Moody's: States face Medicaid budget issues, cuts will affect hospitals

Modern Healthcare reports that hospital reimbursements — because of the end of the enhanced federal matching rate that became law as part of the 2009 stimulus package — will be pinched. In addition, congressional action and the federal debt debate is also causing concern at the state level.

Modern Healthcare: Medicaid Cuts Will Challenge Hospitals: Moody's
States will continue to look for savings in their Medicaid programs that will affect hospital reimbursements, and only good management, especially of expenses, can offset that trend, Moody's Investors Service said in a new report. Medicaid spending represents about 22 percent of state budgets on average, and 37 states have cut Medicaid hospital reimbursement rates for their fiscal 2012 budgets, according to Moody's. States needed to cut more for fiscal 2012 because higher federal match percentages approved in the 2009 stimulus act ended June 30, Moody's said (Galloro, 7/26).

Denver Post: Federal Debt Debate Has States Worried About Impact On Medicaid
A deal that President Barack Obama and Republicans had been working on for weeks to raise the federal debt ceiling — and cut federal Medicaid spending — could have a profound impact on state budgets in Colorado and across the country. Obama previously has proposed a debt-ceiling compromise that called for $100 billion in savings over 10 years in Medicaid, the state and federally funded health insurance program for the poor. The Medicaid cuts were part of the overall plan to trim $1.2 trillion in federal spending over a decade. The Medicaid savings likely would be achieved through some reduction in the rate of federal matching money for certain kinds of services, which account for massive sectors of state spending (Hoover, 7/27).