Federal fund increase may mean fewer Medicaid cuts

State programs get a $10 billion booster shot that experts say could help avert new rate reductions.

By Joel B. Finkelstein, AMNews staff. June 16, 2003.

Washington -- Relief is on its way to state Medicaid programs facing lean times, thanks to a package approved last month by Congress. The new funding it provides may enable states confronting budget shortfalls to reconsider cuts to physician payment rates and other reductions that could undermine patient access.

Most states facing severe economic challenges and balanced budget requirements have already made such reductions or are considering them. For instance, many have tightened eligibility requirements or reduced benefits. Those that have not yet made cuts have frozen expenditures to keep costs down.

Concern about these steps is why AMA President Yank D. Coble Jr., MD, welcomed the new funds and what they could mean for Medicaid patients. "It will hopefully encourage physicians to keep serving these patients," he said, adding that improving access is important for doctors.

Medicaid directors were appreciative as well. "We're very happy with the increase," said Kathryn Kotula, director of health policy at the National Assn. of State Medicaid Directors, explaining that the extra money fit the programs' immediate needs for more funding.

The relief funds were approved as part of Congress' recently passed tax-cut legislation. Seeing the states in such deep fiscal trouble, Congress and the White House agreed to give the states a total of $20 billion. Half of that is devoted to a temporary increase in Medicaid funding for claims filed between April 2003 and June 2004.