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Connecticut’s Hospitals Brace For Budget Cuts

by | Dec 19, 2012 5:34pm () Comments | Commenting has expired | Share

When the General Assembly convenes in a special session later today, the state’s 29 acute care hospitals will be asked to take one of the biggest hits in the $365 million budget mitigation proposal.

If the latest budget documents remain unchanged, state payments to hospitals will be reduced by $90 million, in addition to the $13 million Gov. Dannel P. Malloy rescinded bringing the total cut up to $103 million. Previous drafts of the budget documents had it as high as $120 million and $113 million.

The Connecticut Hospital Association said its members already are delivering services at 31 percent below costs, which could mean some tough choices are on the horizon.

“It is our expectation that hospitals will do all they can to preserve services and jobs, but cuts of this magnitude cannot be absorbed simply through more budget tightening such as delayed investment in equipment and technology,” Jennifer Jackson, president and CEO of the Connecticut Hospital Association, said Tuesday.

She said Connecticut hospitals are losing more than $1.6 million a day caring for the uninsured and Medicaid patients.

Office of Policy and Management Secretary Ben Barnes said these hospitals have been receiving increased payments for the past two years under the Low-Income Adult Medicaid program.

“I’m not saying that this is an insignificant cut for them to absorb, but I’m just trying to put it into perspective,” Barnes said Wednesday afternoon.

He said state hospital payments under the Medicaid program have increased from $70 million a year to $370 million year.

But Stephen Frayne, senior vice president of the Connecticut Hospital Association, said the reduction and the numbers to which Barnes is referring need to be taken in context.

In 2004, the state capped and reduced by half the Medicaid rate it had been paying hospitals for the State Administered General Assistance (SAGA) population. The cut came at a time when that population was growing.

Then, under former Gov. M. Jodi Rell, the state decided to transition the solely state-funded SAGA program into the LIA program in order to take advantage of federal matching funds under the Affordable Care Act.

That means that in 2010 the state was paying about 35 percent of the costs for the Medicaid patients, and today it’s paying 70 percent of the costs. However, since then the program has grown significantly from around 45,000 patients to an estimated 86,000.

“We might be receiving more money, but there are more people coming through the door,” Frayne said. “It’s an aggregate loss.”

Service reductions and layoffs will be a very real possibility, he said.

Barnes said he understands the argument hospitals are making, but believes they will be able to survive this cut. 

“Clearly, this is sustainable given the large increases,” he said, adding that he hoped it would not result in layoffs.

The General Assembly is expected to adopt the reduction in hospital spending later Wednesday evening with the deficit mitigation proposal. It’s unclear at the moment if any amendments will be offered.

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