Arizona’s Medicaid program cancels 5 percent provider cuts

PHOENIX — Arizona’s Medicaid program has canceled a planned 5 percent cut
in payments to hospitals, doctors and other medical professionals after they
objected and lower than expected insurance costs gave the program leeway to
avoid the cuts.

The decision came just three months after Gov. Doug Ducey signed a plan for the
budget year that begins July 1 that projected $37 million in savings from the
cuts in the first year.

Hospitals complained at the time that they and other providers could also lose
additional millions in federal matching funds.

The announcement from the Arizona Health Care Cost Containment System was
posted on the agency’s website and was first reported by the Arizona Capitol
Times. It said lower overall insurance use and the comments played a role.

Ducey spokesman Daniel Scarpinato said the agency determined it could cover its
costs without cutting reimbursement rates.

“I think they’ve figured it out where they’re able to cover it with existing
revenues, so this is not necessary for them to achieve balance,” Scarpinato
said.

The approved budget gave AHCCCS the direction to make the cuts, which would
affect not only hospitals, but doctors, dentists, ambulance services and all
other providers. But the cuts were not required, allowing the agency leeway to
make other adjustments.

Providers flooded the agency with comments, virtually all opposed to the cuts.

In comments sent to the agency in April, the executive director of the Arizona
Association of Health Plans said the $37 million cut in reimbursement rates
would have actually resulted in nearly $200 million in payment reductions when
federal matching funds were included.

“We realize this is not a doomsday situation today, but left unchecked, it can
kick off a troubling trajectory,” Deb Gullett wrote. “Providers will quit
seeing Medicaid patients; robust networks will be diminished; Medicaid providers
will be harder to come by; plans will be required to pay more to keep their
networks intact; patients who can’t get in to see a doctor will go to the
emergency department instead; the cost of care goes up and the quality of care
goes down.”

Others who wrote included doctors who said they’d stop seeing new Medicaid
patients.

Those cuts are off the table, at least for now, but could be revisited.

“We don’t think that will be necessary for this year but the next budget year
is a different question, and that will present perhaps a new set of
circumstances,” AHCCCS spokeswoman Monica Coury said.

The state’s Medicaid program received $1.2 billion in state funding for the
budget year starting July 1. Including federal funds, the agency spends more
than $9 billion a year to cover more than 1.5 million Arizonans.