Budget cuts could cost hospitals $60 million

Lawmakers discovered Monday that plans to cut Medicaid reimbursement rates another 5 percent could cause much wider financial damage to Nevada's hospitals than just the $10.9 million loss in state revenues.

Assemblywoman Heidi Gansert, R-Reno, who is a medical practice consultant, said health insurance providers tie their contract rates to the Medicaid fee schedule.

"This fee schedule is used by HMOs and other entities," she said. Changing the state's fee schedule, she said, cold cause "a domino effect."

"Substantially more is lost by the resetting of the fee schedule," she said.

The overview was presented to the combined memberships of the Senate Finance and Assembly Ways and Means committees.

Gansert's concerns were echoed by Bill Welch, head of the Nevada Hospital Association, who said the total loss to Nevada hospitals would be closer to $60 million. He and other hospital officials have expressed concern those kinds of cuts could force hospitals to cut back services or shut down, in the case of small rural hospitals.

Jeff Fontaine and Norm Frey of the Nevada Association of County Officers protested the plan to take the Indigent Accident Fund, which consists of four cents worth of the property tax revenues in each county, and put that $28 million a year into Medicaid to free up General Fund money.

That funding source was set up nearly 20 years ago to provide counties with a way to cover the medical bills of indigents who are seriously injured in major accidents. The legislation made counties responsible for those bills as part of the deal.

Fontaine said taking the money doesn't change that responsibility.

"The counties are still on the hook for those medical costs," he said.

Frey, past president of NACO and a Churchill County commissioner, said counties were told taking that funding this year was a one-time hit, not ongoing.

"The responsibility doesn't go away," he said. "You could bankrupt counties. If you're going to take away the Indigent Accident Fund, give us some relief on the responsibility."

Larry Matheis of the Nevada State Medical Association told lawmakers Nevada's Medicaid program "in so many areas is last or nearly last."

"If you fail in your essential obligation, the rest of the system can't make up for it," he said. "The state has the obligation to provide (people) with the essential services they need and we're not doing that.

"We're going from bad to disastrous," he said.

The testimony came during the overview of Gov. Jim Gibbons' proposed executive budget.

Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.