How State Budgets Impact Medicaid Funding, Reveal Priorities

New York Could Cut Funding For Nursing Homes

In New York, the proposed budget slightly increases Medicaid funding but cuts payments to certain providers.

The Medicaid program covers over 7 million New Yorkers through more than 80,000 providers and 50 fully or partially capitated managed care plans.

Under the proposed budget, New York will contribute $23.6 billion to its Medicaid program for 2020 through 2021. Nearly forty billion in federal dollars will go toward New York’s Medicaid, resulting in a total of $73.4 billion in funding.

The state’s contribution for 2020 through 2021 would represent a 3 percent increase from the 2018 to 2019 budget.

The proposed budget is intended to result in $2.5 billion in savings.

“The Governor is directing the members of the Medicaid Redesign Team (MRT II) to develop a plan that doesn’t rely on local governments as a funding sources and has no impact on beneficiaries,” the proposal stated. “Instead, MRT  II must once again find solutions through industry efficiencies and/or by relying on new resources provided by the industry itself. They must also root out waste, fraud and abuse.”

However, some are concerned that this strategy will result in harmful Medicaid cuts, The Rome Sentinel revealed. The proposal cuts $600 million that formerly went toward nursing homes, hospitals, and other providers.

Because of the governor’s all-or-nothing stance, if the budget fails to pass, the state could face even higher cuts to Medicaid, The Rome Sentinel reported.

The public comment period starts next week on February 3, 2020.

Iowa’s Privatized Medicaid Increases Both Revenue And Spending 

In Iowa, the state’s privatized Medicaid program can be both a benefit and an impediment to the Medicaid budget. Because the state can negotiate its private payer contracts, it can maneuver to get more funding. But last year, it also led to a rate boost that increased spending mid-year.

In 2019, the state failed to dedicate enough funds to the Medicaid program, according to Iowa Public Radio, forcing policymakers to add over $100 million to the state’s Medicaid budget. This year, policymakers seem determined to prevent late-year supplemental funding hiccups from recurring.

Part of the demand for additional funding was due to the 8.6 percent capitation rate boost, of which the state contributed approximately $115 million. Iowa privatized its Medicaid program in 2016. The $115 million helped payers offer hepatitis C coverage, provider rebasing, and adjustments to long-term services and supports (LTSS) protections and to managed care organization (MCO) oversight.

To avoid repeating the late-year supplemental funding scenario, Iowa Public Radio explained, policymakers are considering adding $89 million to the budget for this fiscal year. They intend to leverage their privatized Medicaid system to meet this goal through higher contract rates.

The state is also dealing with Iowa Total Care, a private payer new to Iowa’s Medicaid program that failed to reimburse 106,000 provider claims. In response, Iowa will withhold $44 million at the end of February unless the payer rectifies its mistake.

North Carolina’s Political Stalemate Threatens Medicaid Funding 

North Carolina has failed to pass a budget, with Medicaid managed care and Medicaid expansion being two of many impasses that the General Assembly cannot overcome.

According to The Daily Tar Heel, the 2019 session was one of the longest sessions in the state’s history, yet nonetheless the budget remains untouched from last year—which effectively means there is no budget.

The lack of compromise has significant impacts for the Medicaid program since North Carolina is a non-expansion state. Its Medicaid program, therefore, relies heavily on state dollars.

“Each state has to make hard choices on how we are able to spend our Medicaid dollars. Particularly in North Carolina, our General Assembly does a ton of work and is in a lot of the details related to Medicaid spend,” Secretary of the North Carolina Department of Health and Human Services Mandy Cohen, MD, told HealthPayerIntelligence.com.

With the General Assembly in its present state, however, and less federal funding than other states, North Carolina’s Medicaid program has to be resourceful.

“We try to do whatever we can to get other sources of funding that will plug holes that Medicaid expansion could have been providing,” Secretary Cohen said.

North Carolina’s Medicaid program has to use one-time grant money to supplement its funding stream. The effects of this are particularly visible in how North Carolina battles the opioids crisis.

“What has been hard is that, if we had Medicaid expansion, we could have been using those federal dollars to help even more people, as well as to invest in things other than treatment. So, we have had to divert the large part of our federal grants to fight the opioid crisis,” Secretary Cohen explained.

Having failed to pass a state budget for 2020 to 2021 in the long session, North Carolina’s budget will now be stalled until April 28 at the earliest, according to The Daily Tar Heel.

As the debates progress, Medicaid programs find themselves caught in the middle of political tensions that influence their funding streams.