Hospitals and doctors in Georgia are fretting over a proposed 10.25 percent Medicaid reimbursement cut for the upcoming fiscal year.
"It's kind of scary because reimbursement is already not great," said Dr. Carlos Baleeiro, a pulmonologist in Fort Oglethorpe, Ga.
About one-fifth of his patients are on Medicaid, the state-federal program for the poor and disable. Dr. Baleeiro said he already struggles to connect those patients with a primary care physician, since many doctors can't afford to take on too many Medicaid patients.
"If all of a sudden, you cut that (rate) even further, there's no incentive to take these patients," he said.
Gov. Sonny Perdue last week announced revised budget recommendations for the 2011 fiscal year that starts July 1. Among other changes, Gov. Perdue proposed the rate cut to save about $144 million. Another $130 million would come from revoking the sales tax exemption for certain nonprofit hospitals.
"It's a double whammy for us for sure," said Kevin Bloye, spokesman for the Georgia Hospital Association.
The association is working to come up with alternatives to pitch to the governor before the Legislature votes to finalize the proposed budget this spring.
Revenue shortfalls in January and February prompted the overall $442 million cut, the governor said. February revenues were down $62 million from the year prior.
The governor's office said the measures are the only alternative after hospitals balked at a 1.6 percent tax on net patient revenues.
The so-called "bed tax" would have collected $345 million in state funds -- $247 million from hospitals -- that would be put back into Medicaid to draw down almost $1 billion in federal matching funds, said Bert Brantley, of the governor's press office.
Some hospitals would have gained money from the plan and across-the-board rate cuts could have been avoided, Mr. Brantley said.
He said Gov. Perdue hopes hospitals will reconsider supporting the hospital tax, because the net impact of the alternatives would be worse.
"We don't want to do this rate cut," he said. "We know the impact would be severe and so hopefully this will jar them to the budget reality that we're in."
Tennessee hospital industry leaders have proposed their own plan to impose a 3.5 percent fee on most hospitals' net patient revenues to draw down federal matching funds. The Tennessee Hospital Association helped craft the plan, which would avoid deep cuts to the state's Medicaid program, TennCare.
But Mr. Bloye pointed out that Gov. Perdue's plan doesn't have the one-year time limit included in the Tennessee proposal, and it doesn't offer protections to ensure that a higher tax won't be imposed down the road.
"We know the state budget situation is going to be a lot worse next year," Mr. Bloye said. "What is going to keep the state from hiking the tax from 1.6 to the federal max of 5.5 percent?"
Meanwhile, doctors say they are facing an unrelenting stream of patients in need.
When Dr. Sally Chu of Fort Oglethorpe opened her new primary care practice in January, she was inundated with new Medicaid patients who hadn't been able to find a doctor.
Forty percent of her 500 patients are on Medicaid, she said. But as her patient base grows she will have to cap the number of Medicaid patients, likely at 20 percent, she said.
And the 10.25 percent rate cut is "going to be a huge hit to us," she said.
PROPOSED BUDGET REVISIONS
Among the changes to Gov. Sonny Perdue's recommended fiscal year 2011 budget:
* Reduce payments by 10.25 percent to Medicaid providers, including most hospitals and doctors
* Lift the sales tax exemption for certain nonprofit hospitals
* Reduce operating expenses for state agencies by an average of 3 percent
* Use $47 million in Tobacco Settlement Funds for Low-Income Medicaid in the Department of Community Health
Source: Governor's press office
Continue reading by following these links to related stories:
Article: Recession, TennCare cuts batter BlueCross profits
Article: Hospital fee plan could avert painful cuts, hospital leaders say
Article: Perdue slashes tax-free holiday