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S.C. Doctors, Hospitals At Loss With Medicaid Cuts

From The State:

By WAYNE WASHINGTON–Tuesday, Jun. 07, 2011

The state Department of Health and Human Services on Monday announced a second round of cuts in payments to doctors and hospitals who treat the poor and disabled.

The state also said it would increase the co-payments that Medicaid patients must pay for their care. The moves are part of a broad plan to save the state $125 million in its upcoming fiscal year. The plan, subject to federal approval, would go into effect July 8.

The state’s health agency posted a $228 million deficit in the fiscal year that ends this month. The agency closed part of that deficit — due, in part, to the large number of people who lost jobs during the Great Recession and went on Medicaid — with a 3 percent across-the-board cut in payments to medical providers in April.

With this new round of cuts, some care providers — including lab and X-ray service providers, podiatrists, physical therapists, psychologists and chiropractors — will face a cut of 10 percent, when the July proposed cuts are added to the April cuts.

Other physicians would fare better. Medical experts whose work could reduce the state’s high infant-mortality rate — obstetricians, neonatologists, and maternal and fetal medicine physicians — are excluded from this round of cuts.

Primary-care physicians, who are in high demand in South Carolina, would face a total 5 percent cut if the state’s proposal gets federal approval.

Co-payments for routine services, including doctor and home-health visits, would be increased as part of the department’s proposal.

With health-care costs soaring — and with state money limited — doctors and hospitals were bracing for larger cuts. Some expressed gratitude Monday that those bigger cuts were not part of the health agency’s proposal.

“With a 15 percent cut being a real possibility earlier this spring, we believe that the 2 percent to 5 percent cuts to physicians announced today show that (Health and Human Services) Director Anthony Keck has heard our message loud and clear: There needs to be a priority placed on physicians and their patients,” said Dr. Gregory Tarasidis, immediate past president of the S.C. Medical Association.

“While there were no winners in this situation, we believe Director Keck made strong efforts to deliver our common goal — ensuring that our state’s patients are properly cared for and preserving the integrity of the Medicaid program.”

In Republican and Democratic states alike, Medicaid has been a sharp point of contention between federal and state officials, with state officials complaining its soaring medical costs are swamping their budgets.

“Medicaid directors in red and blue states are generally forecasting fiscal train wrecks in the coming years,” Keck said.

“Ultimately, the state must continue to drive excess cost out of the entire system if we are to truly have any chance of making health care more affordable to more people and to prevent health-care costs from overwhelming our state budget.”

With the exception of some rural and critical-access facilities, most hospitals will face a 4 percent cut in state payments for inpatient and outpatient services. The proposal also calls for the elimination of state payments to out-of-state hospitals for graduate medical education and a 10 percent reduction in those payments to in-state teaching hospitals.

Earlier this year, as the state health agency disclosed it faced a $228 million budget deficit, fears rose that big Medicaid cuts would result in thousands of job losses and the closure of some hospitals.

Allan Stalvey, executive vice president for the S.C. Hospital Association, said it is too early to say if any hospitals will close because of the reimbursement reductions. The jobs picture is also unclear, he said. “Certainly, we’ve always said, when you take this amount out of health care, you’re going to have an impact on jobs,” Stalvey said. “It’s certainly going to have an impact.”

Hospitals are expecting another shoe to drop: More reimbursement cuts are part of the health-care reform legislation signed into law by President Obama. Hospitals agreed to those cuts, Stalvey said, in exchange for getting more people insured, which would mean fewer uninsured people showing up for expensive emergency-room care.

While Stalvey said the S.C. proposal does not include any surprises, it does mean tougher days ahead for some hospitals. “The smaller hospitals and the rural hospitals, they’re running on very thin margins.”