NC Medicaid dealing with cost-control delays

AP News
Posted: Dec 01, 2009 5:24 PM

North Carolina is breaking the Medicaid budget lawmakers approved this summer because more people need health insurance coverage after losing their jobs and are getting treated for swine flu, an agency official said Tuesday.

State spending for the government health insurance program for low-income families and senior citizens _ along with the disabled _ is $160 million over budget so far this fiscal year as expenditures have surged nearly 9 percent compared to a year ago, Health and Human Services Secretary Lanier Cansler said.

While Cansler is hopeful moneysaving measures will take effect by Jan. 1 and level off the spending increases, he said it's possible the extra spending could extend $200 million above the $2.3 billion budgeted for the Division of Medical Assistance to treat 1.6 million Medicaid enrollees in North Carolina.

"There are some things that we just can't control," Cansler said in an interview.

This overspending is on top of a nearly $100 million state revenue shortfall so far this fiscal year due to the poor economy and $500 million in Medicaid cuts that lawmakers also required the department to squeeze out.

"The claims experience and expenditures for the five months of this fiscal year raises great concerns about the ability to achieve the Medicaid budget established by the General Assembly earlier this year," according to an analysis performed by Cansler's department.

The state's economic conditions and 11 percent unemployment rate has led to higher-than-expected enrollment increases, requiring funds to cover an additional 18,000 more patients than budgeted, or $72 million in state funds, the analysis said. The average Medicaid enrollee also is receiving 4 percent more in medical services than budgeted, the report said.

In addition, more Medicaid patients also have gotten the flu than was budgeted, which could cost the state $13 million in patient treatments more by next summer. The surge in expenditures is attributed largely to the swine flu pandemic, Cansler said.

Cansler said Medicaid program cost controls directed by lawmakers for his department to implement as early as Sept. 1 haven't been approved by federal Medicaid regulators. He hopes they will be in place by January. Gov. Beverly Perdue said she's keeping a close eye on Medicaid expenses and speaking regularly with Cansler.

"We're doing all we can to do to make the cuts that were set for us to happen," Perdue told reporters after Tuesday's Council of State meeting.

Medicaid spending is particularly difficult for department officials and lawmakers because the program historically has been second only to the public schools in receiving the most state funding in the budget.

With federal matching dollars, Medicaid becomes a $10 billion program that serves around one of every five North Carolina residents. So a slight alteration in enrollment can lead easily to tens of millions of dollars in extra spending.

Medicaid spending grows when the economy is bad because more people are out of work or fall into poverty. And since Medicaid is an entitlement program, the state can't turn away people who meet the income or disability requirements and must serve it regardless of whether lawmakers set aside enough money to pay for them.

"It's very disturbing because we've got a budget crisis already," said Sen. Bill Purcell, D-Scotland, co-chairman of the budget subcommittee that determines spending for Medicaid. "We're going to see more people losing their health insurance due to losing their jobs."

Perdue said she hoped to visit U.S. Health and Human Services Secretary Kathleen Sebelius in Washington on Wednesday and urge the Obama administration to extend Medicaid assistance to states still struggling to keep their budgets balanced.

The federal stimulus package already gave state lawmakers $852 million in federal dollars to help close the budget gap on Medicaid for the fiscal year that started in July. The federal spending match also increased from essentially $2 for every dollar spent by the state to $3.

"We have consistently asked them to continue to help hold the states harmless for Medicaid and to help us as we get through this time when our budget is stressed and the budgets of all the states around in the country are stressed," Perdue said.