Most states proposing FY 2012 Medicaid cuts

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Financial outlook is grim for not-for-profits, analyst says
Financial outlook is grim for not-for-profits, analyst says
Nearly all states are enacting Medicaid cuts for fiscal year 2012 to deal with overwhelmed budgets and a slow economic recovery, according to a new report by the National Association of State Budget Officers and the National Governors Association.

To deal with Medicaid shortfalls, 33 states have proposed lowering provider payment rates to nursing homes, hospitals and physicians; 16 states have floated provider payment freezes; and 25 states likely will introduce benefit limits, according to the report. Other Medicaid-reducing strategies include limiting spending on prescription drugs, and enacting or increasing existing copayments.

Still, it's a tough battle for budget-plagued states: Forecasts predict an 18.6% increase in Medicaid spending for states while federal funds decrease by 13%.

As states consider cuts for FY 2012, they are also weighing new regulations under the Patient Protection and Affordable Care Act. These include maintenance of effort provisions, which require maintaining the Medicaid eligibility rules in place when the Act went into effect, according to the Bureau of National Affairs.
 
“As states look ahead, it is not just the economy that gives them pause, but also the aging of our population and the seemingly inexorable increase in healthcare costs,” said NGA Executive Director Dan Crippen.
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