STATE OF WASHINGTON DEPARTMENT OF SOCIAL AND HEALTH SERVICES Medicaid Purchasing Administration 626 8th Avenue, S.E. * P.O. Box 45502 Olympia, Washington 98504-5502 September 29, 2010 TO: Medicaid and Health Care Authority Stakeholders and Providers FROM: Doug Porter, HCA Administrator and State Medicaid Director SUBJECT: 6.3% across-the-board budget cuts for Medicaid and HCA We are releasing today the list of Medicaid budget cuts we turned over to the Office of Financial Management (OFM). They represent the amount needed to reach the $112.8 million target assigned to Medicaid under the executive order calling for 6.3% across-the-board cuts. We also have delivered a plan for the Health Care Authority (HCA) to meet its assigned $9.8 million target without layoffs or benefit cuts. We have made these cuts carefully and with an eye on our one million-plus clients who depend on our services. The cuts are not good news, but we believe we have no other options, given the state's severe revenue crisis and the inflexibility of Medicaid mandates and complexities. Most Medicaid services are mandated by federal law and we do not have the ability to change those costs. Thus, we have had to look primarily at optional Medicaid programs the state can drop without violating these restrictions (please see the full list at the end of this memorandum). An unprecedented cut will be the adult pharmacy benefit - setting limits on our reimbursement for adult prescriptions. This cut will not affect children's medication, and we are still working out how it will be implemented - stay tuned for those details. Adult pharmacy is technically an optional benefit, giving us the authorization we need to make this cut. Knowing that these cuts are inevitable does not disguise the fact that they fall heavily on some of our most vulnerable clients - seniors, children, and people with disabilities. They also will directly impact Medicaid staff and their families, who will again face layoffs over the next three months. We have identified the FTEs that are connected to the different programs being eliminated and, in coming weeks, we will begin the formal notification of employees whose jobs are being eliminated. We will press ahead as quickly as we can, but none of the cuts detailed below are possible without State Plan Amendments, WAC regulatory changes, client and provider notifications, or renegotiated contracts - all things that take time. Our judgment is that we will be using the next several months to make sure most cuts can go into effect on January 1, 2011. A few additional cuts also require legislative approval and are not even targeted to begin before March 1, 2011. If there is good news today, it is that the Health Care Authority will be able to achieve its $9.8 million target with much less travail. The Basic Health benefit fund has been operating with a small surplus, and we are counting on the Basic Health waiver in health care reform to provide federal relief for Basic Health beginning next year. Although we will not be able to enroll people on the Basic Health wait list, we can pay off HCA's 6.3% budget cut out of that existing surplus, and no further cuts should be necessary this biennium. No administrative cuts should be required, and no client will be forced out of subsidized coverage. At Medicaid, there is a grimmer picture; however, every state agency faces challenges in these tough economic times, and health care is no exception. Relief is not yet in sight. The budget for the next biennium already has been assigned Medicaid budget cuts of $521 million. All of the cuts detailed below will again be needed to make that target. Optional programs in Medicaid G/F savings possible Number of clients who would be affected Effective Date Effective date Adult Pharmacy Benefits $39.4 million All adult clients March 1, 2011 Medical for Disability Lifeline (formerly GA-U) $20.3 million 21,000 March 1, 2011 Eligibility reduction in Apple Health for Kids $10.1 million 27,000 March 1, 2011 State-Only Alien Emergency Medical $8.6 million 1,300 Jan. 1, 2011 Adult Dental Services $8.3 million 105,000 Jan. 1, 2011 First Steps/Maternity Support Services/Infant Case Management $6.4 million 65,000 March 1, 2011 Adult Hospice $4.6 million 2,600 Jan. 1, 2011 Interpreter Services $3.3 million 70,000 Jan. 1, 2011 School-based Medical Services $3.3 million 20,000 Jan. 1, 2011 Medicare Part D Co-Pays $3.2 million 49,000 Jan. 1, 2011 Physical, Occupational and Speech Therapy $2.9 million 20,000 Jan. 1, 2011 Take Charge/Family Planning $1.2 million 43,000 March 1, 2011 Adult Vision $500,000 67,000 Jan. 1, 2011 Adult Podiatry $400,000 6,500 Jan. 1, 2011 Adult Hearing Services/Devices $300,000 2,400 Jan. 1, 2011 NOTE: Please do not reply directly to this Listserv message. If you have feedback or questions, please send it to [log in to unmask] JHS-BF Reminder: All offices of the Medicaid Purchasing Administration will be closed for Temporary Layoff Days on Monday, October 11, 2010; Monday, December 27, 2010; Friday, January 28, 2011; Tuesday, February 22, 2011; Friday, March 11, 2011; Friday, April 22, 2011; Friday, June 10, 2011.