Isle Medicaid costs
outrun budget again

"We are running a deficit, and we did last year as well," said Human Services Director Susan Chandler.

"We are able to roll that money off into next year's budget, but that starts us off behind the 8-ball."

Some payments are being made with available money, she said. But most bills have to wait until July, when the department can draw on the 1996-97 budget and obtain matching federal money. So the agency will start the next fiscal year "behind the 8-ball," Chandler said.

Susan Chandler:
The deficit "starts us off
behind the 8-ball"
for fiscal year '97

Gov. Ben Cayetano has convened a task force representing the Human Services and Health departments and his office to look for ways "to get a grip on this," she said. The deficit is in the fee-for-service Medicaid program covering about 30,000 aged, blind and disabled residents, Chandler said.

The Healthcare Association of Hawaii reported overdue state payments to hospitals totaled about $60 million at the end of April, $30 million each from state and federal governments.

"They're robbing from the 1997 budget to solve the problem," said Joan White, Healthcare Association vice president. "It's happening every year, and it's moving earlier and earlier into the year xxx until we'll be in a real crisis."

Chandler agreed the situation is worsening. "We are in control of our budget on the QUEST (managed care) side because of a lot of rule changes and a new assets test," she said. But it's difficult to predict fee-for-service costs, she said.

In the past, the department asked the Legislature for emergency funds to cover Medicaid shortages and then obtained federal funds, Chandler said. "Both of those spigots have turned off."

White said hospitals have been as cost-efficient as possible and virtually every facility has downsized. "As far as we can tell, there's no fat in any of these systems. Cash flow is critical to the life's blood of an organization."

Facilities that aren't reimbursed on time eventually will have trouble paying salaries and vendors and ordering supplies, she said.

Chandler said the department found an additional $10 million to pay some providers. "It's mostly hospitals that we're asking to tolerate the delay until July 1," she said. But one facility is being paid so it can make its payroll by the end of this week, she said.

Kate Stanley, human services deputy director, said the extra $10 million uncovered for Medicaid is state money normally used for the federal share of welfare payments until the federal money comes in. The department has asked to get the federal money before the state fiscal year ends, which frees up state money, she said.

Chandler said the aged, blind and disabled population has grown by only about 2,000 recipients in three years but costs have jumped from $198 million to $258 million.

The biggest increases have been in optional services for drugs and intermediate level care, which aren't federally required, she said.

Medicare changes also have increased Medicaid costs, Chandler said. For example, Medicare provides only 100 days in a nursing home, she said. "After that, they drop into Medicaid."

It's planned in July 1997 to move aged, blind and disabled Medicaid recipients into a managed care program, similar to QUEST, Chandler said.

An advisory committee has been meeting with community groups to prepare for the shift, she said. "I think there's a lot of fear that somehow it won't be done well. That's why we're doing this so slowly. We've been talking about it since 1993."

Chandler said she's "a strong believer" in managed health care because it helps people find appropriate and coordinated services. "For the elderly, I think that's a real plus."

She said the task force wants to give the governor a plan to relieve the Medicaid plight and will meet with doctors, providers, consumers and community groups to prepare for the next biennium budget.

The department is exploring lower-cost alternatives to nursing care, such as assisted living, Chandler said. Oregon's program to pay home care providers, which it does under a federal waiver, also offers possibilities, she said.

The Legislature has directed her agency to develop a coordinated system of care and meetings have begun with concerned agencies and groups, she said.

She said they're looking at reasons for the increasing costs and "alternatives the community would like us to pursue."