States Take Aim At Medicaid

By JANE ZHANG

At least 25 states have enacted or proposed cuts in health-insurance programs for the poor, potentially leaving millions of patients with reduced levels of care or no coverage at all.

The cuts come as states are making painful moves to close record budget deficits while facing increased demand for services. Across the country, states have pared services under Medicaid, the federal-state health program for the poor, and 12 states have also targeted the State Children's Health Insurance Program, a federal-state program designed to provide health care for children from low-income families that earn too much to qualify for Medicaid, said a report to be released Wednesday by Families USA, an advocacy group in Washington.

The group estimates that more than 250,000 people will lose care because of cuts already enacted and proposed cuts could affect millions more.

States hope federal help will restore some of the funding. The House is expected to vote on a stimulus package as early as Wednesday that would provide about $87 billion over 27 months to boost state Medicaid programs. Senate committees are considering it, and President Barack Obama is pushing lawmakers to send him the bill to sign by mid-February.

The extra money would provide much-needed relief to states, but it's unclear if it would be enough to stave off cuts as job losses swell the Medicaid rolls. States In the meantime, public hospital administrators worry that they could end up paying down the road if patients postpone seeking treatment until they are acutely ill.

Some states have capped enrollment, cut benefits and slashed services that aren't specifically required by the federal government, such as home care for the disabled and vision and dental care. Others such as Nevada, with already-lean Medicaid programs, have resorted to across-the-board cuts in payments to hospitals and doctors. As it stands now, the stimulus legislation would require states to retain or restore Medicaid eligibility levels to those of July 1, 2008, but it wouldn't prevent states from making benefit or provider cuts.

Even before the financial crisis, Nevada's Medicaid spending was the lowest in the country per beneficiary -- $472 compared with a national average of $1,015, according to a 2006 survey. In September, Nevada cut Medicaid payments to hospitals by 5% across the board, and some physicians, especially pediatricians specializing in orthopedics, urology and cancer, saw their payments reduced by 41%. Still, the state faces a revenue shortfall of more than $2.3 billion in the next two fiscal years as gambling and sales-tax revenues have plummeted.

Nevada Gov. Jim Gibbons in his State of the State speech this month proposed increasing Medicaid spending by $206.6 million to $2.8 billion. But he also proposed eliminating Medicaid coverage for low-income pregnant mothers.

The state has already reduced personal-care assistance to the elderly and disabled, which led to complaints and some 200 hearings, said Charles Duarte, the state's Medicaid administrator. The state also capped dental benefits for its State Children's Health Insurance Program, or Schip, at $600 a year, and eliminated orthodontics and vision coverage. Gov. Gibbons plans to cap enrollment at 25,000 for the state's Schip program, which already has 23,000 enrollees and pending applications for 7,000 children. "We don't have money," Mr. Duarte said. "We try to look at things that will have the least impact."

The cuts meant $21 million less in Medicaid funding for the area's only public hospital, the University Medical Center of Southern Nevada in Las Vegas, said Chief Executive Kathy Silver. That came at a bad time for the hospital: Even before the cuts, it was expected to lose $51 million, about 10% of the hospital's net revenue, to uncompensated care.

The hospital, which treats most of the Medicaid and uninsured patients in the area, eliminated some services. By early November, it stopped accepting new patients at the outpatient oncology clinic, and then canceled a contract for outpatient dialysis, saving $2.5 million a year. It also ended routine prenatal care, leaving 600 women to find other providers, and it discouraged women with high-risk pregnancies from using the hospital by closing a unit that was losing more than $2 million a year, Ms. Silver said.

The transition hasn't been without risks, especially for the uninsured who can't afford costly oncology drugs. For undocumented immigrants, she said the hospital is working with the Mexican consulate in Las Vegas to "try to get them treatment or send them to Mexico, if they want."

Officials at the local Mexican consulate declined to comment.

Meanwhile, some doctors -- especially specialty pediatricians -- have stopped seeing Medicaid patients. Mark Barry, an orthopedic pediatrician at Desert Orthopaedic Center in Las Vegas, said he stopped accepting patients after Medicaid slashed reimbursement rates 41%. "It's extremely troubling," Dr. Barry said. "There's nothing more I want to do than provide care."

Health clinics and doctors' offices that still accept Medicaid are overcrowded, and some patients are looking for care out of state. "We are almost creating medical refugees out of the Las Vegas area," said Stacey Gross, community-programs manager in southern Nevada for Susan G. Komen for the Cure, a nonprofit dedicated to fighting breast cancer. "Only a small fraction of people are actually securing any amount of charity care."

As the economy worsens and job losses mount at casinos and elsewhere, some fear patients will eventually flood emergency rooms when their conditions worsen. "I feel like this is a tsunami coming," said University Medical Center's Ms. Silver.

If Nevada's state legislature approves the governor's budget, Mr. Duarte said hospitals will get another 5% payment cut on July 1 this year.

Write to Jane Zhang at Jane.Zhang@wsj.com

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