Medicaid providers face fee cuts

COLUMBIA — Senators have agreed to allow Medicaid provider rates to be cut over the next several months, despite a Democrat’s warning that the move would set a “dangerous precedent.”

The 24-11 second-reading vote came at the request of both Gov. Nikki Haley and her appointee who leads the state’s chief Medicaid agency, Anthony Keck, to help address the agency’s $225 million deficit.

The legislation would lift a state ban on adjusting Medicaid provider rates. South Carolina is the only state in the nation with such a prohibition.

If approved by the House soon, the legislation could save the state $6.4 million over the next four months in the event of a 3 percent rate reduction, said Jeff Stensland, spokesman for the agency.

“By making these adjustments to provider reimbursement rates, we are able to protect critical optional patient services such as adult pharmacy,” he told GreenvilleOnline.com.

Haley praised the Senate, calling the vote “courageous.”

“Tony Keck and I are committed to providing as much health to our patients for as little cost as possible to our taxpayers, and that effort started today,” she said. “Senators chose the people and patients of South Carolina over the special interests — this was a huge win for our state.”

The action came as the House Ways and Means Committee gave final approval Thursday to a $5.2 billion spending plan for the fiscal year that starts in July that would adopt Medicaid spending cuts and grant Keck the authority to adjust provider rates.

Among $200 million in spending reductions he submitted to the House is $125 million he said would come from provider rate cuts or cost savings suggested by providers.

“If we can’t pay the bills, we’ve got to do something different,” Senate Majority Leader Harvey Peeler told his colleagues.

Peeler said the state hired Keck to run the state Department of Health and Human Services and to try and get the agency’s finances under control.

“We hired him to run his shop, and we want to untie his hands,” he said.
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But some Democrats and providers have argued there were other ways.

Sen. Vincent Sheheen, a Camden Democrat, said hospitals have offered to raise their bed tax and to use that revenue to draw more Medicaid dollars, a notion Haley has rejected.

Sen. Phil Leventis, a Sumter Democrat, said he was told by state economists that if lawmakers cut $300 million from Medicaid spending, it would cost 14,000 jobs.

“Please don’t tell me we are just managing things,” he said. “We are impacting people’s lives.”

Leventis argued that it is a “dangerous precedent” to give any HHS director such authority.

But Republicans argued the change was needed.

Senate President Pro Tempore Glenn McConnell said while the legislation wouldn’t solve the agency’s problems, it is a start toward a more realistic view of addressing the state’s financial ailments.

“People in this country have got to understand, government cannot spend its way to prosperity,” he said.

Sen. Tom Davis, a Beaufort Republican who once served as chief of staff for former Gov. Mark Sanford, said the Legislature effectively lost control over some of the cost growth in Medicaid two years ago when it accepted federal stimulus dollars and agreed to restrictions on eligibility.

Now those restrictions prevent the state from controlling the numbers of new enrollees, he said, and “people are pouring into that program.”

Officials say more than 100,000 people have enrolled in the program since 2007. Davis said almost 1 million people in the state now are on Medicaid.

Davis said he was among 13 or 14 senators who tried to reject the stimulus money and the strings that came with it.

“We were ignored, and now the chickens have come home to roost,” he said.

He said lifting the ban on provider rate cuts will at least give the state some power to address Medicaid costs.

Keck has said he doesn’t plan to immediately cut rates if granted the authority but use it as a negotiating tool to attract cost saving ideas from providers.

Sen. Ronnie Cromer, a Newberry pharmacist, unsuccessfully attempted to amend the legislation to delay implementation of any cuts for at least 60 days so providers have adequate notice and the opportunity to give feedback to the agency.

Stensland said Keck would work with Cromer and others to establish a clear procedure for provider input.

The measure must get a final reading in the Senate before being sent to the House.