Tennessee: Despite stimulus, funds for Medicaid uncertain

Tennessee: Despite stimulus, funds for Medicaid uncertain

March 8th, 2009 by Emily Bregel in News

Despite an injection of millions in Medicaid stimulus money this fiscal year, health care providers in Tennessee and Georgia still are feeling queasy.

Tennessee will receive about $300 million in Medicaid relief funds this fiscal year under the economic stimulus package, staving off proposed cuts to TennCare payments to hospitals.

TennCare officials say it's too soon to tell what the stimulus money will mean in the upcoming fiscal year, which starts July 1.

But in Georgia, the stimulus money has not forestalled significant cuts to Medicaid payments to hospitals and other health care providers in Gov. Sonny Perdue's fiscal year 2010 budget.

His budget slices $186 million in Medicaid payments to hospitals, according to the governor's press office.

offsetting cuts

To close a projected $900 million shortfall this year, Tennessee Gov. Phil Bredesen asked state agencies for 15 percent reductions in their budgets. TennCare officials had proposed cuts to supplemental payments to hospitals and some grant programs to meet that requirement, said Kelly Gunderson, TennCare spokeswoman.

No enrollment cuts or service reductions were on the table, she said.

"With extra money coming in, the hope is that there will be some reductions that will be offset, but we don't know anything for certain yet," she said.

TennCare expects to get a total of $1.1 billion in stimulus money - in the form of an increased federal match on state Medicaid spending - through the end of 2010, Ms. Gunderson said.

Hospital supplemental payments give extra funding to hospitals that care for a large portion of uninsured patients and those on Medicaid. Those payments are "absolutely critical" to medical facilities like Erlanger hospital, which absorbed almost $85 million in uncompensated care last year, Erlanger President and CEO Jim Brexler said.

"It is now absolutely essential that our legislators and the administration really work with us together to make sure we do not have health care cut, when in fact the intent at the federal level was to provide adequate funds for health care," Mr. Brexler said.

Hospital executives in Tennessee fear that previously proposed cuts to hospital payments will go into effect, despite stimulus funding. In other states, governors are redirecting stimulus funds intended to pay for health care programs toward other needs, said Craig Becker, president of the Tennessee Hospital Association.

Nearly half the hospitals in Tennessee are losing money, he said.


An estimated $1.7 billion in Medicaid stimulus funding will come into Georgia over the next two years, but hospitals in the state face deep reductions to their Medicaid payments, said Kevin Bloye, spokesman for the Georgia Hospital Association.

At a time when hospitals are treating more uninsured and Medicaid patients, the cuts could be "devastating," he said.

"There are rural hospitals in the state that are hanging by a thread," he said.

Georgia is facing a $2.6 billion shortfall in the current fiscal year and lower revenue projections for next year, said Bert Brantley, spokesman for the governor's press office. So even with $467 million in stimulus funding in the current fiscal year, cuts to hospital payments still are needed, he said.

"I think that's the thing people haven't understood as much. Even with this money coming into the state for stabilization funding, we're still anticipating cuts because of lower revenues," he said.

Gov. Perdue announced in his budget presentation last week that he is lowering revenue projections for next year by $1.6 billion.

At Hutcheson Medical Center in Fort Oglethorpe, President Charles Stewart said he hopes the governor may redirect more funds toward hospitals before the budget is finalized.

"I hope they will listen to the hospitals and understand the critical need that we have," he said. "Hospitals in Georgia, and particularly Hutcheson, are not really in a position to be able to withstand a lot of Medicaid cuts."