs, called it the most thorough review ever undertaken at DHS. Allison has been adamant that, though the proposed cuts are harmful, they are the least harmful option legally available (some spending is locked in because of federal law). In other words, according to Allison, any “other ways” to trim money are even worse than what’s been proposed.

Undaunted, Westerman says that he is “doing research to find out where we can provide higher level of care at lower cost.” He said he was hopeful that “some of these reforms we’re studying” would help plug the hole in lieu of cutting Level-3 nursing-facility care, but said he was “not ready to start discussing them yet.” I asked him to call me when he’s ready to go public with any ideas. We’ll see.

How does Medicaid expansion fit into this discussion? Both Allison and Gov. Mike Beebe have said that projected savings from expansion could be used to plug part of the hole and avoid the cuts to nursing facilities (these projected savings are even greater than originally thought). Westerman said that Medicaid expansion and the proposed DHS cuts were “two separate issues…I don’t think we should be blending them. We need to focus on reform of the existing Medicaid system and make it sustainable before we talk about expanding it.”

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