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Baker’s budget plan shifts Medicaid payments

Governor Charlie Baker’s budget proposal involves squeezing savings out of Medicaid, which has ballooning costs.
Governor Charlie Baker’s budget proposal involves squeezing savings out of Medicaid, which has ballooning costs.(Pat Greenhouse/Globe Staff)

A significant part of Governor Charlie Baker’s proposal to tame a projected $1.8 billion state budget shortfall involves squeezing savings out of Medicaid, the state-federal health care program for the poor and disabled, which has ballooning costs.

But, officials said, rather than chopping the benefits for the neediest, narrowing eligibility, or slicing rates paid to medical providers, Baker embraced two main strategies. He is requiring people to reenroll in the program, as the law requires, paring those who are not eligible. And he is continuing a longtime Massachusetts tradition in dealing with the budget-busting entitlement: putting off payments.

To maximize savings in the fiscal year that begins July 1, the new governor essentially kicks the can down the road with some Medicaid payments, taking costs from one fiscal year and moving them to the next.

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Administration officials acknowledged the fiscal swap — what they call “cash management” — is not the best way to budget over the long term but emphasized that it is a strategy that has been used by Massachusetts to deal with Medicaid since at least 2004. And they strongly hinted that the alternative would have been painful cuts that would impact the state’s neediest.

Asked about the can-kicking strategy, Baker’s chief spokesman, Tim Buckley, underscored in a statement that the administration is working on structural reforms to “right-size” the budget, “reducing the need for additional cash management.”

He added the governor is pleased his administration’s budget, released Wednesday and now in legislators’ hands, “avoids tax hikes, higher fees, and reductions in critical services despite the massive deficit left for the administration.”

Baker, a Republican, took over from Deval Patrick, a Democrat, on Jan. 8.

Rolling out their budget plan on Wednesday, Baker administration officials said that if no changes were made, spending on the program — known as MassHealth — would increase by an astronomical 16 percent next fiscal year. Baker’s budget would shrink that increase to 5.6 percent, saving the state $761 million, they said.

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In a briefing with reporters Thursday, Health and Human Services Secretary Marylou Sudders and other top officials said the majority of those savings — about 60 percent — would come from cash management practices. And officials took pains to note that previous administrations had taken many of the same steps.

Instead of making certain Medicaid payments to some managed care organizations, institutional facilities, and hospitals late in the new fiscal year, they will make them early the subsequent fiscal year — on or after July 1, 2016, officials said.

At the briefing, officials suggested that it would have been unwise to discontinue the practice in the upcoming fiscal year, with the state already facing significant budget struggles, in part due to the state’s bungled rollout of its health insurance website beginning in 2013.

They also implied that it would have been difficult to undo the practice in the less than two months they had to put together the budget, in the midst of snow closures and a $768 million gap Baker and the Legislature scrambled to bridge in the current fiscal year.

The administration has said the only Medicaid benefit the budget proposal cuts is for chiropractic care, saving the state about $300,000.

A much bigger savings, officials said, will come from the state redetermining eligibility for about 1.2 million people on Medicaid, as the law requires. The administration thinks the process, which is expected to slim the rolls, will save about $200 million for the state in the new fiscal year.

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The yearly reenrollment requirement lapsed as the state’s health insurance website — for people who don’t get insurance through their employers — failed in autumn 2013, after it was changed to comply with the federal health care overhaul.

Noah Berger, president of the left-leaning Massachusetts Budget and Policy Center, said he sees in Baker’s budget “a postponement of really addressing the long-term challenges. In Medicaid, we see significant shifting of costs from” the new fiscal year to the one that begins in July 2016.

That, he said, “has the positive effect of avoiding painful cuts that could have long-term negative effects on the Commonwealth this year, but mean that we will continue to face real challenges in the years ahead.”

But advocates for the needy did not add caveats to their praise.

Amy Whitcomb Slemmer, executive director of the advocacy group Health Care for All, is cautiously optimistic.

“I think this administration did a very respectable job navigating some of the current needs with this fiscal deficit,” she said. “I very much appreciate that they maintained most of the benefits in MassHealth.”

Whitcomb Slemmer added that she hoped they would continue those benefits in the future.


Joshua Miller can be reached at joshua.miller@globe.com. Follow him on Twitter @jm_bos.