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North Carolina Sets Sights on Medicaid Spending Cuts

by Andrew Barr on August 8, 2011

The North Carolina legislature’s hope to cut more than $350 million in Medicaid spending may not be so easy with the recently approved plan. From the News Observer:

It takes time to get federal approval for any changes in Medicaid services, so the state won’t see the impact of the legislature’s cuts for months. Under orders from the legislature to manage Medicaid with the money budgeted, Lanier Cansler, secretary of health and human services, has to squeeze more savings into less time.

Because Medicaid is a state and federal program, the state needs federal approval before it limits or eliminates patient services or changes rates it pays providers. The Medicaid budget is $12.8 billion this year, though the federal government picks up most of the cost. The state pays about $3 billion.

Medicaid could end up $20 million to $30 million short of the budget goal just because of the months it takes for the federal government to approve changes, Cansler said.

He’s asking the Medical Care Advisory Committee, a federally required group, to step up its meeting schedule through October to offer the department guidance on where else to find savings or make cuts.

According to Business Week,

The overall impact of state spending cuts is magnified because for every $1 of state spending on Medicaid services the federal government pays $2. That means this year’s reduced state spending will take more than $1 billion out of North Carolina’s Medicaid program, which is budgeted to spend $12.8 billion.

A $118 million cut in state Medicaid spending could amount to another $354 million in overall losses.

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