April 23, 2014

DHS Proposes Cuts to Wisconsin Medicaid Program

The Wisconsin Department of Health Services (DHS) announced Friday a set of proposed changes to the Wisconsin Medicaid program as part of DHS’ efforts to identify and implement savings measures in the program. In a letter to co-chairs of the Joint Committee on Finance, DHS Secretary Smith outlined a number of proposals aimed at cutting Medicaid spending by $554.4 million in all funds needed to balance the program. These proposed cuts are required under the 2011-2013 biennial budget (Act 32 § 49.45(2m)(f)).

DHS’ proposed changes focus on review and reform of service delivery models, payment, benefits, and eligibility, including:

  • Elimination of the 2% intensity increase in hospital inpatient payments, leaving hospital base funding at FY 2011 levels. (Projected Savings: $7.2 million GPR).
  • Modification and reduction of provider reimbursement for services to dual eligibles such that providers will receive the same reimbursement for services provided to dual eligibles and non-dual eligibles. (Projected Savings: $6 million GPR).
  • Implementation of the Enhanced Ambulatory Patient Grouping System (EAPGs) for outpatient claims reimbursement similar to inpatient DRG payments. (Projected Savings: $1.6 million GPR).
  • Development of a per diem rate for end stage renal disease services not to exceed 80% of Medicare payments. (Projected Savings: $1.3-1.5 million GPR).
  • Adjustment of rate paid to physicians for services typically provided in an office setting when those services are instead provided in a hospital setting, including adjustment based on lower overhead costs in a hospital setting. (Projected Savings: $1.5 million GPR).
  • Increased focus on fraud and Medicaid integrity with the addition of 10 FTE contract auditors and implementation of extrapolation policies when fraud is identified (Projected Savings: $14.9 million GPR); payment review for Medicaid Managed care fee-for-service payments to identify inappropriate payments (Projected Savings: $2 million GPR); and contracts with Recovery Audit Contractors (RACs) to reduce improper payments (Projected Savings: $3 million GPR).
  • Submission of a proposed Demonstration Project to waive the Maintenance of Effort Waiver requirements established under the Affordable Care Act. (Projected Savings: $54.4 million GPR).

The DHS letter also includes reform proposals regarding: HMO and hospital pay for performance, asset test enhancement, divestment policy reforms, third party liability, medical homes for specific populations, conversion of 1915(i) Home and Community Based Waiver to 1937 Benchmark Alternative Benefits Plan, and the Family Care enrollment cap. 

The full list of DHS Medicaid proposals is available here, and the Secretary’s statement on the Medicaid program is available here. Read the joint statement by Joint Committee on Finance Co-Chairs here. Comments on these proposals may be submitted to DHS’ new Medicaid reform website.

©2014 von Briesen & Roper, s.c

About the Author

Meghan C. O'Connor, Health Care Attorney, Von Briesen Law Firm

Meghan O’Connor is a member of the Health Care Section and the Government Relations and Regulatory Law Section. She advises clients on a wide range of regulatory compliance, corporate, and transactional matters, including: HIPAA, HITECH, and other federal and state confidentiality laws; provider and vendor contracting; health care reform, Medicare, and Medicaid compliance; patient care and risk management issues; managed care; insurance regulation; and clinical integration and accountable care networks.

Prior to joining von Briesen, Meghan worked for the U.S. Department of...


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