States are cutting and limiting Medicaid Hospital stays

By Phil Galewitz, Kaiser Health News

A growing number of states are sharply limiting hospital stays under Medicaid to as few as 10 days a year to control rising costs of the health insurance program for the poor and disabled. Advocates for the needy and hospital executives say the moves will restrict access to care, force hospitals to absorb more costs and lead to higher charges for privately insured patients. States defend the actions as a way to balance budgets hammered by the economic downturn and the end of billions of dollars in federal stimulus funds this summer that had helped prop up Medicaid, financed jointly by states and the federal government. Arizona, which last year stopped covering certain transplants for several months, plans to limit adult Medicaid recipients to 25 days of hospital coverage a year, starting as soon as the end of October. Hawaii plans to cut Medicaid coverage to 10 days a year in April, the fewest of any state. Both efforts require federal approval, which state officials consider likely because several other states already restrict hospital coverage. Private health insurers generally don't limit hospital coverage, according to America's Health Insurance Plans, a trade group. Rosemary Blackmon, executive vice president of the Alabama Hospital Association, said "for the most part hospitals do what they can" to provide care to Medicaid patients despite the limits. In Arizona, hospitals won't discharge or refuse to admit patients who medically need to be there, said Peter Wertheim, spokesman for the Arizona Hospital and Healthcare Association. "Hospitals will get stuck with the bill," he said. Driven by higher enrollment and medical costs, Medicaid spending was projected to rise an average of 11.2% in fiscal 2011, which ended in June, from $427 billion in 2010, according to the National Association of State Budget Officers. For fiscal 2012, the association estimated state Medicaid spending will rise 19%, largely because of the end of the federal stimulus dollars. The program served 69 million people last year. Matt Salo, executive director of the National Association of Medicaid Directors, said the hospital coverage limits reflect how states are "desperately looking for any and all levers to reduce Medicaid costs" within the law. The federal Centers for Medicare and Medicaid Services is working with states to "provide them with flexibility to run their Medicaid programs and reduce their costs," Medicaid director Cindy Mann said in a statement. At the same time, "we must also ensure the Medicaid program continues to meet the health care needs of the children, people with disabilities and the elderly whom it serves."

Contributing: Kaiser Health News is an editorially independent news service and a program of the Kaiser Family Foundation, a non-partisan health care policy organization. Neither KFF nor KHN is affiliated with Kaiser Permanente.