Medicaid savings could from tighter eligibility rules

e-mail this story to a friend Related Related site • Read the report online

Medicaid costs jumped 25 percent between fiscal 1999 and 2002, or $360 million a year, according to a Legislative Audit Council review released Tuesday. The federal government picks up about 69 percent of the $3.6 billion Medicaid program, with the state paying about $480 million in 2002, according to the LAC.

While escalating health care costs are responsible for the bulk of the increases, the LAC concluded that millions could be saved by reducing the number of adults on the program by 10 percent through tougher eligibility requirements and better scrutiny of applications, and by implementing copayments for certain services and a Medicaid enrollment fee.

"The program is one that we have to manage," said LAC Director George L. Schroeder, "or we're going to bankrupt the state government."

Frank Adams, spokesman for the state Department of Health and Human Services, which administers the program, called the review helpful.

"They found some things...that should be looked at with an eye to change," he said, "and acknowledged that much of what it's recommending is in process of being changed."

But while Medicaid expenses may be reduced, the need for medical care isn't, advocates for the poor and health care providers say. The result is that it will be harder for organizations like New Horizon Family Health Service, which provides care to people on Medicaid, Medicare and on a sliding fee scale, said executive director Regina Cook.

As fewer people qualify for Medicaid, more are likely to seek services on a sliding fee scale at the clinic, she said.

"The typical patient...pays a very discounted fee," she said. "That visit may cost us $100 but that person could end up paying $15 or $25."

And that means a domino effect on other providers as well, such as the Greenville Free Clinic, whose patients are ineligible for Medicaid and have no other way to pay.

"As these folks are squeezed off the Medicaid roles, they have no other place to turn. But we're at capacity as it is," said executive director Suzie Foley, adding the clinic saw 1,800 first-time patients last year. "We just can't keep up with the demand."

Reducing eligibility also will mean increased charity care for hospitals and increased use of more costly emergency rooms, said Kenneth A. Shull, president of the South Carolina Hospital Association.

"Patients will still have a bad gall bladder, or whatever, and have to be taken care of, and if you don't have a primary care provider you're much more likely to go to the ER for primary care," he said. "Much of it will end up as bad debt."

That in turn feeds spiraling health care costs by shifting the cost of indigent care to those with commercial insurance, Shull said.

Faced with mounting financial problems, nearly every state has taken steps to contain Medicaid costs this year, according to the Kaiser Commission on Medicaid and the Uninsured. Some 37 cut provider reimbursements, 27 reduced eligibility, 25 reduced benefits, and 45 implemented programs to control pharmaceutical costs, such as the preferred drug list recommended by the LAC.

That plan could save $12.8 million by enabling the state to negotiate lower drug prices, according to the LAC. Such a plan proposed by Human Services last year is now under review by the Sanford administration, Adams said.

Meanwhile, Rep. Rex Rice, R-Easley, introduced a bill Tuesday that would hike the tax on a pack of cigarettes by 42 cents to help pay for Medicaid. Rice said his bill differs from other tobacco tax proposals because it's tied to Medicaid reforms like those suggested by the LAC. It also calls for consolidating all eight health care agencies under one umbrella organization for additional savings as the state faces a budget shortfall of $500 million, he said.

"We've got to do something about the growth of Medicaid," said Rice, the representative of the House Ways and Means Committee to the LAC.

Weldon Mikulik, a vice president of the United Way of Greenville County, which operates the Community Health Alliance to reduce the number of medically underserved in the county, said he understands the need to find savings, but added medical care may not be the right place to look.

"People need to have health care," he said. "It's almost as basic as food, clothing and shelter."

NOTE: To view the entire report online, go to www.state.sc.us/sclac