Medicaid faces ‘daunting’ budget challenges

The state’s Medicaid agency has a projected $300 million hole to fill in next year’s budget.

If the shortfall remains at that level, the financial request to the General Assembly in January will be ‘‘very high’’ from a historical perspective, said Vince Harris, chief financial officer of the Department of Community Health, after the agency’s board meeting Thursday.

The projected $308 million shortfall for fiscal 2013 stems mostly from growth in the program’s spending, plus the delay of a month’s payment to the care management organizations that deliver services to children and pregnant women.

Medicaid and PeachCare cover a total of 1.7 million Georgians, most of them children of lower-income parents.

The programs’ financial crunch also includes $245 million more in future claims from medical providers for services rendered but not yet billed. And it comes as Georgia Medicaid and PeachCare are undergoing a redesign process that seeks to improve health outcomes and contain spending.

A consulting firm, in a state-commissioned report on the Medicaid redesign, recommended that people with disabilities and in nursing homes be switched to a managed care format, run by private companies. Though 25 percent of the Medicaid enrollment is in the ‘‘aged, blind and disabled’’ (ABD) population, that segment accounts for 54 percent of overall Medicaid spending.

David Cook, commissioner of Community Health, noted during the board meeting that coordinating care can improve health outcomes and save money.

The Medicaid budget numbers ‘‘are pretty daunting,’’ he said. “Figuring out where we go, particularly with ABD, is where the focus will be.’’

Hanging over the meeting were references to the impending Supreme Court ruling on the constitutionality of the health care reform law. The 2010 law includes a Medicaid expansion that would add more than 600,000 people to the program’s rolls in Georgia, so the court’s ruling will have great significance for the state.

Tim Sweeney, director of health policy at the Georgia Budget and Policy Institute, said after the meeting that the current Medicaid budget problem was ‘‘several years coming,’’ with budget writers and the Legislature in the past pushing program costs down the road.

“It’s evidence that the state budget is not adequate now to fund our current programs,’’ Sweeney told GHN.

But he also said the upcoming redesign isn’t meant for quick savings. “The department is viewing redesign as a long-term process, and that’s the right way to look at it,’’ he said.

A wild card in the budget calculations is the state’s hospital tax, which generates $600 million for the Medicaid program but is expiring next year.

Community Health said the Georgia Hospital Association is proposing changes in the tax. It’s expected to be a hotly contested legislative issue next year.

Meanwhile, medical providers will take a cumulative $48 million hit with a change in the state’s method of paying for people who are enrolled in both Medicare and Medicaid. Kidney dialysis providers will be disproportionately affected, said Jerry Dubberly, the state’s Medicaid chief.

“We do recognize the burden and hardship this has created on providers,’’ Dubberly said. He acknowledged the concern of board members about physicians and other providers possibly leaving the Medicaid business.

Dubberly also reported some good financial news: The department received federal approval for an additional $19 million to $20 million to develop community- and home-based services for people at risk of  having to live in nursing homes.