NASHVILLE - Chattanooga-based Orange Grove Center and similar providers could see new cuts in state TennCare support for their group homes serving the severely mentally retarded if the state's Medicaid program cuts its overall spending by 5 percent.
Orange Grove and other institutions operating intermediate care facilities would see their state reimbursements cut by another 5.5 percent.
That comes on top of 4.25 percent reductions already planned to begin Jan. 1 because an expected $82 million that the federal government acknowledges it owes Tennessee cannot be repaid without congressional authorization.
Gov. Bill Haslam has directed all state agencies to prepare plans to cut costs by 5 percent in the upcoming 2012-13 budget he will submit to state lawmakers next year.
After listening to TennCare officials' presentation in his final public budgeting hearing, Haslam said, "Our firm hope is we don't have to go into that 5 percent. We're doing everything we can."
Earlier, TennCare Director Darin Gordon outlined $342.9 million in funding cuts in areas such as eliminating counseling for dying patients and families using hospice care. Mental health providers would see their reimbursements cut by 8.5 percent.
Gordon is recommending $87.7 million for inflationary increases in TennCare - which serves low-income pregnant women, children and other select groups - and other programs like CoverKids.
That would bring TennCare's total budget to $8.6 billion with some $2.7 billion from the state and a hospital assessment fee with the remainder coming from the federal government.
But the state is depending heavily on hospitals agreeing to extend the fee and, according to the Tennessee Hospital Association, expanding it from the current 4.52 percent to around 4.75 percent.
"The problem with us is we put up $452 million and are now asked for another $21 million," hospital association President Craig Becker later said. "I'm not sure our membership is going to be real enthusiastic about doing that. Let's try somewhere [else]. They [state] have got some increase revenues coming in."
Money from the hospital fee goes to prevent state funding cuts in support for most hospitals and doctors and other select areas. The administration is looking at hitting all providers, including hospitals, with an additional 1.2 percent cut in reimbursements.
Becker and Gordon also note the picture in Washington is blurry with Congress and President Barack Obama focused on cutting the federal deficit.
Tennessee officials expect there will be federal efforts at some point to reduce the amount of money states like Tennessee can get from providers to use as the state's match to draw down federal dollars.
But although Gordon anticipates the state should be relatively safe for 2013, Becker said he fears congressional Republicans in Washington, seeking to avoid major cuts in military spending, will turn quickly to curbing the use of provider taxes.
Meanwhile, in an interview earlier Monday, prior to the announcement of possible further reimbursement cuts, Orange Grove Executive Director Kyle Hauth said the 4.25 percent cut already scheduled to go into effect Jan. 1 will have "devastating implications" for the nonprofit provider.
Orange Grove now operates 16 small group homes, serving some 80 people around the clock, a clientele who Hauth said "have the most intense needs. These are people who have significant physical and cognitive disabilities, and they require a tremendous amount of services."
The 4.25 percent cut for group homes would cost Orange Grove, which serves about 700 people, "looking at about a half million cut with really no mechanism to recover from that. It's not like we're allowed to reduce our services. We're being told here are the mandated services. It's not like we can manipulate those costs. Those costs are the costs."
Now, under the 5 percent reduction scenario, Orange Grove faces the 1.25 percent rate cut as well as an additional 4.25 percent reduction because the federal Centers for Medicare and Medicaid Services says it needs congressional approval to repay the state what CMS owes.
Contact staff writer Andy Sher at asher@timesfree press.com or 615-255-0550.