House eyes Medicaid for more savings

February 09, 2010 | Beth Musgrave | Comments 13

Rick Rand, D-Bedford, is chairman of the House Appropriations and Revenue Committee

By Beth Musgrave – bmusgrave@herald-leader.com

FRANKFORT — House leaders said Tuesday they are looking at the Medicaid program to find money and more savings to help plug a looming hole in the state’s two-year budget.

House budget committee Chairman Rick Rand, D-Bedford, said leaders have determined they need to come up with about $395 million to plug a hole in the first year of of the biennial budget. Part of that deficit can be erased by removing $220 million in General Fund dollars from the state-federal health care program for the poor and disabled.

Lawmakers said the Medicaid money won’t be needed because of enhanced federal funding that will last through Dec. 30. However, all of the $220 million won’t be available unless Congress approves a second stimulus that boosts federal spending on Medicaid.

Even if all of the $220 million can be transferred to the General Fund, lawmakers must still find another $175 million in cuts or savings to balance the first year of the budget.

The second year of the budget — where the gap between revenues and costs grows to more than $750 million — is still up in the air, Rand said.

House Speaker Greg Stumbo, D-Prestonsburg, said details about how to resolve the $175 million hole in fiscal year 2011, which begins July 1, will hopefully be discussed with the House Democratic caucus soon — possibly as early as Wednesday. But Stumbo was hesitant to say when those options would be made public.

He said one option would be to require the Medicaid program to find additional operational efficiencies, which would leave more money for the General Fund.

For example, he said the state might be able to save money by making changes to Medicaid’s pharmacy program and expanding programs that help manage the care of Medicaid patients.

In Louisville, a managed care program called Passport, which serves roughly 20 percent of Kentucky’s Medicaid clients, has saved the state about $300 million a year, Stumbo said.

Stumbo has also said that other cost savings could come from cutting some of the state’s personal service contracts — which could total as much as $1 billion a year.

Personal service contracts can be used to hire professionals such as doctors, lawyers and engineers. But those contracts can also be used to hire general labor.

Rand said none of the cuts the House is considering to balance the books in 2011 will be painless. Many state agencies have already gone through six rounds of previous budget cuts in the past two years. Some agencies have been slashed by more than 25 percent.

“None of the choices that we have are easy,” Rand said.

But there are lingering questions about whether the state can generate savings from Medicaid, whose rolls have swelled over the past year to 789,000 people, or roughly 20 percent of the population.

Former Gov. Ernie Fletcher pledged to cut costs in Medicaid but it was later determined that some of those cost-savings never materialized.

Still, Stumbo said that Oklahoma — which has similar demographics to Kentucky — has realized savings in its Medicaid program. Previous administrations may not have looked at what other states were doing to find savings, he said.

Democratic Rep. Jimmie Lee of Elizabethtown, who chairs the budget review subcommittee that oversees Medicaid, said he has been examining ways to curtail costs in the program, including doing a better job of prosecuting those who file fraudulent medical claims.

Filed Under: Greg Stumbo • KY General Assembly • Rick Rand • State Budget

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House eyes Medicaid for more savings

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