Gov. Phil Bryant wants to perform a magic trick of sorts: reform Mississippi's Medicaid program so that it doesn't cost any more state money next year. Program officials were expecting costs to increase by 16 percent.
The essence of making funds stretch is changing how the state pays hospitals to care for Medicaid patients. That group is mostly poor children, but includes some parents, disabled adults, and senior citizens.
Medicaid will cost Mississippi $763 million this year. Bryant, in releasing his budget Tuesday, called it "the elephant in the phone booth."
Democratic lawmakers are questioning whether Bryant is just camouflaging cost cutting, which could mean less care for patients or less money for hospitals.
"It's smoke and mirrors for cuts," said Rep. Steve Holland, D-Plantersville. "That's all it is."
The hospitals, for their part, say they want to see details.
"I think we have to withhold judgment until we see what they're going to actually propose," said Gwen Combs, vice president for policy at the Mississippi Hospital Association.
The state only pays for about 20 percent of the program's overall $3.9 billion cost, with most of the rest of that money coming from federal sources. But even that fraction is steadily devouring Mississippi's strained budget, as the recession has driven up the ranks of beneficiaries and hospitals costs have risen 19 percent in the past two years.
State officials said Mississippi's program is a relatively rich revenue source for hospitals, noting that Mississippi hospitals are among the most profitable in the country. But hospitals are directly taxed to cover about a third of the state's Medicaid costs. That money, an estimated $253 million this year, is used to match federal funds.
Bryant said Tuesday that Medicaid projected it would need $883 million in the budget year beginning July 1. Most agencies are already in line for 5.5 percent cuts under the new governor's first spending plan, and Bryant said there was no way to absorb that kind of cost increase without much deeper cuts, since he rules out tax increases.
So Bryant ordered Medicaid to come up with a plan by March 1 to change how Medicaid pays hospitals.
"The 763 million that the governor talked about yesterday, what we've been asked to do is transform the program to live within that kind of budget," Richard Roberson, special assistant to the executive director, told lawmakers Wednesday.
Today, the program pays each hospital its own daily rate per patient, no matter how simple or complicated an illness is being treated. Most of the medical world long shifted away from such a system, instead paying hospitals based on a price list for particular procedures, adjusting for how complicated the treatment was and whether hospitals have to pay more or less to their workers.
Mississippi has long been mulling such a switch, but Bryant said that a 2009 state law that tried to set it up is unworkable and must be rewritten.
A 2009 legislative report endorsed the switch. Paying hospitals a daily rate based on expenses encourages them to keep patients longer, and doesn't give any incentive to make care cheaper, the committee wrote.
The University of Mississippi Medical Center, the state's largest single recipient of Medicaid funds, endorses the goals of the change.
"In the long run, it will mean people will be able to treat the patients and move them out quicker, said Dr. James Keeton, vice chancellor for health affairs at the Jackson medical complex.
But the Performance Evaluation and Expenditure Review Committee warned against using the change as a way to cut payments.
"Funding must remain sufficient to ensure reasonable reimbursement of provider costs to ensure that Medicaid beneficiaries have adequate access to medical services," the panel wrote.
At a briefing Wednesday, Rep. David Myers, D-McComb asked how Medicaid could now say it didn't need any more money when it had asked the Legislature for a big increase.
"Did you ask for that $870 million not needing it, or did you need it?" he asked.
"What we've been asked to do is live within our means," Roberson replied.
Roberson said Medicaid is looking at other cost-cutting plans, including holding down drug costs, putting more people in community-based mental health care, and expanding two for-profit care management organizations that try to make sick people healthier.
Holland, the former chairman of the House Public Health and Human Services Committee, said he didn't believe Medicaid could maintain services without more cash. "They'll come back with a deficit," he said.
Roberson, though, said Medicaid doesn't want to pay less for the same care, but pay a full price for different, less expensive care that keeps patients from getting so sick.
As for reaching the hurlde of implementing changes by July 1, Roberson said: "That's going to be a challenge."
