DHS Reports that Medicaid Budget Is in Balance
Improvement Attributed Primarily to Reduced Family Care Capitation Rates in 2013
A December 28 letter from the Department of Health Services (DHS) says the agency has essentially eliminated the $147 million GPR deficit in the 2011-13 Medicaid budget, which the department had estimated in 2011. According to today’s letter to members of the Joint Finance Committee from DHS Secretary Dennis Smith, the projection that the Medicaid budget will be in balance by the end of the biennium “reflects $119.5 million GPR in savings from health care efficiencies implemented to date and projects an additional $27.8 million GPR in savings by the end of the year.”
Although this development isn’t surprising, I’m pleased to hear DHS say they anticipate ending the biennium without a Medicaid shortfall. That said, the letter is a bit frustrating for a hard core budget policy wonk because it leaves out some significant details and provides little explanation for the latest improvement in Medicaid financing, other than the following:
“The fiscal situation has improved primarily because CY 13 capitation rates for Family Care, PACE, and Partnership managed care organizations have been finalized. The final rates have decreased by 0.7% for Family Care and 3.0% for PACE/Partnership compared to CY 12. The September projection assumed they would increase by 2.7% for Family Care and 1% for PACE/Partnership.”
The letter makes a few points about Family Care, but the statements don’t shed much light on the fiscal impact of the long-term care cost-saving measures that were proposed a year or so ago to offset the cost of lifting the Family Care enrollment cap. Though I’m not certain, I think the department is saying that it still assumes the savings will be just the $3.2 million estimated in the previous quarterly report (not counting the reduced capitation rates noted above).
In addition, the DHS letter makes no mention of several sources of recent funding – the recently announced $23.3 million CHIPRA performance bonus for 2012, the $8.7 million supplement to the 2011 performance bonus (see our recent blog post), and a number of awards resulting from settlements with drug companies. My guess is that the letter’s silence on those issues means that DHS plans to use the funding just as it did in 2011 – to provide lapses to the state General Fund.
We will continue to try to answer these questions.