Budget problems result in Medicaid physician payment cuts

15 April 2010

In Dec. 2009 as Gov. Tim Kaine left office, he introduced a budget that included cuts to health care services but did not include cuts to physician Medicaid payments. When the House of Delegates and the Senate introduced their budgets, both chambers proposed cuts to physician Medicaid payments to balance the budget. The House proposed a five percent cut to all physician payments beginning in July 2010. The Senate proposed a four percent cut to physician payments and a four percent cut to Medicaid managed care organization (MCO) plans beginning in July 2011.

On Mar. 14, the Virginia House of Delegates and Senate passed a new state budget that includes a three percent Medicaid provider cut in fiscal year (FY) 2011 and four percent in FY 2012. The proposed cuts would apply to physicians, hospitals, nursing homes, dentists and other providers, and would take effect July 1, 2010 and July 1, 2011, respectively. No cuts to Medicaid managed care organizations were included in the budget.

It is anticipated that provider cuts may be prevented through additional federal Medicaid funding to the states, which is expected to be approved by Congress.

MSV thanks all physicians who worked to educate their legislators about this important issue. Through advocacy, collaboration with specialty societies and proactive media relations, our message to protect patient access was heard as the final cuts are less than those originally proposed by each chamber. Also, physician outreach to U.S. Sens. Mark Warner and Jim Webb has paved the way for additional funding for Virginia Medicaid from the federal government pending approval by the U.S. House of Representatives.

In addition to preventing provider cuts, federal Medicaid funding will be used to: 

• Partially restore funding to pharmacy providers who provide medications to Medicaid recipients in largely rural areas 
• Maintain current eligibility in the Family Access to Medical Insurance Security (FAMIS) program in FY 2011 and FY 2012 
• Restore Medicaid eligibility reductions for individuals in longterm care waivers and low-income aged, blind and disabled individuals 
• Reverse proposed cuts for optometry and podiatry services

While the Virginia House of Delegates and Senate initially disagreed in their approaches to allocating the additional federal Medicaid assistance funding to health and human resources programs, the final budget does stipulate that the funding be used to offset reductions in that area.

In comparison to the various proposed budgets, the General Assembly-approved budget includes: 

• Restoration of funds for Virginia’s free clinics 
• Restoration of funds for Virginia’s community health centers 
• Restoration of funds for the Virginia Health Care Foundation 
• Administrative reductions of more than $4 million 
• Restoration of funding for Virginia’s poison control centers 
• Restoration of funding to Commonwealth Center for Children and Adolescents

Gov. Bob McDonnell has the ability to offer amendments to the budget. The General Assembly will consider any amendments suggested by Gov. McDonnell on April 21, 2010. Gov. McDonnell has expressed support for maintaining provider payments under Medicaid and did not offer any such cuts when he announced his budget recommendations as the General Assembly was considering the budget. Therefore, MSV does not anticipate that the governor will amend the budget to include additional Medicaid cuts.