Proposed Medicaid spending restraints could force staffing reductions at nursing homes and make it more difficult for parents to care for severely ill or disabled children, families of patients and health care providers said at a budget hearing in Annapolis yesterday.
The proposed budget for Medicaid, the federal-state program that provides health care for the poor and for elderly in nursing homes, isn't being cut. As proposed by the Ehrlich administration, it would be $4.3 billion for the fiscal year beginning July 1 (about half state money and half federal matching funds), an increase of 9.4 percent over the current year's allocation.
But because some health care costs are growing so quickly, some programs are receiving budget increases that are less than the rise in inflation, and others are being reduced or consolidated.
"The fact of the matter is that Medicaid is growing at approximately twice the rate of the revenue sources to pay for it," S. Anthony McCann, state health secretary, told the Subcommittee on Health and Human Resources of the House Appropriations Committee. "This is a reality we all have to face."
Medicaid now accounts for about a sixth of the state budget, according to a report by legislative budget analysts, and is projected to grow about 8 percent a year unless cost containment measures are taken.
Donald E. Lewis, administrator of St. Mary's Nursing Center in Leonardtown, said that proposed changes in reimbursement rates for nursing homes wouldn't allow his facility to cover its higher costs for employee health insurance and for liability insurance. Liability premiums are expected to increase to $230,000 next year, from $191,000 this year and $80,000 four years ago, he said.
"We're going to be looking at having to reduce our staff," he told the lawmakers. "If you put these cuts into place, we're going to have to reduce care hours."
Kate Ricks, of Waldorf, chairwoman of Voices for Quality Care, a statewide organization for families of nursing home residents, said the change in formula would only save the state $21 million and mean losing a like amount in federal matching funds.
The result, she testified, would be "fewer aides in our nursing homes, and the aides that are there are not going to be as attentive."
Under the proposed nursing home reimbursement changes, the state would pay $876 million to care for the same number of people as this year, or about 16,000. The amount is 3.2 percent more than this year but 2.7 percent, or $42 million, less than if the state used current formulas. It is the largest amount of dollar savings contained in the proposed Medicaid budget.
Stephen J. Allen, chief executive officer of Xavier Health Care Services Inc., which owns nursing homes, and president of the trade group Health Facilities Association of Maryland (HFAM), said budget cuts in the 1990s had led to poor quality, leading the state to shut down some nursing homes.
With better reimbursements, nursing hours per patient increased 28 percent from 1997 to 2004, and wages (including fringe benefits) doubled, according to HFAM figures.
McCann, the state health secretary, said the changes apply only to reimbursement rate components dealing with administrative and capital costs, not to those covering patient care.
The state Medicaid program could face federal cuts this year when Congress takes up President Bush's budget reductions. The president is seeking changes that he says will save $60 billion in Medicaid spending over the next 10 years.
Beyond nursing home care, yesterday's more than four hours of testimony also touched on programs ranging from day care for frail adults to community support for the disabled.
A number of parents and advocates opposed the proposed elimination of a program called Rare and Expensive Case Management, or REM, which helps coordinate care for about 6,500 children with severe and complex medical problems.
The cases would be moved to Managed Care Organizations, the HMO-like groups that already provide most care for children under Medicaid. The state projects that move would save $6 million.
The Managed Care Organizations are already handling similar cases now, McCann testified, and can provide equal or better benefits at lower cost.
But Carol Fanconi, representing an advocacy group called Medicaid Matters! Maryland, said a study by the state health department itself had found that children in the REM program received necessary outpatient care 84 percent of the time, compared with 62 percent for disabled children with care managed by HMOs.
Cheryl Watson, of Gaithersburg, said REM helped her find the right doctors to treat her 14-year-old daughter, Hope, who has cerebral palsy, and helped her get medical equipment to keep Hope at home, avoiding more expensive hospital or institutional care.
"REM came to my rescue," she testified.