States face "meltdown" over Medicaid

States are already struggling with budget shortfalls and proposed program reductions that could hit both physicians and patients.

By Joel B. Finkelstein, AMNews staff. May 16, 2005.

Washington -- Lawmakers' resolution to shave $10 billion in savings from Medicaid likely means that further cuts to physician reimbursement, patient rolls and benefits are ahead.

The recently passed fiscal year 2006 budget resolution calls for a $10 billion reduction in projected Medicaid spending over five years. While a significant sign of congressional intent, the measure is only a blueprint for the final budget. Now lawmakers in various committees must fill in the details of how budget targets will be reached.

The Bush administration has proposed finding Medicaid savings by curbing what it sees as inappropriate use of state cost-shifting mechanisms and cracking down on waste, fraud and abuse.

It's hard to believe that the government will be able to find $2 billion in savings a year through those measures alone, said Stephen Edwards, MD, past president of the American Academy of Pediatrics and chair of AAP's access subcommittee.

States will have little choice but to make even deeper cuts to their programs, he said. Many states have repeatedly frozen or reduced physician rates over the past three years.

"We are going to cut in the meat of a program that is already underfunded," he said.

Dr. Edwards practices in North Carolina, which has one of the highest Medicaid reimbursement rates in the country, about 95% of Medicare rates. That payment level is the key to the program's success, allowing physicians to offer children a medical home where they can consistently receive preventive services and access to medical care.