Haley Signs Bill on Medicaid Rates (SC)

April 7, 2011

Gov. Nikki Haley signed a law Wednesday that allows the state to cut Medicaid reimbursement rates to health providers.

The new law repeals a 2008 proviso, or budget law, that had prohibited the state Medicaid agency from adjusting rates, a tactic most other states hav e used to help close budget shortfalls and preserve programs for beneficiaries.

Beginning Friday, doctors and other health providers who accept Medicaid will face their first reimbursement rate cut in at least three years.

“The bottom line is this will save the taxpayers money,” Haley said during the bill-signing ceremony.

Passage of the new law came about three months after The Post and Courier published a report showing that the 2008 proviso’s key proponent had received tens of thousands of dollars in campaign contributions from hospitals and physicians.

Under the proviso, doctors faced no threat of rate cuts even as beneficiaries lost dozens of programs, including adult eye exams, dental care and therapies for people with disabilities. South Carolina was one of the few states where the Medicaid agency had been barred from adjusting reimbursement rates to health providers.

Just over a week after that report, two state senators filed a bill to repeal the proviso.

The state Senate passed the bill in mid-March and the House passed it Tuesday.

The S.C. Department of Health and Human Services already has announced a 3 percent rate cut for providers who accept Medicaid, the state- and federally-funded health insurance program for the poor. Notice of the cut will go out to doctors, hospitals and other Medicaid providers today. It will take effect Friday.

Not everyone is happy.

Doctors and hospitals have said the cut could be financially devastating to providers, causing some to stop accepting Medicaid patients altogether. It could force rural hospitals and practices to close, they said.

“We understand sacrifice and know that we must have some part in helping to balance the Medicaid budget, but even this 3 percent cut may be too much for physicians to bear, particularly those in rural areas,” Todd Atwater, CEO of the S.C. Medical Association, said in a statement.

Atwater said further cuts “could be a potential disaster for the state” if Medicaid patients who can’t find physicians turn to emergency rooms for treatment at a higher cost.

The state expects to save about $80,000 daily from the rate cut — about $7.5 million for the rest of this budget year. It is expected to prevent further program cuts for people enrolled in Medicaid, who already have experienced a host of benefit cuts this year.

“We are saying that the patients come first, the providers are secondary, and through that we will prevent further service reductions,” Haley said during the ceremony. “Providers are not going to be happy because they always are going to want more. Our goal is to look out for the patients. Our goal is to look out for the taxpayers.”