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Feds Stopped Medicaid Payments in January; Barnes Says Small Surplus Still Possible

by Christine Stuart | Aug 21, 2014 5:30am
(19) Comments | Commenting has expired
Posted to: Health Care, State Budget, State Capitol

CTNJ file photo Gov. Dannel P. Malloy’s budget director reported Wednesday that the state would end the 2015 fiscal year with a small, $300,000 surplus if the federal government agrees to begin reimbursing the state hundreds of millions of dollars for care provided to some Medicaid recipients.

The Centers for Medicaid and Medicare Services stopped payments to the state in January when it found discrepancies in the numbers the state was reporting. Connecticut decided to accept the federal government’s initiative to expand Medicaid eligibility up to 138 percent of the federal poverty level and reimburse the state 100 percent of the costs for some of those individuals. Others in Medicaid would still receive a lower reimbursement rate.

Between January and March, according to the Department of Social Services, the federal government refused to pay the state $249 million for those Medicaid recipients. The number continued to grow through July, but state officials were unable to say Wednesday what exactly the federal government owes the state.

In the meantime, the state has been forced to find the money to make the payments to the health care providers as it looks to reach an agreement with the federal government over how many individuals qualified for the new higher reimbursement rate.

Budget Director Ben Barnes told state Comptroller Kevin Lembo that his office is “closely monitoring federal review of Medicaid reimbursements for a variety of programs and services.”

Barnes said his office, along with the departments of Social Services and Mental Health and Addiction Services, are “actively engaged with the federal government in addressing issues relating to claiming methodologies and allowable costs.”

In a telephone interview Wednesday, Barnes said the situation regarding Medicaid expansion is “less than ideal,” but he believes they will find a resolution at the latest by the end of December.

Ideally, “we should have this resolved long before then,” he added.

Barnes was unable to recall the exact amount the state was owed off the top of his head.

However, using the estimated loss of about $250 million for the first three months of the year, it’s not unreasonable to speculate that the state could be facing an additional $750 million shortfall in Medicaid reimbursements by December.

“It’s aggravating dealing with a federal bureaucracy,” Barnes said.

But he remained optimistic the state would resolve its differences with the federal government.

As far as maintaining the Medicaid program, Barnes said he wasn’t concerned about the state’s ability to continue making Medicaid payments to providers in the absence of federal funding. He said the state should have no problem with cash flow.

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(19) Comments

posted by: Fisherman | August 21, 2014  7:15am

HUNDREDS of millions short - but we won’t know until DECEMBER, immediately AFTER the election? The federal government is questioning the integrity of our numbers?
De rigueur for Barnes and Malloy.

posted by: Commuter | August 21, 2014  7:50am

Suddenly, Fisherman, the federal government can be trusted, eh? What brought about this change of heart?

The article says that when this is resolved we have perhaps hundreds of millions of dollars coming our way, and that could put us in the black for this fiscal year. Good to know.

posted by: bgenerous | August 21, 2014  9:18am

Who better to deal with federal bureaucracy than the the state bureaucracies?  Not unlike the state promising towns revenue for certain programs then reimbursing the towns at a level below 100%.  If not resolved before the election, a new administration will be handling it.

posted by: Just another CT resident | August 21, 2014  9:28am

About a month ago CT News Junkie reported,
“In its monthly letter to Lembo, Ben Barnes, Malloy’s budget director, said most of the additional revenue came from a $42.1 million increase in federal Medicaid awards. About $37.2 million came from personal income tax revenue, while all other revenue was revised downward by $16.3 million.”

Now Barnes reports that the ‘surplus” will total only $0.3 million and the reduction is not his fault. How can anybody believe anything Barnes says? This man has lost absolutely all credibility. If Malloy wants to regain any credibility with his constituents then he needs to Barnes to go.

posted by: Christine Stuart | August 21, 2014  10:22am

Christine Stuart

Just to be clear here there is more than one Medicaid program. The program with the increase in the award was a different Medicaid program.

posted by: ocoandasoc | August 21, 2014  11:27am

The financial information that the State of CT makes public is so dynamic, so untimely, so contradictory, so confusing, and so poorly presented that the majority of voters in what is supposed to be a “smart” State have long ago stopped paying attention.  The State’s habit of borrowing money and treating overly optimistic “projections” of income as cash on hand, all so they can throw the word “surplus” around, would be hysterical if the inevitable consequences of their actions were not so potentially tragic. Objective financial analysts and public accountants are tired of issuing warnings only to be accused of “crying wolf.” But honest, folks, the wolves are out there. And they’re getting closer every day.

posted by: CitizenCT | August 21, 2014  12:45pm

The state supposedly now reports under GAAP per Mr. Barnes and the $249M pertains to claims from last January through March.  Therefore wasn’t the $249M included in last year’s revenue and “surplus” even though it was uncollected at the time and now the collectability of it is uncertain?  Hope CTJunkie asks Mr. Barnes and Lembo to explain how this was recognized in the reporting of the fiscal year recently ended.

posted by: dano860 | August 21, 2014  1:06pm

Nobody is hunting those wolves either. They just keep borrowing (bonding) more bullets.
Let’s not forget that the premium increases have been delayed until after the November elections too.

posted by: art vandelay | August 21, 2014  11:25pm

art vandelay

In the 1980’s we called this “Voodo” economics under Reagan. Now in the 21st Century under a DEMOCRAT Governor we call it sound economic policy.

posted by: QuestionMark | August 22, 2014  8:28am

Ben Barnes knows how to play games with the books in a phony ploy to promote another four years of Malloyism, and keep to keep his job.

posted by: joemanc | August 22, 2014  2:41pm

I’m confused by this story. The FY2015 just started July 1st right? So why do we care that a small surplus is still possible for 2015? Additionally, if the feds withheld $250 million from the state just in the 1st 3 months of the year, FY2014, then wouldn’t that have wiped out the surplus the state had for FY2014? With all due respect, I would re-write or clarify this story.

posted by: Commuter | August 22, 2014  4:58pm

Uncharacteristically wildly off the mark on the “voo-doo economics,” Art Vandelay.

Voo-doo economics, also known as supply side economics, is the failed neo-mercantilist economicish rationale for the disasterous failure known as the Reagan Revolution.

What Barnes is saying is simply that there is more money due to Connecticut that is not reflected in the current fiscal picture and, if things go well, it is enough money to put us in the black for the year.

Pretty. Straightforward.

posted by: Christine Stuart | August 22, 2014  8:28pm

Christine Stuart

Joemanc,
There’s a few details that probably should have been included. We hope we answered some of these questions in our follow up story today. Basically Medicaid payments lag actual spending and it will impact cash flow before it impacts deficit and surplus numbers. Also, the legislature moved Medicaid, for lack of a better word, outside the regular budget process last year in order to get around the spending cap issues, which lead to this issue not coming up sooner.
~Christine

posted by: art vandelay | August 23, 2014  12:23am

art vandelay

@commuter,  Had the Reagan Economic policies been totally enacted and kept on course, our country would be in MUCH better economic shape than it is today.  Problem now is too many Democrat Kenynsian’s from the economic ivy towers mucked things up.

posted by: QuestionMark | August 23, 2014  11:39am

@art vandelay:  Thank you for straightening out a misinformed “commuter” who apparently chooses to keeps his head in the sand.

posted by: Commuter | August 26, 2014  4:55pm

Bad news, Art Vandelay:
- Reagan raised taxes before he cut them.
- Reagan spent in deficit, heavily, at the same time he was cutting taxes.
- The combination of cutting taxes and spending in deficit was calibrated to produce the economic expansion that it did at just the right time to declare “Morning in America.”

In other words, a Keynesian move of historic size, driven by political calculations.

These are statements of fact. You can go and verify them, the people who were running the administration have talked about it on a number of occasions.

Meanwhile, the Laffer Curve was never anything more than a fig leave for a radical agenda that destroyed jobs and middle class wealth, and helped so-called conservatives get rich for doing nothing more than pillaging the rest of us.

This is all a matter of record, Art. Data. Facts. Not ideology.

posted by: art vandelay | August 27, 2014  2:11am

art vandelay

@Commuter,
I’d love to know where your facts are coming from.  Probably from some “Liberal Think Tank”.  I do know this for a “fact.  During the 1980’s as a result of Reagan’s economic policies, Connecticut experienced its greatest period of economic growth.  The Democrats were in charge and spent surplus after surplus like a drunken sailor.  The binge crashed when Bush raised taxes which resulted in the income tax.  Since 1991 Connecticut has been in a DEPRESSION!  Republican Governor or not, Democrats controlled the spending w/veto proof majorities.  If you like the depression this state is in, by all means vote for Malloy.

posted by: Commuter | August 27, 2014  7:09am

“During the 1980’s as a result of Reagan’s economic policies, Connecticut experienced its greatest period of economic growth.” This is at once historically inaccurate, an acknowledgement of the ability of Keynesian methods to stimulate the economy, and the fact that such methods directly benefited from said policies. You’ve hit a trifecta of being wrong, Art.

And Connecticut benefited mightily during the Cold War from increased defense spending. Much of the deficit spending Reagan engaged in was on defense.

It was under Bill Clinton that not just the deficit, but the national debt itself was on a course to be paid of in about 10 years.

The end of the cold war profoundly effected defense-based manufacturing, and that impacted Connecticut heavily and over the long term.

Malloy is addressing this fundamental change in the state’s economy with investments in the workforce, fiscal discipline, and a relationship with the business community that is unprecedented in this state.

Your fairy tale about Reagan is not serving you well, Art, nor your fetish about taxes.

Everything I am saying to you is verifiable with a bit of curiosity and a few key strokes.

posted by: SocialButterfly | September 4, 2014  8:33pm

@Commuter:  I question your contention that Malloy is addressing fiscal discipline when his massive spending record contradicts your claim.