New DHS Report Shows Smaller Medicaid Deficit

Monday, April 2, 2012 at 11:00 PM by

Revised Figures Account for Some of the Planned Medicaid Cost Savings

The Medicaid deficit continues to get smaller, according to the latest quarterly report submitted by the Department of Health Services (DHS) to the Joint Finance Committee. The report dated March 30 indicates that the state share of the estimated Medicaid deficit has fallen by an additional $10.6 million GPR (following even larger shrinkage announced in January).

Back in October, DHS estimated that the state share of the Medicaid deficit was almost $220 million GPR. That shortfall fell to $92.3 million in early January and now to $81.7 million GPR. I initially thought today’s report was great news because DHS is in the process of implementing plans that cut Medicaid spending by $75 million GPR (outside the proposed BadgerCare changes). Thus, my first reaction to the new $81.7 million figure was that DHS was on the verge of closing the deficit, without making any changes to BadgerCare. However, a closer reading of the quarterly report sheds a different and less rosy light on the Medicaid shortfall, because the main reason the deficit has gotten smaller is that DHS has now folded into its calculations a significant portion of its Medicaid cost-saving measures.

One bit of bad news in the report is that there will be a small drop in the Federal Medical Assistance percentage (FMAP) for Wisconsin in the 2013 federal fiscal year. A very small change in that percentage yields a loss of $30 million for the state in the current biennium. That amount is more than offset by the implementation of $36 million of Medicaid cost-savings initiatives, such as brand name prescription drug reimbursement reform and expanded third party liability collections.

The bottom line is that the official figure for the Medicaid deficit is smaller, but the new report leaves me scratching my head about the amount of other Medicaid savings that can still be expected from the changes DHS is making outside BadgerCare. We will follow up if or when we get an explanation of how much of the $75 million of non-BadgerCare savings the state can still anticipate.

Jon Peacock

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