State Workgroup Considers Hospital Cuts to Offset Medicaid Managed Care Rate Increases

August 4, 2016

The State’s Health Care Oversight Joint Select Committee met last Wednesday to hear an update on a study looking at ways to deliver a zero increase rate for Medicaid managed care plans in the upcoming fiscal year.  Staff from the Health Care Authority recommended three areas of focus based on the recommendations from its workgroup, composed of state staff and the managed care plans.  The workgroup’s full report is due to the legislature on October 1st.
The group has put forward three recommendations, two of which potentially involve cuts to hospital payments:
  1. Explore near-term changes to restrictions on how mental health drugs are managed.
  1. Review readmissions payment policy with managed care plans and HCA), and
  1. Improve primary care access through rate increase (and consider a phased approach with potential offsetting changes like reductions in payment to hospital-based clinics).
The work group will be reconvening in August.  We will be asking for the discussions to be broadened to have the hospital and provider viewpoint considered.  We are concerned about the impact on access to primary and specialty care if Medicaid hospital-based clinic payments are cut to support a rate increase for primary care.  We also would be concerned about any changes to the Medicaid readmission policies that increase the magnitude of the penalties or result in inappropriate claim denials. (Andrew Busz,


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