Budget cuts upset health care providers

Maryland health care providers - particularly nursing homes, pharmacists and adult day care centers - told the House Health and Government Operations Committee yesterday that the latest round of state budget cuts hits them disproportionately, and could lead to reductions in quality and in patient access.

Gov. Robert L. Ehrlich Jr. announced, and the Board of Public Works approved, $208.4 million in cuts to state spending for the fiscal year; of that, $88.3 million is from the health budget.


Most of the actions did not eliminate programs, but reduced or eliminated planned increases in reimbursements to providers.

"We cannot sustain another cut in Medicaid prescription fees," said Marvin Freedenberg, an executive of NeighborCare, which provides pharmacy services to nursing homes.


The state had been getting a discount of 10 percent from list price on prescriptions, and moved that to 11 percent July 1, which Freedenberg said would mean a loss of $1 million to pharmacies, which are operating on a thin profit margin of about 1 percent. The latest round of cuts would increase the discount to 12 percent.

"The cumulative impact of cuts in the '90s" led the state four years ago to decide it needed to pay more to nursing homes to allow them to improve quality, said Mark Woodard, vice president of Health Facilities Association of Maryland, which represents about 150 nursing homes and other facilities.

Nursing homes would receive $836 million, or 4.2 percent more this year than last, but that's $4 million less than they were scheduled to receive before the latest round of cuts, and $14.6 million less than they would have gotten before legislative budget trimming.

Geraldine Valentino, a lobbyist for Almost Family, which runs 10 day care centers for frail elderly patients, said labor costs for the centers had increased 9.5 percent last year, yet the latest round of cuts keeps reimbursement at current levels, blocking a planned 3.3 percent increase

David C. Romans, a legislative budget analyst, told the committee that the $88.3 million cut from the health budget would mean only $7.6 million worth of service reductions, such as cuts in payments to agencies that manage complex Medicaid cases. The rest, he said, resulted largely from plans to get additional federal grants and from cost shifts - such as cutting planned reimbursement increases to providers.

Del. John Adams Hurson, committee chairman, said there was nothing lawmakers could do at this stage to reverse the budget actions. However, he said, his committee hoped to work with the state Health Department and providers on alternatives, perhaps mitigating some cuts this year or avoid continued reductions next year.

"Given the state's budget situation, it's a long-term process," said Hurson, a Montgomery County Democrat.

Nelson J. Sabatini, state health secretary, said the largest of the health cuts - a limit by Medicaid in the number of days it will pay for of an adult hospital stay, designed to save $40 million a year - could shift costs to other insurers, but he said this would be borne more broadly by large and small employers and government programs.