New round of Medicaid cuts coming, due to loss of enhanced FMAP

Illinois Medicaid anticipates a $1.2 billion loss to general revenue funds and related funds in the coming fiscal year, due to the loss of enhanced Federal Medical Assistance Percentages (FMAP), according to the state's Medicaid administrator, Theresa Eagleson.

"While the fiscal year 2012 budget is not yet resolved, this loss has caused the state to debate significant provider rate cuts and reductions in Medicaid and other health care and social service programs," says Ms. Eagleson.

For example, says Ms. Eagleson, the governor's budget proposed a 6% rate cut to most Medicaid providers, as well as significant reductions to programs such as Illinois Cares Rx and other non-Medicaid health care programs, in order to make up the difference.

The enhanced FMAP provided a savings of $254 million to Alaska's general funds, says William Streur, commissioner of the Alaska Department of Health and Social Services (DHSS).

"With the loss of that enhancement, a gap exists in the budget that must now be filled by other means," says Kimberli Poppe-Smart, DHSS' deputy director for Medicaid and Health Care Policy. "We are looking at cost savings and cost avoidance measures to fill that gap."

Rather than look at cutting services, reimbursement rates or eligibility at this point, the first effort will be to identify efficiencies and quality enhancements that will result in savings, says Ms. Poppe-Smart.

"Ultimately, we anticipate there will need to be an increased spending of state general fund dollars to cover much of the gap," she says. "As a result, those dollars will not be available for other programs."

Cuts to optional benefits or provider rates may be necessary in the future, says Ms. Poppe-Smart, but at this point they are not the focus of short-term efforts.

Some possible options are enhanced use of generic medications and related pharmacy strategies, a psychiatric medication policy for certain groups covered under the Medicaid program, and a redesigned personal care attendant program, says Mr. Streur.

"The department is exploring the selection of pilot sites for patient-centered medical homes, and a chronic care management program for high utilizers," he adds.

Contact Ms. Eagleson at (217) 782-2570, Ms. Poppe-Smart at (907) 269-7827 or, and Mr. Streur at or (907) 334-2520.