Medicaid takes another hit as state agencies implement 2.5% reduction for 2011

posted 12.09.10

On Monday, Dec. 6, all state agencies received a letter from Gov. Rick Perry, Lt. Gov. David Dewhurst, and Speaker of the House Joe Straus requesting that they identify an additional 2.5 percent in savings for expenditures in the current biennium. This directive comes on the heels of a 5 percent reduction agencies implemented earlier this year, which included a 1 percent cut in Medicaid fees.

For physicians, the Texas Health and Human Services Commission has announced this will mean another 1 percent cut in Medicaid fees and a 2 percent cut for nursing homes and community-based providers.

Recent sales tax figures have shown an upward trend, but revenue for fiscal year 2010 was $2 billion less than estimated. With the state confronting a predicted shortfall for the coming biennium of somewhere between $11 billion and $30 billion, state leaders continue to call on agencies to tighten their proverbial belts.

“Reduced spending in the current fiscal year puts state government in a better position to prepare for the budget reductions that will be necessary to balance the budget for the 2012-2013 biennium,” the leadership write in the letter. “And every dollar we save in fiscal year 2011 will alleviate the level of reductions necessary for the upcoming biennium.”

The physician fee cuts are expected to save about $42 million in 2011, according to reporting by the Dallas Morning News.