The Truven Health Blog

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By Truven Staff

States Allowed to Cut Back on Medicaid Payments

Bill Bithoney image60 Million Americans currently are enrolled in Medicaid and, as a result of the Affordable Care Act (ACA), over the next 2 years many more patients will be enrolled. While initially the Federal government will cover the cost of the increased enrollment in Medicaid, the share of Federal funding will eventually shrink.  to hospitals, doctors and other providers, perhaps in an attempt to get Republican governors to buy into the ACA.

Many states such as California and Illinois are already struggling to pay for the high cost of Medicaid. These states may find it essential to cut Medicaid payments to providers in order to dig out of already challenging deficits—even without the projected higher costs of Medicaid in the future.  On the other hand the Obama Administration’s position on this matter has infuriated hospitals and providers who believe that Medicaid already reimburses them below their costs of providing care.

These providers and healthcare advocates are using the path of judicial appeal to prevent planned cuts from taking place in California. In a brief filed with the appeals court, the administration has stated that “there is no mandate to reimburse providers for all or substantially all of their costs.” Will providers continue to provide care to Medicaid patients if the rules change? The President of the California Medical Association has said that “two thirds of the doctors in California cannot afford to participate in Medicaid because the rates are so low.” What will happen if the rates get even lower? Healthcare providers are watching this case closely.

Dr. William Bithoney
Categories: Government, Medicaid