Medicaid costs push county to reserves
By Matthew Whittle
Published in News on June 7, 2007 1:46 PM
When Wayne officials found out last year that the state General Assembly was going to cap this year's Medicaid payments at the county's 2005-06 levels and provide a $27.4 million relief fund for counties going over those thresholds, they knew the deal probably wouldn't turn out to be as good as it sounded.
They were right.
In May, Wayne County hit its Medicaid cap.
"We knew it was going to happen," said county Department of Social Services director Judy Pelt. "We predicted it in January. Spending was much higher than the state had predicted.
"A lot of it had to do with the billing for community support services for mental health. Those were billed at a much higher rate than the state had predicted."
That meant that for services rendered through April 30, the county had already spent $6.9 million.
To pay for the overage, the county was able to draw down about $133,000 from the state's relief fund.
But that still leaves May's payment to make, and so far this year, monthly costs have run around $600,000.
Medicaid payments are made a month behind, meaning May's will be paid later this month and June's will be paid in July, in the next fiscal year.
And that's what has county officials worried. They know there's not going to be enough money left in the state's relief fund to pay for all of May's overage. At best, Wayne County could get nearly $327,000. At worst, it could get none.
"We know there's going to be a county cost. We know we have zero dollars left (under the cap)," Ms. Pelt said. "If there's any money left over in the cap, we should receive a portion of that in June."
But she also knows that depending on what happens in the other counties, there's no guarantee any of that money will still be available.
At that point, any remaining county expenses will have to be pulled from the county's $24 million fund balance. The only problem is, the county won't know what that amount will be until the end of the month.
"That's really an unknown for us. We're preparing for the worst case and that's anywhere from $500,000 to $900,000. We just don't know yet, but this is going to be a hard hit for us," county Finance Director Pam Holt said. "Our fund balance is our savings account, and this is going to be a hit to that, which is what the bond rate agencies look at when setting our interest rates."
That's a concern, she explained, as the county has tried for the last several years to build up its fund balance to set the stage to borrow money for school construction and other capital projects. At this point, though, Holt said that there's really not any way to gauge how much damage dipping into the fund might cause.
In the coming fiscal year, 2007-08, Wayne's Medicaid expenses -- 15 percent of the total cost shared by the federal, state and county governments -- are expected to reach $8.4 million, with no continuation of the cap or other relief in place.
The House's version of the state's 2007-08 budget does contain $100 million to help the state's 100 counties, but with Wayne expecting to see a $1.7 million increase from this year's estimated expenses, such help would only go so far. The Senate's budget, on the other hand, calls for the state to permanently relieve the all counties of their $500 million-and-growing problem, but puts no specific plan in place yet.