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Thursday, March 1, 2012 10:02 am

Masticating Medicaid

State lawmakers chew on $2.7 billion Medicaid cuts

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Illinois’ Medicaid program is in a hole, Gov. Pat Quinn said in his annual budget address last week, and state lawmakers must cut billions from the program to prevent that hole from swallowing up the state’s budget.

But what those cuts will look like remains to be seen. Quinn has appointed a Medicaid reform working group to find $2.7 billion in cuts, which will likely mean tightened eligibility, fewer options for program recipients and coverage for fewer costs and procedures.

The Illinois Department of Healthcare and Family Services (HFS) last week produced a list of possible Medicaid reforms, including eliminating or reducing optional services such as hospice care, chiropractic care, dental care and therapy services.

Cutting $2.7 billion from the low-income health care program wouldn’t touch the $1.9 billion in overdue bills from last fiscal year, however. Meanwhile, Illinois is already moving forward with a plan to reduce certain Medicaid costs – including fraud.

HFS director Julie Hamos said in a letter to the U.S. Centers for Medicare and Medicaid Services that Illinois is working on residency verification after an audit in 2010 showed that six percent of Illinois Medicaid recipients had out-of-state addresses. The initiative had previously been on hold pending federal approval, but Quinn and Hamos grew tired of waiting. Illinois is also preparing a plan to check income eligibility, HFS says.

In a September 2009 report to Congress, the U.S. Government Accountability Office revealed cases of “doctor shopping” – illegally obtaining the same prescription from multiple Medicaid doctors – and other abuses in Illinois and four other sample states. In one case, an Illinois mother used her son’s prescription for ADHD medication to obtain 3,200 pills – a six-year supply – at a cost of $6,600 to Medicaid. A lack of state oversight allowed the scheme to continue for two years, the report says.

“Although the child received overlapping prescriptions … and was banned along with his mother from at least three medical practices, the Illinois Medicaid Program never placed the beneficiary on a restricted recipient program,” the report states. “Such a move would have restricted the child to a single primary care, pharmacy or both, thus preventing him and his mother from doctor shopping.”

Besides the anti-fraud initiative, at least one other Medicaid cut is already in the works. A compromise that took effect on March 1 between the state and pharmacies that accept Medicaid is expected to save about $45 million.

David Vite, president and CEO of the Illinois Retail Merchants Association, says pharmacies in Illinois negotiated a reduction in reimbursements for dispensing expensive brand name drugs in exchange for an increase in the reimbursement for dispensing low-cost generic drugs. Pharmacies must increase the rate of dispensing generic drugs by 2 percentage points within two years, or the reimbursement rate for generic drugs will return to the lower rate. Vite said the state currently spends about $814 million annually for prescription drug reimbursements under Medicaid.

While the expected savings are only about 0.17 percent of the needed $2.7 billion in cuts, Vite says this change will help keep other costs down by maintaining access to prescriptions.

“As a provider to the state, the pharmacy community is sort of the first line of defense,” Vite said. “If you start cutting prescription medications, you’re going to find more people in emergency rooms, more people in hospitals, which is a much more expensive form of treatment than making sure someone has their blood pressure medication or their diabetes medication. It could mean the difference between going to the emergency room for $2,000 and a $21 prescription.”

Vite says the compromise helps prevent painful cuts elsewhere in the program.

“It’s in everyone’s best interest to have an agreeable solution,” Vite said. “A one-sided solution will always have access questions, and the worst thing you could do is keep the recipients from getting their medications.”

Contact Patrick Yeagle at pyeagle@illinoistimes.com.

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