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Alabama Lawmakers Consider Medicaid Service Cuts

By Marissa Evans, CQ Roll Call

August 17, 2016 -- As Alabama lawmakers weigh how to plug an $85 million hole in the state’s Medicaid program, advocates are preparing for their worst-case scenario, including cuts to prescription drug benefits and prosthetics for beneficiaries.

While Gov. Robert Bentley, R-Ala., called lawmakers back to the legislature on Monday to address legislation that would create a statewide lottery, more pressing is the question of how the Yellowhammer State will provide more funding for the joint federal–state health insurance program for the poor and disabled. Though the lottery will create an estimated $225 million a year by fiscal year 2018, lawmakers and advocates say that it will not help with Medicaid’s funding crisis for fiscal year 2017. The legislature is also considering using part of its BP legal settlement from a 2010 oil spill to bridge the funding gap.

"This call is designed for the Alabama Legislature to address adequate support of essential state services including children, the elderly, people with mental illness and support for men and women in law enforcement," Bentley said of the special session in a news release.

The special session comes months after state lawmakers left Montgomery after a brutal budget showdown in May. Bentley, trying to protect the Medicaid program, vetoed the legislature's budget. But lawmakers overrode his veto on April 5, putting into effect a $1.8 billion budget for the state’s general fund. The $85 million shortfall for Medicaid has put pressure on the agency to dial back services while trying to serve more than 1 million poor Alabamians who rely on the care.

Prescription drug benefits, outpatient dialysis, eyeglasses for adult beneficiaries, prosthetics, funding for case managers, and reducing payments to providers are all on the chopping block.

Alex Smith, director of policy and advocacy for AIDS Alabama, said in an interview that 3,000 Alabamians receive HIV medication through Medicaid and cutting the drug benefit would be devastating for patients. He said the state would likely have to institute a waiting list for the medication, something that officials have not had to do in almost a decade. Implementing a waiting list would mean thousands of people going without their medication, which could be deadly.

"These people would be at the mercy of the legislature to hopefully find funding for that gap," Smith said.

The state is also scrounging for funds to fulfill requirements for a previously approved federal waiver.

The Centers for Medicare and Medicaid Services, or CMS, approved a waiver Feb. 9 allowing Alabama to create 11 regional care organizations to provide primary care, behavioral health services and specialty care. Those providers will run the state’s managed care program and be paid a fixed monthly fee per patient. The state can start the program at any time but the agreement says that Alabama Medicaid has to maintain services, not cut them. If all went as previously expected, the state could receive as much as $748 million in federal Medicaid matching payments but those funds are now in jeopardy with the state’s budget woes.

Push for Expansion

Jim Carnes, policy director for Alabama Arise, an advocacy group in the state, said in an interview that the organization is pushing for Medicaid expansion to be considered, too.

Under the 2010 health care overhaul, people with incomes up to 138 percent of the federal poverty line can become eligible for Medicaid under expanded eligibility. If states choose to accept the expansion funds, the cost for people who gain eligibility is fully covered by the federal government until 2017, when states must start chipping in. By 2020, the law requires states to cover 10 percent of the cost. Thirty-one states and the District of Columbia are participating in the expansion already

While Alabama officials that control the state have been die-hard health law opponents over the years, the state’s budget problems have persuaded some Republicans to give Medicaid expansion a closer look.

"It’s fair to say that the tone and atmosphere around [Medicaid expansion] has changed a little bit," Carnes said, adding that some former fierce opponents appear to be softening their resistance.

Bentley has one potential way to expand Medicaid, Carnes said. The legislature has not given the governor full-on authority to broaden Medicaid through executive powers but he could take a similar approach to how Alaska Gov. Bill Walker, an Independent, expanded Medicaid in September. Alabama law would allow Bentley to initiate Medicaid expansion as long as the legislature is not in session. The state's Legislative Council, which considers these types of issues when the legislature has adjourned, could then approve, deny or simply not object to Bentley's proposal. If the council chooses to not object, then the proposal would be approved. It's unclear at the moment if Bentley will go this route when the legislature leaves Aug. 24.

"We’re not interested in getting [the legislature] to say yes," Carnes said. "We have supporters on that committee and some who might be willing to step aside and then there are hold-out objectors. If [Bentley] does it in the off-season, then we feel like there's more room to develop a favorable outcome."

Publication Details

Publication Date: August 22, 2016