The New Mexico Human Services Department has released an outline of proposed cuts to reimbursement rates for Medicaid health care providers aimed at trimming up to $160 million in annual state and federal spending.
The proposal would rescind previous reimbursement increases to nearly 2,000 general physicians and trim payment rates to hospitals by between 3 percent and 8 percent.
Preventive care and obstetrics would be exempt from reimbursement cuts linked to a broad range of medical services for poor and disabled patients enrolled in Medicaid. Earlier rate increases also would be rolled back at 29 hospitals that receive supplemental payments to offset uncompensated care.
The proposed reforms are “aimed at protecting basic health care benefits for our most vulnerable.”
The agency estimates its changes would save the state general fund between $26 million and $33 million annually, as New Mexico grasps for other ways to trim Medicaid spending, Human Services Department spokesman Kyler Nerison said.
New Mexico is seeking to close an $86 million state funding gap for Medicaid services between now and mid-2017, under budget restrictions linked to a downturn in energy markets and other spending priorities. The state budget shortfall means New Mexico is likely to forgo well over $300 million in federal matching funds for Medicaid.
Earlier this month, state analysts raised new concerns about barriers to health care access for Medicaid patients in New Mexico, after a survey found those patients wait from three weeks to nearly two months to get an appointment with a doctor.
Under the newly proposed rates, the University of New Mexico Hospital would see the steepest reimbursement reductions — 8 percent for inpatient services and 5 percent for outpatient.
All other private and public hospitals would see reimbursements on Medicaid patients drop by 5 percent for inpatient services and 3 percent for outpatient. The Human Services Department declined to explain the reasoning behind the differential.
Officials at the University of New Mexico Hospital and its Health Sciences Center were seeing the proposal for the first time and still need time to analyze it and respond, spokesman John Arnold said.
Other rate reductions would affect dental services and community benefits providers. Rates would increase for select preventive care services, increasing state and federal spending by up to $1.5 million.
The proposed rate reductions from Human Services are broken down into 10 categories. All would require approval from the federal agency that administers Medicaid and Medicare — the Centers for Medicare and Medicaid Services, according to the Humans Services Department.
Reductions to hospital services involve additional state regulatory approvals that are subject to public notice and hearings, agency spokesman Nerison said.
The administration of Gov. Susana Martinez hopes to have provider changes in place by July 1, the start of the new fiscal year.
Full Medicaid coverage now extends to more than one-third of New Mexico’s 2.1 million residents, or about 40 percent including those with partial coverage.