Medicaid morass: States are cutting funds to make up for major revenue shortfalls

With demand for services up, the cuts could hardly come at a worse time.

By Amy Snow Landa, AMNews staff. Jan. 7, 2002.

Marlboro County, home to cotton farms, textile mills and tobacco growers, is one of the poorest areas in South Carolina.

Its three licensed obstetrician-gynecologists include John R. Nobles Jr., MD, who has maintained a women's health clinic in the town of Bennettsville for 17 years.

The clinic's revenues have never risen much above its operating costs, says Dr. Nobles. But that goes with the territory when more than one-third of your patients are either on Medicaid or uninsured.

South Carolina pays its physicians among the lowest Medicaid fees in the country, which is especially hard on doctors who treat a high proportion of patients who are enrolled in the program.

But physician fees sank even further last fall, when South Carolina decided to reduce Medicaid reimbursement for physicians, hospitals, pharmacists and nursing homes by $66 million through fiscal year 2002, which ends June 30.

Faced with a sudden plunge in tax revenue that has translated into a budget shortfall of $500 million, state officials decided to cut 4% across the board from all state agencies, including the Dept. of Health and Human Services, which runs the Medicaid program.

As a result, the state's physicians stand to lose at least $8 million in Medicaid fees over an eight-month period, according to preliminary estimates by the South Carolina Medical Assn.

"I just find it incredibly frustrating," says Dr. Nobles. "I don't know how much longer we can keep doing more with less."

Many physicians -- particularly those in poor, rural areas -- can ill afford the reductions, says Ron Fitzwater, the medical society's chief operating officer. "We've got physicians all across this state who are sincerely hurting from these rounds of cuts." [...]