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O’Malley’s Medicaid rate cut extended by Hogan

Included in Gov. Larry Hogan’s fiscal 2016 budget is a continued pay cut for physicians who see Medicaid patients. The reduced Medicaid reimbursement rate is expected to save the state $160 million in 2016.

Physicians aren’t happy about the cuts, but their resentment isn’t directed at Hogan; it’s aimed at his predecessor, Martin O’Malley, according to Gene Ransom, president of MedChi, a doctor association.

Why? Because Hogan simply extended the same Medicaid rate cut that O’Malley implemented earlier this month to deal with the budget deficit for fiscal 2015.

“Obviously we don’t like this — we would like to be paid fairly — but it’s hard to be angry with the new administration,” Ransom said. “We see Gov. O’Malley as the one responsible for this. And frankly, it could have been a lot worse, given the budget situation.”

Why is the Medicaid program wreaking so much havoc on the state budget?

It starts with the Affordable Care Act. The ACA gave states the option to expand Medicaid, and Maryland jumped on board. The state widened eligibility standards for Medicaid, which added about 400,000 people to the Medicaid rolls.

The federal government is supposed to pay for that expansion by covering the medical costs of new enrollees — but there’s a catch.

The federal government usually pays 50 percent of Medicaid costs; states pay the other half. For enrollees who signed up because of expanded eligibility, the feds agreed to pay 90 percent to 100 percent of the costs.

However, as health exchange workers canvassed across Maryland looking for uninsured residents, they also found lots of people already eligible for Medicaid before the expansion but had never signed up.

For those people, the feds only pay the original 50 percent match, which put unexpected stress on the state budget.

So what happens now?

“I think physicians are going to drop Medicaid,” Ransom said. “I talked to two practices today who said as a result of the O’Malley payment cut, they’re going to leave Medicaid. They just can’t afford to do it.”


About Alissa Gulin

Alissa Gulin covers health care, education and general business at The Daily Record.