Planned cuts in Indiana Medicaid spending next year could hold back 5 percent of payments to doctors and other providers and cut the rates paid to the lowest performing nursing homes, the state’s outgoing social services chief said.
Indiana also will change the way it buys prescription drugs for Hoosier Healthwise enrollees to take advantage of higher rebates from drug companies, Mitch Roob of the Indiana Family and Social Services Administration said.
The changes if fully implemented would save Indiana about $155 million during the state fiscal year that begins next July 1, Roob said. Medicaid covers about 1 million needy and disabled Hoosiers.
However, the holdback in reimbursements — which Roob himself described as “draconian” — is a last resort that FSSA will seek to avoid, he said.
FSSA in 2005 and 2007 passed rules to allow similar holdbacks but didn’t resort to them, Roob said. A holdback in 2009 would go against rate increases such as $32 million annually that family doctors, pediatricians and other primary care physicians began receiving this year.
“We will seek authority to hold back rates up to 5 percent if necessary. We don’t believe it will be necessary,” he said in a teleconference with reporters before Gov. Mitch Daniels announced that Roob would leave FSSA to head up the Indiana Economic Development Corp. on Jan. 5.
Roob, in a Dec. 11 internal memo made available to reporters, ordered Medicaid Director Jeff Wells to immediately begin the months long process of writing new state rules to allow the 5 percent holdback and nursing home rate change. The memo also directed Wells to implement the new drug policy effective July 1.
Roob’s departure from FSSA wasn’t expected to affect the Medicaid plans. He will be succeeded by his current deputy secretary and chief of staff, Anne Waltermann Murphy.
The 5 percent holdback in Medicaid reimbursements to doctors, dentists, hospitals, nursing homes, home health agencies and other providers was unlikely to happen, unless the economy worsens.
“It is my hope that the state will find other ways to reduce its costs, but regrettably, the current forecast of the state’s revenue has forced us into this position,” Roob’s memo said. “If necessity compels us to take this draconian action, the state will reduce its cost by $100 million.”
