A decision to reduce state Medicaid funding is putting a fiscal strain on the South Peninsula Hospital in Homer. The hospital could receive about $1 million less in Medicaid reimbursements from the state.
When a patient checks the Medicaid box on their hospital bill, the bill is paid with state and federal dollars set aside for Medicaid.
Margaret Brodie, director of the state Division of Health Care Services, said on August 1, the state decided to pay hospitals back 5 cents less on the dollar for Medicaid-funded care. The decision is meant to save money after legislative funding cuts.
“The Medicaid program took a funding cut of approximately $30 million for fiscal year ’18 and fiscal year ’18 started July 1,” Brodie explained.
She said the cut is retroactive and applies to reimbursements for treatments provided from July 1 through the end of June next year.
South Peninsula Hospital Communications Director Derotha Ferraro said the hospital is scrambling to fill the $1 million hole.
“We are forced to figure out how to take a 5-percent reduction on a Medicaid reimbursement when we’ve written an entire budget based on that level of reimbursement,” Ferraro said.
This is the first time in three years that Medicaid funding has changed. The hospital expects to take in about $74 million in revenue this year, and Medicaid reimbursements account for about 30 percent of that estimate.
Ferraro said the hospital’s budgeted earnings can absorb some of the loss, but adds that hospital administrators will need to make up for the rest by cutting expenses.
Ferraro also said the state didn’t alert the hospital’s CFO of the cut until September, about a month after the decision was made.
In addition to the reimbursement rate cuts, Brodie said the state is trying to find ways to get more federal matching dollars and it is cutting Medicare payments for doctor and dental services.
