As Georgia faces another tight budget year, Department of Community Health (DCH) Director Clyde Reese reported to the DCH Board at its October meeting that provider rates and other budget recommendations approved last month by the panel have been officially forwarded to Governor Sonny Perdue and the Office of Planning and Budget (OPB).

Due to continued declines in overall state revenues, Governor Perdue asked DCH to submit recommendations for six, eight and 10 percent budget cuts in the next fiscal year. To meet that request, the DCH Board last month approved cuts across the board for all providers, except hospitals. Hospitals are exempt because the governor promised a three-year moratorium on their rate cuts if the state’s hospitals acquiesced to a provider fee—which they did.

As usual, DCH Director Reese said, the DCH Board’s recommendations are simply suggestions to the state’s budget writers, and ultimately the legislature will make final decisions about any cuts.

Throughout most of his administration, Governor Perdue has asked agencies during down economic periods to submit deeper cuts than were ultimately contained in his budget—though not always. In addition, the incoming governor will likely make modifications to the budget that Governor Perdue prepares.

In addition, the DCH Board initiated the process of drafting a request for proposal (RFP) to rebid its Medicaid care management organization (CMO) contracts. CMOs are a Medicaid equivalent of private sector health maintenance organizations (HMOs), organizations charged with lowering state Medicaid costs through better care management programs and greater efficiencies in patient care.

Three incumbent firms hold those contracts through June 30, 2012, but DCH must have an RFP prepared no later than July 1, 2011. DCH Director Reese said he expects the new RFP to be ready for release no later than February 1, 2011.

In addition, the DCH Board took the following actions:

  • The switch from EDS to HP Enterprise Services as the processor of Medicaid claims will occur November 1, 2010. The DCH and the vendor are ready; however, Dr. Reese expects some challenges and problems as the program moves to a new vendor.  
  • The Children’s Intervention School Services fee-for-service rates were approved as advertised.  
  • Nursing home provider fees were raised from $12.21 per day to $13.39 per day retroactive to October 1, 2010. This move provides $8.7 million in additional state dollars to fund $35.3 million in support of the nursing home Fair Rental Value System initiative.  
  • New pharmacy fee-for-service rates for specialty pharmaceuticals were set at average wholesale price (AWP) minus 18 percent for certain categories of medicines and at AWP minus 24-42 percent for Hemophilia Blood Factor-related pharmaceuticals.  
  • New Medicaid reimbursements rates were approved for Psychiatric Residential Treatment Facilities, saving the state $510,000 annually for these services. The changes include using the 2008 cost reports, adjusting bed utilization from 90 percent to 80 percent and including inflation factors through June 30, 2011.  
  • The DCH Board approved changes in the State Health Benefit Plan to comply with federal healthcare reform legislation.