Lawmakers discuss Medicaid cost-saving options

BOISE — The Idaho Legislature and state Division of Medicaid will have a number of potential downstream impacts to consider when weighing cost-saving recommendations for Medicaid.

The state hired the consulting firm Sellers Dorsey to create a report of recommended cost reductions to Idaho’s Medicaid program.

Michael Heifetz, director at the firm, told House and Senate Health and Welfare committee members Monday that his firm’s initial report only included possible short-term savings for the state, and it wasn’t charged with doing a long-term economic analysis of the impact of those recommendations — which include decreasing provider reimbursement rates, eliminating the primary care case management program and eliminating the dental benefit.

“You’ll see through this really whole conversation that any aspects of cost savings bring with it the potential for other consequences,” Heifetz said. “Every action brings a reaction, and the degree of the reaction is not always easy to determine.”

The firm was tasked with looking at how to save the state at least $41.5 million in general funds. If the state implemented all 14 recommendations provided in its December report, the estimated total savings would be $65.7 million.

Each action is intended to be short-term, or able to be implemented in one year or less; the report with long-term recommendations for the program is due in early April. State Division of Medicaid Administrator Juliet Charron told members the agency would wait until the final report to create a more long-term strategy and look “holistically” at the recommendations.

“We don’t want to put the cart before the horse,” Charron said. “We want to be strategic about this … we want to be really, really cautious about what those changes look like so we’re mitigating any potential negative impacts to access and care in our state.”

One of the changes would be to reduce reimbursement rates for providers by 7.5% across the board. Currently, the state bases its reimbursement rates on the Medicare fee schedule.

The estimated cost savings of this change for fiscal year 2024 would be $21 million.

“The provider community is probably not going to jump up and down at it, but we saw it as a reasonable approach given the dynamics nationwide,” Heifetz said.

For in-state hospital services, the report recommends reducing the in-state pay-to-cost ratio from 100% of the costs to either 90% or 95%. The firm also recommends reducing expenses on outpatient care by about 10%.

Both recommendations were based on what is done in other states, but both recommendations come with the challenge that they will be seen by providers as significant reimbursement reductions, according to the report. The inpatient recommendation is estimated to save around $6 million and the outpatient around $8.7 million. The group also recommended more aggressive management of the single-case agreements, although Heifetz noted it would take more administrative staff to oversee the change.

Eliminating the adult dental coverage benefit could save about $5.8 million a year, he said, but it may lead to more utilization and expenses of emergency care because of dental problems becoming more severe.

The report also outlines changes to the way medical transportation vendors are reimbursed, with a reduced rate for nonemergency medical transportation. For skilled nursing facilities, the recommendation is to increase the provider assessment to 6% tax on total revenue of nursing facilities.

Other recommendations include eliminating the primary care case management program and contracting with an auditor to recover costs from fee-for-service claims.

Most of the recommendations come with the potential for strong pushback from stakeholders, according to the report. There’s also the potential impact of less federal matching dollars if the state is reducing how much it is spending, Heifetz told the House committee, but his firm didn’t analyze that impact.

Heifetz told committee members that the decisions they choose to make regarding these recommendations and which, if any, to implement will be difficult.

“Medicaid is hard,” he said. “You’re managing diverse populations of all kinds with all kinds of needs, and you have limited resources. … Medicaid is a program that touches people directly every day.”

Guido covers Idaho politics for the Lewiston Tribune, Moscow-Pullman Daily News and Idaho Press of Nampa. She may be contacted at lguido@idahopress.com and can be found on Twitter @EyeOnBoiseGuido.