SC Medicaid agency preparing rate cut plan notices

COLUMBIA, S.C. (AP) — South Carolina's Medicaid program will send rate-reduction plans to doctors and hospitals next week, setting the stage for lower state payments starting in April, the director of the program said Friday.

Meanwhile, South Carolina Gov. Nikki Haley said Friday she would continue to implement new federal health-care laws that rely heavily on Medicaid even as she backs efforts to kill the overhaul in court or repeal it with federal legislation.

Department of Health and Human Services Director Anthony Keck said the 30-day notices to doctors and hospitals will go out in the coming days. The agency still needs to get federal permission for the changes that will affect a health-care system that cares for more than 952,000 of the state's elderly, poor and disabled.

South Carolina, unlike other states, has had budget laws that barred DHHS from reducing rates. On Thursday, the Senate OK'd a bill that would let reductions happen immediately. That legislation is heading to the House.

In the House, budget-writers on Thursday approved a state budget plan that cuts $125 million from payments to doctors and hospitals.

Keck said the ability to immediately cut rates will save about $6.4 million at an agency that has a $225 million deficit for the budget year that ends June 30. Earlier this month, the state's financial oversight board approved a $100 million bailout that promises to keep payments to doctors and hospitals flowing through April.

Federal regulators will prevent rates from being cut so much that Medicaid patients don't have access to health care, Keck said. He notes the states' rates now are higher than in the rest of the country. "We think that this is a prudent move and we think that providers will stay in the system," Keck said.

The governor said the new Republican administration is trying to "balance out the system."

"And I think that what you've had is a special interest for a long time who has been exempt from things that people in their homes and businesses and everybody has had to live within their means," Haley said.

The South Carolina Hospital Association has warned that a cut of 10 percent would cause hospitals to lay off 2,600 workers. Allan Stalvey, the association's executive vice president, said the group would work with Keck, but hospitals can't cut costs nearly fast enough to keep up with rate reductions.

"We recognize that cuts are necessary, but we believe the total size of cuts being proposed in one year is such that they will have a devastating impact on hospitals' ability to provide the services our communities need," Stalvey aid in a prepared statement.

Keck's changes also affect prescription drugs, with new requirements that the state approve non-generic drugs. That's raised concerns from critics who said the state would pull people away from current, name-brand prescriptions for mental illness and HIV/AIDS.

"We have pre-authorization in place for every other class of drug and so this is just adding to that," Keck said. "We're not interested in pulling people off of drugs that they're stable on and we will probably do some sort of grandfathering-in on those things.

The state Medicaid changes come as states have been told to begin implementing last year's federal health- care overhaul. The federal law gives states money while imposing new requirements on Medicaid programs.

Last week, Alaska Gov. Sean Parnell said he wouldn't implement the federal law after a Florida judge said it was unconstitutional. On Thursday, Florida, South Carolina and 24 other states suing to stop the overhaul said in legal filings that states should be allowed to immediately stop following the law.

Three federal judges appointed by Democrats have ruled in favor of the law; two Republican appointees have ruled against it. The legal challenges are expected to end up before the U.S. Supreme Court.

Haley opposes the health-care overhaul and said she'll continue to push the legal challenge as well as efforts to repeal the law. Should "none of those work," she said, "I'm not going to let the people of South Carolina fall."

South Carolina will continue to try to set up a health care plan under the federal law. Haley added, "So, no, we are not going to let this fall on any front. It's our responsibility to make sure we cover all of our bases."