While looming cutbacks of $400 million for the Arkansas Medicaid program in fiscal 2011 may be reduced because of a lawsuit settlement with a drug company, there is still widespread concern in the medical community about large decreases in funding for a program that provides healthcare to a large segment of the population of Arkansas.

 

“I think everybody is concerned about it,” said David Wroten, executive vice president of the Arkansas Medical Society. “We are most concerned about the impact on access to healthcare. The biggest problem with this is for every dollar that we cut, we lose three in federal money. So, what may only be a $100 million state revenue cut is $400 million worth of services. That is a tough, tough job to try to do that in one year. You can’t do it without combinations of multiple cuts to multiple programs. It will be difficult to do without cutting services. Adding to the difficulty is that federal stimulus dollars are involved, which prohibits the option of changing the current eligibility requirements. That will make it very difficult to cut eligibility.”

 

Medicaid Director Eugene Gassow solicited feedback from stakeholders for a “Bending the Curve” proposal to reduce Medicare expenses that includes a number of options. Wroten said right now the Arkansas Medical Society is waiting to see what the Medicaid director comes up with as recommendations.

 

“Like everyone else, we are waiting patiently to see what those recommendations are,” Wroten said. “We know it will be difficult. What we have tried to say is we don’t see any way to come up with those kinds of cuts on a short-term basis without cutting services or eligibility. It may be impossible. One of the things we have offered is to work on long-term solutions that have the potential to make fundamental changes in how we implement Medicaid. Those are solutions that are going to require a lot of study and input. We have pledged our efforts to work with the department and the governor’s office to come up with ways to do that on a long-term basis.”

 

Wroten said the state’s Medicaid program already runs on a pretty lean budget; there is not a lot of fat in the program.

 

“It has a reputation as being one of the best Medicaid programs in the country, Wroten said. “We certainly don’t want to do anything to change that. Administrative costs to run the program are very low. And the problem is, right now federal stimulus dollars are involved that will make it very difficult to cut eligibility.”

 

Many people may not realize that Medicaid pays for more than just hospital and physician services.

 

“It is a broad program that pays for the services of many types of healthcare provider groups, as well as service groups such as transportation providers and nursing homes,” Wroten said. “It is very, very broad.”

 

The new healthcare reform bill passed by Congress will make many more people eligible for Medicaid. In 2014 an estimated 250,000 people in Arkansas may be added to the Medicaid rolls. Wroten said the federal government will pick up a lot of the cost of expanding Medicaid eligibility.

 

“But the state will have to pick up some of it,” Wroten said. “If the Arkansas economy turns around, that will make it easier for the state budget to handle, but it will definitely present another set of challenges.”

 

Paul Cunningham, senior vice president, Arkansas Hospital Association, agreed that while the exact impact of decreases in Medicaid funding isn’t yet known, there are reasons for concern. If fewer people are eligible for Medicaid either for outpatient or inpatient services provided by hospitals, those people could end up going to the emergency room.

 

“If Medicaid were to cut eligibility, we would still see those patients but they would have no source of payment,” Cunningham said. “I don’t know if it would affect access to healthcare. If patients show up in emergency rooms, we are going to treat those patients, but it could affect hospital finances if rates are reduced or eligibility is reduced.”

 

While deep cuts would affect all hospitals, large and small, there is potential for small rural hospitals to be more impacted than urban hospitals. Some rural hospitals have higher rates of Medicaid patients.

 

“Assuming cuts in reimbursements, those hospitals with higher Medicaid percentages of total patient population stand a chance of being more adversely affected,” Cunningham said.

 

The state and federal governments are looking at the issue of funding healthcare from different viewpoints. Cunningham said the Arkansas Balanced Budget Act requires the state to spend no more than it takes in. The federal government can run a big deficit. Cunningham said states have expressed concern with the implications of the health reform law because it does add to Medicaid rolls in future years.