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Location: Strasburg, Virginia

Tuesday, December 06, 2005

House GOP calls for reform of Medicaid; A1

By Garren Shipley
Daily Staff Writer

The buzz in Richmond might be about transportation, but Republicans in the House of Delegates want to spend some time in the 2006 session talking about Medicaid reform.

Medicaid spending is a huge part of the state’s bottom line — 14 percent of the general fund budget, according to documents compiled for the Senate Finance Committee.

That’s one reason the GOP caucus intends to push reform legislation next year, said Del. Clay Athey, R-Front Royal, the chairman of the House Republican Policy Committee.

Athey announced a short list of legislative priorities for the 2006 session late Monday.

“We will focus on holding the line on taxes, protecting private property rights and controlling budget growth,” he said.

One way Republicans intend to do that is through Medicaid, the federal-state program designed to provide health insurance to the poor.

The GOP caucus will work to reform “this often abused government program … by retooling it and empowering recipients with more direct knowledge, opportunities and control with Medicaid Health Savings Accounts,” Athey said.

Virginia is in better shape than some other states, however, with single-digit cost growth rates over this biennium, 7.1 percent in fiscal 2005 and on track for a growth rate of 3.8 percent in fiscal 2006, according to figures from the House of Delegates.

Still, that represents a forecast increase of more than $500 million in the next two-year budget over 2004-06.

If that pace continues, the program will eat up 40 percent of the entire state budget by 2025, Athey said.

Virginia has already tried some Medicaid reform with success.

The commonwealth implemented a “preferred drug list” for Medicaid prescriptions in 2004. That effort to steer patients toward lower cost medications and other pharmacy efforts has saved taxpayers $35 million in fiscal 2005 alone, according to a report by the Department of Medical Assistance Services released last month.

The GOP hasn’t yet gone into detail about how its version of savings accounts would work, but both Florida and South Carolina are taking a private-enterprise, savings-account approach to the problem of rapidly growing Medicaid bills.

Gov. Mark Sanford, R-S.C., has submitted a plan for federal approval that, at its most basic level, would give Medicaid recipients a “savings account” with a set amount of cash each year.

Enrollees could then use that money to buy medical coverage under a state-approved plan, or to pay for health insurance through their employers.

Another option would allow some to purchase only “catastrophic” coverage and use the balance of their accounts to pay for services directly.

One of South Carolina’s major goals with the plan is to get people out of the emergency room for primary care.

“When you have Medicaid patients visiting the emergency room 66 percent more often than other South Carolinians, coupled with a program that’s on pace to consume almost 20 percent of the state budget,” Sanford said earlier this month, “it’s clear real reform is needed to make sure this program grows at a sustainable rate so that people get the care they need.”

Cost control is another major goal of the effort. Budget officials say increasing Medicaid costs will eat 47 percent of all new revenue in the state budget in 2007, taking all of it and then some by 2010.

South Carolina applied for federal permission to implement the plan last month.

But it’s not the first state south of the Mason-Dixon line to try Medicaid reform.

In 1994, Tennessee officials started TennCare, an effort to bring down costs by allowing private insurance companies to provide competing insurance plans for Medicaid patients, with the state picking up the bill.

Cost savings wrought by competition among private firms would be used to expand the program to lower-income residents without insurance who weren’t eligible for standard Medicaid and the “uninsurable,” those with chronic medical conditions that couldn’t be covered any other way.

It didn’t work out quite the way backers thought it would.

A rash of lawsuits over access to benefits, prescription drugs and fraud — or mismanagement by the state government, depending on who answers the question — kept the program from realizing any real savings.

Just more than a year ago, Tennessee Democratic Gov. Phil Bredesen announced that more than 400,000 people would be dropped from the program to contain rapidly growing costs. That number was later revised downward to more than 100,000.

At its height, the program covered almost one out of every four people in the state, each of whom got an average of 30 prescriptions filled per year.

Bredesen laid the blame for the “meat ax” approach to reform at the feet of those suing the state.

“The reason that these lawsuits and consent decrees have taken on such importance is that many of their provisions specifically gut our ability to use the management techniques — such as prior authorization — that other states and commercial plans today routinely use to control costs and frankly improve care,” Bredesen said at the time.

The Virginia General Assembly convenes in January.