PeachCare, Medicaid spared in state budget cuts

ATLANTA - Deep state budget cuts won't slice into Medicaid and PeachCare benefits for Georgia's neediest residents, according to a spending recommendation that state health officials adopted Thursday.


But hospitals and health care providers will feel the pinch as the state balances the books by delaying a planned Medicaid rate increase, the first in five years. The boost would have funneled tens of millions more dollars their way for caring for those on government health rolls.

State health officials are also recommending that the state take advantage of a federal rule change and require commercial insurance providers with managed care plans to pay an additional fee in the next fiscal year. That's expected to face stiff opposition from the powerful insurance lobby in the coming legislative session. Currently, the fee is only paid only by Medicaid managed care plans and generates about $90 million a year in revenue.

State health commissioner Rhonda Medows said officials would have to slash PeachCare benefits and freeze enrollment without that fee - even as residents struggle amid a souring economy.

Medows called such an alternative "at the mildest draconian and at the worst horrific."

Cuts are rippling throughout Georgia government as officials look to fill a projected $1.6 billion budget gap for the fiscal year that began July 1. As tax revenues decline, Gov. Sonny Perdue has ordered all state agencies to come up with plans cut funding from 6 to 10 percent. Medicaid, the state and federal program for the poor and disabled, is targeted for a 5 percent reduction.

The state was spared even deeper cuts to health programs because of a surplus in revenue. PeachCare, the state health insurance program for children of the working poor, has also seen its enrollment dip 22 percent in the past year as it toughened its screening process, Medows said.

Growth in the state's Medicaid rolls has also slowed as the results of anti-fraud measures and other cost-saving initiatives kick in, officials said.

The board of the state Department of Community Health approved the budget blueprint Thursday and sent the recommendations to Perdue.

The department is slashing about $120 million from its $3.5 billion budget, which comes from both state and federal funds.

Hospitals and health providers in Georgia have been looking forward to a rate increase that would give them more Medicaid dollars per patient. They say they need the extra cash to stay afloat as they face rising costs with treating the uninsured.

Glenn Pearson, an executive vice president with the Georgia Hospital Association, said Georgia's Medicaid currently reimburses at about 84 cents on the dollar.

"We understand the budget reality," Pearson said. "But I don't know too many businesses that could continue to lose money like this on what's a major piece of their revenue."


Department of Community Health



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