In Business Las Vegas

Health Care and Banking

No room to cut Medicaid in struggling economy

By Nicole Lucht / Staff Writer

As the economy sours, Medicaid enrollment and spending increase, the Kaiser Commission on Medicaid and the Uninsured said in a report released April 28.

The report, "Medicaid, SCHIP (State Children's Health Insurance Program) and Economic Downturn: Policy Challenges and Policy Responses," found that a state's response to an economic slowdown can actually "worsen cyclical downturns" by tapping into reserves, borrowing from trust funds and delaying spending.

The commission is part of the Kaiser Foundation, a nonprofit health research and policy analysis organization.

"The need to cut Medicaid during economic decline limits the program's ability to function as an automatic fiscal stabilizer," the Kaiser study said. "Such stabilizers are some of the country's most effective buffers that alleviate the harmful effects of the business cycle. They automatically stimulate the economy when it weakens and retract stimulus when it improves."

In March unemployment in the Las Vegas area reached 5.6 percent, up from 4.3 percent in March 2007, according to the Nevada Employment, Training and Rehabilitation Department.

Gov. Jim Gibbons responded to the economic slowdown by issuing statewide budget cuts, including a 4.5 percent reduction to the health care financing and policy budget, totaling about $42.4 million, according to a summary released in January by the state's Health and Human Services Department.

The department is planning for an additional loss of $19.7 million in federal matching funds for fiscal 2009, the summary said.

To fund Medicaid, the state is planning on depleting its reserve of $14.3 million, injecting it into the general fund, the summary said.

With a 1 percent increase in unemployment nationwide, 1.1 million people go uninsured and 1 million Americans (three-fifths of whom are children) enroll in Medicaid, the Kaiser study said. This increase leads to states spending an additional $1.4 billion on Medicaid, despite falling state revenue, a key finding of the Kaiser study.

Workers can lose health insurance through several factors in a tough economy, the report said. These include job loss, reduction in hours (and no longer qualifying for benefits) and employers cutting benefits.

The Kaiser study also found that the federal Jobs and Growth Tax Relief Reconciliation Act increased the amount of federal Medicaid reimbursements in 2003-04 to states with $20 billion in additional funds.

The Kaiser report suggests that while the federal government should consider a similar spending bill, it could reward states that meet certain criteria with a uniform increase in Medicaid matching rates, as proposed in a health care funding bill.

Another approach would be to target assistance that uses economic conditions to determine how much a state receives.

Skilled nursing facilities that receive Medicare reimbursements could face payment rate changes from the Centers for Medicare and Medicaid Services, the department announced May 1.

The "more accurate" payment rates are recalculated to reflect differences in patient care needs, a department release said.

The centers are "committed to providing high quality care to those in skilled nursing facilities and to paying those facilities properly for that care," acting Administrator Kerry Weems said. "The proposed adjustments to the payment rates for next year reflect that policy."

Medicare reimburses facilities on a prospective payment system that determines a daily payment rate based on a patient's illness and needed services, known as "case-mix," the release said.

Although the change is estimated to reduce payments to nursing homes by $770 million, or 3.3 percent, the decrease is expected to be offset by fiscal 2008's proposed increase of 3.1 percent to skilled nursing facilities.

The increase, called a "marketbasket," factors in price changes for goods and services.

"We are confident that with the payment rates we are proposing today, the nation's skilled nursing facilities would be able to continue to provide high-quality services to those who need critical skilled nursing facility care services," Weems said in the statement.

Lifesigns, a Memphis, Tenn.-based wellness and prevention company established in 1992, has opened its second area location in Henderson.

The clinic at 9065 S. Pecos Road offers in-depth preventive health screenings, including physical exams, screening ultrasounds, blood work, chest X-rays and electrocardiograms. Sleep studies and CT scans are expected to be offered later.

"Not only will the new facility allow us to serve patients who come to the clinic for screening and wellness exams, we'll also be able to extend the Lifesigns' on-site corporate wellness programs to more areas of Las Vegas," Lifesigns Chief Executive Jim Breland said in a statement. "Healthier employees result in fewer health claims, lower premiums, less absenteeism, higher productivity and improved morale."

The company also has clinics in Atlanta and the Tennessee cities of Nashville and Memphis.

Nicole Lucht covers health care, workplace and banking issues for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at (702) 259-8832 or nicole.lucht@lasvegassun.com.

IBLV Homepage