State cancels $1 billion medicaid cut to Ohio hospitals

The state has canceled a planned $1.1 billion Ohio Medicaid cut to hospitals, saying an uptick in the economy and reshuffling money in the health care program has prevented the reduction.

The cut would have represented 5 percent of what Ohio Medicaid pays hospitals to treat some 3 million program recipients who qualify based on their incomes, health conditions and disabilities, among other factors.

Gov. John Kasich’s administration had proposed cutting hospital rates by about $500 million beginning Jan. 1, said Greg Moody, director of the Ohio Office of Health Transformation. Then additional Medicaid cuts were added by the House and Senate last summer, when lawmakers crafted a two-year state budget, Moody said.

Hospitals had been bracing for the across-the-board cuts to go into effect in January. But the administration announced it was able to delay those cuts to July 1, thanks to reconfiguring Medicaid rates the state pays to managed care organizations. Then at the end of May, the administration told hospitals it wouldn’t have to make the cuts at all.

That’s because the number of people enrolled and the amount of money it has cost to cover their health care was lower than state projections, Moody said.

For instance, in April, the state had estimated there would be 3.1 million Medicaid recipients. But the actual number of enrollees was 97,000 fewer people.

“The variance is very small, but in a program as big as Medicaid, when you have a few fewer people, you end up saving quite a lot of money,” Moody said.

State and federal Medicaid spending in Ohio is about $25 billion a year, he said.

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