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Medicaid cap comes with catch

WINDSOR – Help may indeed be on the way, but there’s always a catch.

With the recent passage of North Carolina’s $18.9 billion budget for 2006-07, the General Assembly earmarked $27.4 million in Medicaid relief for all 100 counties.

That was great news for economically stressed counties such as Bertie, Hertford and Northampton where upwards to 25 percent of their respective budgets are absorbed by Medicaid expenses.

On Monday, county managers and finance officers statewide received official confirmation from the state Department of Health and Human Services regarding the methodology for implementing the county Medicaid relief as adopted in the state’s 2006-07 budget.

“As you may know and with your help, we were able to secure one-time Medicaid relief by capping county Medicaid costs at 2005-06 actual expenditures, with a total cost to the state not to exceed $27.4 million,” said Rebecca Troutman of the North Carolina Association of County Commissioners in an e-mail sent to all county managers.

According to Troutman, DHHS will continue to bill counties for their actual 2006-07 Medicaid share at the 15 percent non-federal rate, but will closely monitor these expenses in comparison with last year’s actuals. As individual counties reach their 2005-06 amounts in late 2006-07, DHHS will begin issuing credits against payments due.

DHHS will continue with this crediting of payments until the $27.4 million is exhausted. Should that occur, counties would resume paying the 15 percent non-federal share.

“We appreciate the efforts of the County Commissioners Association and to the legislators for their efforts to realize that Medicaid is a financial burden, especially on rural low-wealth counties like ourselves,” Bertie County Manager Zee Lamb said.

He continued, “This is the methodology that will be used for the Medicaid cap. We certainly hope that we do not exceed our 2005-06 spending, but if we do we know that the state has set aside $27.4 million to cover any cost overruns.”

The item that concerned Lamb was once the state’s pot of money has been depleted, the counties will return to paying the traditional 15 percent of the costs. What makes that even more of a load to bear is the fact that the counties have no control over Medicaid spending. Their only course of action is to simply help pay the bills.

Lamb was correct in figuring Bertie’s 2005-06 Medicaid expenses. Two weeks ago, he reported them at a shade over $2.3 million (the actual figure came in at $2,303,442). He said the county’s 2006-07 budget called for $2.4 million in Medicaid funding. If the 2005-06 spending cap holds firm and the state’s pot of relief money doesn’t run dry, that means Bertie stands to gain roughly $97,000.

“But that’s a big if,” Lamb noted. “We’re capped at a little over $2.3 million and we’re hopeful not to exceed that limit and have to tap into the state’s funding. But yet our Medicaid costs have grown each and every year. We have no control over that spending. We get the bills and pay our share.”

To demonstrate how tight local counties must run their budgets, Lamb pointed to what the state estimated Bertie’s Medicaid spending would be in 2006-07 prior to the cap taking effect. That projection stood at $2,584,000.

“If we had used that figure in our budget, we would have to seriously think about a two-cent tax increase,” Lamb said. “Rather, we waited it out, hoping for and receiving some Medicaid relief. But we need to remember that this cap is only for one year. Without the state extending the spending cap or devising other ways to ease the Medicaid burden on the counties, we’ll be right back to where we were prior to the spending cap.”

In Hertford County, the Medicaid cap will be $2,177,171 while Northampton’s spending will top out at $2,248,305.

For Lamb and the other R-C area county managers, there was hope for targeted Medicaid relief for low-wealth counties.

Lamb said the funding cap is just one of the three issues he would like to see the state address in upcoming budget years. The first is the targeted relief for the counties whose budgets are strained by Medicaid payments. Second was the cap or the freeze and thirdly, he would like to see the state pick-up the entire costs involved in Medicaid and not pass along a portion for the counties to pay.

North Carolina remains as the only state in the nation that requires its counties to pay for a portion of Medicaid.