Georgia’s Medicaid and PeachCare programs are tight on cash. The cash-flow problem has prompted the Department of Community Health to ask medical providers and...

Georgia’s Medicaid and PeachCare programs are tight on cash.

The cash-flow problem has prompted the Department of Community Health to ask medical providers and insurers to give the agency some flexibility on payments.

The financial situation came up Thursday at a Department of Community Health board meeting. Scott Frederking, the agency’s budget director, said, “We will have little if any reserves at the end of the year.’’

“Day to day, we’re watching our cash,’’ he told the board.

Frederking told GHN later, ‘‘We’re managing the best we can. We will pay our bills.’’

Including federal funds, the state Medicaid and PeachCare budgets total more than $7 billion annually. The state’s fiscal year ends June 30.

The agency is about one month behind in payments to the three care management organizations that oversee care for more than 1 million Medicaid and PeachCare members. The CMOs agreed to the payment lag.

Community Health has also asked hospitals for early delivery of their ‘‘provider tax,’’ a payment that, by increasing federal dollars for the program, helps fund Medicaid and raises reimbursements for providers.

Hospitals are also getting their final payment from the state for the disproportionate share program a little later than normal, said Vince Harris, the agency chief financial officer. The DSH program compensates hospitals that serve a large number of low-income patients.

Hospitals and the CMOs ‘‘have been very cooperative,’’ Frederking told GHN on Thursday. The cash flow ‘‘has been unusually lean this year,’’ he said.

Part of the problem stems from the agency budget being put together based on reserves from previous years, Frederking said. Medical costs have increased for Medicaid and PeachCare patients.

And, Frederking added, the ‘‘accumulation of budget cuts over the last few years’’ is another factor. The state is also awaiting federal funds from the tobacco settlement and other programs.

Community Health, meanwhile, is in the middle of choosing a new structure for delivering care in the Medicaid program. One of the goals of this ‘‘redesign’’ effort is to ensure long-term financial sustainability.

It appears that Community Health is not the only state services agency experiencing a cash crunch. The AJC in a Thursday article reported that the Division of Family and Children Services may run out of money for some services by the end of the fiscal year.

Large hospitals may have enough money on hand to voluntarily send their payments early to Community Health. But the impact of the cash crunch on smaller hospitals may be more damaging.

The situation has put rural hospitals in a ‘‘very difficult position,’’ said Jimmy Lewis, CEO of HomeTown Health, an organization of rural hospitals in the state.

Lewis said rural facilities are already dealing with Medicare and Medicaid pressure on reimbursements, plus an increase in the number of uninsured people and in patients who are underinsured, with very high deductibles.

“We’ve gotten indications that the state is in serious need of cash,’’ Lewis said. Some rural hospitals paid the provider tax early, but others couldn’t afford to do that, he said.

For rural hospitals, it has led to three or four months ‘‘of serious cash starvation,’’ Lewis said. Rural hospitals ‘‘too often operate on one to five days of cash,’’ he added.

Tim Sweeney, director of health policy for the Georgia Budget and Policy Institute, said Thursday that he isn’t surprised by the Medicaid cash situation.

It reflects a problem of balancing a state budget without new revenue, said Sweeney. “It’s a little bit along the lines of a budget gimmick because cash flow is so tight.’’

Budget writers have used the Medicaid year-end reserves for the new year’s budget, even though the reserves are set aside to pay medical services that have already been delivered, he said.

“We’ve seen increased enrollment in Medicaid and very little increased funding,’’ Sweeney said.

Providers and CMOs are ‘‘being asked to bankroll the state,’’ he said. “We’ve been saying for a while that this is a program that needs more resources.’’


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Andy Miller

Andy Miller is editor and CEO of Georgia Health News

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