State delaying Medicaid payouts

By Tony Cook (contact)

Friday, June 20, 2008 | 2 a.m.

In an attempt to juggle a surge of Medicaid bills, the state is putting a hold on some payments to University Medical Center and other health care providers, prompting fears of delays in receiving large amounts of anticipated cash.

State officials say souring economic conditions have spurred an increase in Medicaid enrollees, causing reimbursement requests to outstrip the amount of money Nevada budgeted for two Medicaid programs, one primarily for nursing home patients and the other for needy families.

The state realized last week that it had met its budgeted limit for payouts in one of those categories. It hit the limit in the second category this week.

So far, the state has put a hold on about $3 million in payouts, though state officials say other Medicaid programs could max out before the fiscal year ends June 30.

The state plans to make up for the delayed payments in the first week of July. That’s when the new fiscal year begins, which means Medicaid officials can tap into money the Legislature budgeted for fiscal 2009.

“It’s an authority issue, not a cash issue,” said Mike Willden, director of the state’s Health and Human Services Department, which administers Medicaid.

The delay might seem insignificant, but it is the health care industry’s equivalent of withholding a paycheck for a few days or weeks. That has some hospital administrators worried about having enough cash on hand to pay their expenses.

“It’s tough on smaller hospitals that rely on (reimbursements) to make payroll,” said Dwight Hansen, financial services director for the Nevada Hospital Association.

But big hospitals such as UMC also are concerned.

“It could potentially be a cash-flow problem depending on how many accounts are affected,” said Kathy Silver, UMC’s chief executive.

UMC expected to receive $6.8 million in Medicaid reimbursements from the state this month, but state officials say at least $500,000 of that will be delayed for about a week. As a result, UMC and other hospitals might have to delay purchases, shift money around or plead with the state for an advance.

The state has put off payments of some claims at the end of past fiscal years, but hospital officials say this year’s delays are coming earlier than usual and may affect more Medicaid programs.

Willden said Nevada’s Medicaid enrollees this fiscal year exceeded the number expected during the state’s 2007 budgeting process by about 118,000.

As a result, legislators gave Medicaid officials permission to spend $27 million of what had been budgeted for fiscal 2009. That and other factors created an expected $60 million Medicaid shortfall for fiscal 2009. Gov. Jim Gibbons erased that problem with a second round of state budget cuts this year, Willden said.

Now it looks as if the shortfall will exceed $60 million, Willden said.

Hospital officials are concerned about what that might mean.

“If nothing else changes, all they do is start the fiscal year with a bigger deficit,” Silver said. “Does that mean next year they’ll stop paying us in May?”

Willden plans to ask legislators to give him more flexibility to shift money between Medicaid accounts if one reaches its budgeted limit. The state has a tough job because it must forecast the need for Medicaid two years in advance, he said.

“You can certainly say we have some fault in this,” he said. “We under-projected the need.”

And with a Medicaid budget of $1.3 billion, if forecasts are off just 1 percent, it causes a shortfall of millions of dollars, he said.