Iowa Governor Chet Culver has released details regarding implementation of the recently announced 10 percent across the board budget reduction.  The plan calls for a 5 percent Medicaid payment reduction for Medicaid providers, including hospitals, effective December 1.  

IHA’s initial analysis indicates the impact of this cut on Iowa hospitals will exceed $18 million for the remainder of the 2010 fiscal year.  The total amount of Medicaid cuts to all provider groups, including physicians, affected by the 5 percent reduction will be $55.4 million. 

Iowa hospitals already lose more than $170 million a year because Medicaid payments fail to cover the cost of care.  Hospitals will be working the governor and Legislature to stop any further reduction to Medicaid provider payments. 

A big reason Medicaid cuts must be avoided:  the program has the highest return on investment for Iowa’s state budget.  Not only do Iowa’s poorest residents receive high-quality health care, but the state receives almost three dollars from the federal government for every dollar it appropriates to Medicaid, a benefit that no other state program provides. 

“These cuts come at time when the economy is driving more citizens into Iowa’s Medicaid program, putting even more pressure on Iowa hospitals as they try to make ends meet,” said IHA President and CEO Kirk Norris.  “Just like the implication of lost jobs at state agencies, even lower Medicaid payment forces evaluation of employment positions within hospitals; the big difference here is that the jobs affected are actually responsible for the health of patients.

“IHA and its membership are committed to working with the governor and the Legislature to find solutions that meet the needs of both hospitals and the poorest of Iowa’s population.  This is not the time for the state to stand down on its commitment to Iowa’s Medicaid program and those who make it work.”