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Joe Lubarsky, president, Eljay LLC
Joe Lubarsky, president, Eljay LLC

Q: In all six years of your study of Medicaid funding there have been vast payment shortfalls. What was different this year?

A: Things actually improved a little. If you look at Medicaid alone, things are probably as good as they've been. But there are no guarantees.

Q: Why did they get better?

A: State economies have improved and in 2004, 12 new states added provider taxes.

Q: How short were payments last year?

A: About $4.4 billion overall, compared to $4.6 billion the year before. That's a national average shortfall of $13.15 per patient day.

Q: How does that affect typical facilities?

A: About 92% of allowable costs were covered. It was only 89% when the economy was sluggish for a few years. But if you consider total costs and compare, that 8% shortfall is more like 11% or 12%.

Q: What has this annual study taught us?

A: Rates drive costs, not vice versa. You can't spend what you don't have. Rates the last two to three years have gone up a little more than costs. 2006 was the first time state revenues grew faster than expenditures since 1999.

Q: How does the future look?

A: Fiscal 2008 rates don't look too bad, but any change can easily change the numbers. There is no stability or predictability.
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