TribBlog: How Deep Do Medicaid Cuts Go?

Lawmakers have proposed cutting Medicaid provider rates 10 percent to help meet the state's budget crisis. But health care groups suggest the cuts are far deeper. In a press conference today, the Texas Health Care Association, which advocates for nursing homes, said the House and Senate’s recommended budgets for Medicaid services actually represent a 33 percent cut from current service levels.  

“The problem is there are other things that are either being cut or resulting in budget reductions beyond that that are additive,” said Coyle Kelly, an economic consultant for the group.

For starters: Stimulus funding dramatically increased the portion of Medicaid costs paid by the feds during the last biennium — money that won't be available in the next biennium. That drop, coupled with the proposed 10 percent rate cut, is where health care groups come up with the 33 percent figure, which they call devastating.

“We are not crying wolf. Pieces of the sky are falling,” said Tim Graves, president and CEO of the health care association. “There’s no way that the major revenue stream of nursing home care in Texas can be cut by a third and not cause significant bankruptcies, closures, widespread displacement of patients. And front-line health care workers will just be going to the unemployment lines in local communities.”

The proposed 10 percent cut comes on top of a 1 percent Medicaid rate cut that took effect in September, and a 2 percent cut expected to take effect next week. 

“I feel like I’m in the fight of my life, not only for our residents, but for our staff as well,” said Darlene Evans, owner of Autumn Winds Retirement Lodge in Schertz, which took a $25,000 hit with the 1 percent rate cut alone.

Medicaid covers 70 percent of nursing home patients in Texas, and more than 550 of the state's nursing facilities have populations that are 70 percent or more Medicaid. Those facilities house more than 45,000 patients and employ thousands of people. Graves estimates that even a 10 to 15 percent reduction is enough to cause closure and forced relocation for patients in the many facilities with 100 percent Medicaid patients.

The other troubling piece of the Medicaid budget puzzle is caseload growth — and legislators’ lack of acknowledgment of it in current budget recommendations. Health care providers say as more people enroll in Medicaid — people who, by law, can't be turned away — the state could have to cut rates even further.

"That creates a significant hole above and beyond the 33 percent budget reduction," Kelly said. "People will show up needing care, and they have to be enrolled and given the care."