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Medicaid Budget Proposal Would Cut Hospital, Nursing Home Rates Again

Published
Hospitals could face another rate cut under the Medicaid budget proposed for this fiscal year. Tension over the cuts came up during a budget hearing...

  Hospitals could face another rate cut under the Medicaid budget proposed for this fiscal year. Tension over the cuts came up during a budget hearing this week.

Last year around this time, Medicaid – that’s the state health insurance program for the poor and disabled – was facing a big deficit. Today, officials say they’re on track to save more than $75 million dollars, a figure they say is better than expected. But Hospital Association of Rhode Island spokesman Michael Souza says a proposed rate cut of two and a half percent would be bad for hospitals. They’re already absorbing rate cuts from last year.  

“Medicare increases to hospitals are pretty much zero or decreases because there’s been cuts in order to help fund things like Medicaid expansion, health insurance exchanges, there were cuts to hospitals.”

Medicaid officials argue that hospitals will be able to make up some of the losses through an incentive program for high quality care.

Nursing Home Association spokeswoman Virginia Burke questioned the premise for the cuts, saying Rhode island already spends less that it should on the frailest patients.

“When it comes to spending on the elderly, we spend about the same as other states do. And we do that despite the fact that our elderly are disproportionately old and therefore more in need of long term care services.”

Medicaid officials say they’re focused on curbing spending and improving care. The cuts are part of the state budget proposal, which still has to be approved by lawmakers.

Medicaid officials also addressed a reported overpayment to insurers of $200 million dollars. The payments went to insurers as part of the agreement to cover people newly eligible for Medicaid, under the Affordable Care Act. But no one knew exactly how many services never-before-enrolled patients would use, and so the payments were an estimate. As it turned out, the newest enrollees cost less than anticipated. So the overpayment is being returned. The funds are all federal dollars, as Medicaid expansion is still covered by the federal government. States will take on an increasing percentage of the cost of covering this expanded population over the next few years.

Mike Souza represents hospitals in Rhode Island.
Mike Souza represents hospitals in Rhode Island.