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Alabama Medicaid begins making its case to legislators

Brian Lyman
Montgomery Advertiser

The Alabama Medicaid Agency, facing about $85 million less in funding than it says it needs to function, started laying out a case for more money to legislators Wednesday.

Alabama Medicaid Commissioner Stephanie Azar and Governor Robert Bentley discuss the budget impact to Alabama Medicaid Agency at the State Capitol Building in Montgomery, Ala. on Wednesday April 6, 2016.

In an hourlong presentation, Alabama Medicaid Commissioner Stephanie Azar presented an overview of the agency’s funding, spending and eligibility requirements.

Medicaid asked for a $100 million state funding increase but only got $15 million. During the presentation, Azar stressed that the program had little left to cut and the agency’s current General Fund allocation would force them to lose services needed by Medicaid recipients.

“I know Medicaid is asking for a lot of money from the General Fund,” she told a joint committee of the Legislature. “And I know it is what it is.”

The Legislature formed the committee as a way to gather data and learn more about the functions of the agency. Medicaid consumes about 38 percent of the General Fund budget, and legislators – unwilling or unable to create new revenue for the troubled budget – have accused the program of “cannibalizing” other state agencies in its needs.

The program is critical for the state’s health system. Hospitals and primary care providers, especially pediatricians, depend on Medicaid to keep their doors open. Despite strict eligibility requirements – an able-bodied individual would only qualify for benefits if they had a child eligible for Medicaid and made less than $2,892 a year – more than 1 million Alabamians qualified for the program last June.

“The first thing you do in any challenge is to understand what comprises that challenge,” said Senate Finance and Taxation General Fund chairman Trip Pittman, R-Montrose, after the meeting.

Beyond understanding, the goal of the hearings is unclear. State officials, especially in the Senate, have shown no willingness to reopen the 2017 General Fund budget, which they gave final approval to earlier this month. Pittman indicated Wednesday he expected some level of reduction to remain in place.

“Some cuts will be made,” he said. “Some impacts will be felt, and then we’ll react to what happens.”

The happenings could be significant. In a press conference earlier this month, Azar and Gov. Robert Bentley warned that the state may cut adult prescription drugs, outpatient dialysis and hospice care for patients.

The cuts could also force Medicaid to remove a primary care bump for physicians that keeps reimbursement rates close to Medicare levels. Getting rid of that could force many providers out of the program. Medicaid has not ruled out additional reimbursement cuts after the primary care bump.

“If we were to cut any of these providers . . . we would have the possibility that some of these providers would close,” Azar told the committee.

Azar said after the meeting that Bentley had not yet decided what cuts to make in the program.

Azar’s presentation focused on the scope and operations of the program. The federal government pays for more than two-thirds of the $6 billion program; the state’s General Fund spending amounts to about 11 percent of the total program. The state’s hospitals take on a significant share of costs in the program. Of Alabama’s $2 billion in spending on Medicaid, 36 percent comes from the General Fund and 34 percent from hospitals.

Azar said a 30 percent increase in the eligible population since 2008 drove cost growth. The federal government determines eligibility, Azar said, and the state has little leeway in it. Despite the increase, the costs of eligibles have been flat. The average monthly cost of a Medicaid enrollee in 2008 was $5,813 per patient. In 2015, it was $5,783.

The program faces losses of $73 million in one-time money, Azar said, one of the reasons the agency seeks a $100 million increase Even at $785 million, Azar said some cuts to the program would be likely.

Committee members had relatively few questions for Azar. Sen. Arthur Orr, R-Decatur, pressed the commissioner on resource evaluations for Medicaid recipients, such as home ownership. Azar said Medicaid does not include primary home ownership in making benefit determinations and that the federal government dictates that.

Azar said she would remain hopeful about the program’s prospects, though she said cuts would take a toll.

“It’s disappointing,” she said. “I know the Legislature’s in a tough place, but it’s disappointing to me as Medicaid commissioner because I know what these cuts are going to do.”