Final budget plan cuts $64 million in physician payments for Medicaid and CHIP

posted 05.24.10

The results are in. After asking all state agencies to submit plans to reduce their spending by 5 percent in the current 2010-2011 biennium, Texas’ top three elected officials have revealed which cuts will go into effect. Gov. Rick Perry, Lt. Gov. David Dewhurst, and House Speaker Joe Straus announced the final plan on Tuesday, May 18, outlining $1.2 billion in savings for the state. About $500,000 in spending cuts were spared from the original proposals.

One of the biggest cuts—$64 million—comes through a reduction in payments to health care providers who treat Medicaid beneficiaries and enrollees in the Children’s Health Insurance Program. The 1 percent across-the-board cut is less than the original proposal by the Texas Health and Human Services Commission, which would have reduced payments for adult services by an additional 1 percent.

Leadership spared other controversial cuts in HHSC and other agencies, including the reduction of 200 beds at four mental health hospitals, and a slew of cuts to employees and programs in the criminal justice system.

Facing a projected $18-billion shortfall in the 2012-2013 biennium, many worry that these cuts signify more drastic measures to come. Though the $1.2 billion in savings will be rolled into an account available for the next biennium, this difficult round cuts hardly makes a dent. “Every penny we save now in the 2010-2011 biennium is one penny closer to balancing the budget in the next legislative session,” Perry said in a press release. “These reductions reflect our state’s ongoing commitment to keeping taxes low by limiting government spending, a key aspect of the continued strength of our state’s economy.”

The last time the state faced a deficit of this size, lawmakers slashed the health care safety net programs and funding for graduate medical education. These two topics were the cover stories of the winter and spring editions of Texas Family Physician magazine. Read them in the TFP archive, www.tafp.org/news/tfp/archive. Stay tuned as your Academy follows the budget story and its impact on your practice and your patients.