Friday, April 01, 2011

Medicaid Cuts for Concho Valley: $121 Million

The State Legislature took applied salve to a nearly severed limb by restoring $1.8 billion for Medicaid caseload growth.  It reduced the projected hit on Concho Valley providers from $152 million to $121 million.  The biggest portion of this cut comes from loss of federal matching funds.

These are real dollar reductions from 2010-2011. Shannon sees 80% of the areas uninsureds,so they likely get the lion's share of Medicaid patients. Medicaid is a notoriously poor payor to providers. THA reported:

For 2011, the Medicaid inpatient rates for most hospitals are set at an amount that is less than 60 percent of audited allowed costs, and outpatient rates are at less than 85 percent of allowed costs.
Add the 10% provider rate cut and Medicaid reimbursement gets worse.  Fitch Ratings cites Shannon's poor payor mix in its assessment of Shannon Health System bonds.  Shannon budgeted a system-wide loss of $7 million for FY 2010.  If things haven't changed, their ability to absorb a $20 million hit and remain a safety net provider will be severely tested.

Here's the irony.  The State Legislature plans to implement pay for performance (P4P) under Medicaid.  Money is traditionally the fifth or sixth highest motivator, behind contributing to society, working with people one respects.  Medicaid may be the worst payor providers have.  Texas P4P system will use up to 2 year old data to reward providers   It remains to be seen how a moderate motivator, based on old data and dangled by a notorious cheapskate, will impact healthcare in the Concho Valley.  That might be the only April Fool's part of the piece, but it's true.

(Note:  The projections are based on CPPP's original work.  I narrowed it to the Concho Valley, then adjusted for the $1.8 billion caseload restoration.)

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