Because of statewide budget cuts, Georgia’s hospitals and doctors won’t be getting a long-awaited increase in Medicaid reimbursement this year.

But it could have been worse. Deb Bailey, director of governmental affairs for Northeast Georgia Health System, said at least the Georgia Department of Community Health’s recommended 5 percent overall reduction to the Medicaid program isn’t expected to include hospitals and other providers.

"We did not get a 5 percent cut, which could have been as much as a 12 percent cut when combined with the federal match," she said. "We really came out ahead."

Bailey was concerned enough about possible cuts that she attended the Aug. 28 Board of Community Health meeting in Atlanta, where the budget recommendations were approved.

"To be honest, I think the board did the best they could do," she said. "I don’t think DCH had a choice."

Gov. Sonny Perdue has asked every state agency to recommend cuts of at least 6 percent in their departments. Medicaid and a related program, PeachCare for Kids, were given a slight break, with only a 5 percent cut.

Officials tried to find ways to achieve that reduction without eliminating existing services or removing patients from the rolls. Department of Community Health spokeswoman Matia Edwards said the goal was to "keep the program for the most vulnerable available during this economic downturn."

Medicaid is a federal health insurance program for the very poor, administered and partially funded by the states. It covers children, pregnant women and blind or disabled people.

PeachCare is part of a federal children’s health insurance program for low-income working families who earn too much to qualify for Medicaid.

Currently, 1.2 million Georgians are covered by Medicaid, and 200,000 by PeachCare.

During its last legislative session, the Georgia General Assembly approved a 2.5 percent increase in Medicaid payments to hospitals and doctors, to go into effect on July 1.

But that increase has been postponed until July 1, 2009, when the next fiscal year starts. That way, the extra expense won’t show up on this year’s budget.

"That’s incredibly discouraging," said Mimi Collins, chief executive officer of the Longstreet Clinic in Gainesville. "But I’m not surprised, given the state’s budget issues."

Longstreet may be affected more than most other local providers by the delay. The clinic has both the area’s largest pediatrics practice and the largest obstetrics practice, so it treats a large number of patients on PeachCare or Medicaid.

Some obstetricians in the Gainesville area have stopped participating in Medicaid, which has further increased the Medicaid population at Longstreet.

Collins said many physicians don’t like to deal with Medicaid because the reimbursement level already is so low.

"The fee schedule has been flat for years. There’s been no adjustment for inflation," she said.

Though she’s disappointed that there won’t be a payment increase this year, Collins said the situation would be even worse if payments had been reduced.

"If it were a fee cut, I think you would see continued erosion in the state’s Medicaid network," she said. "We already lost a lot of doctors when the state transitioned to the CMO system (a managed care model that enrolls Medicaid patients in commercial insurance plans). It’s harder to get referrals to pediatric subspecialists now."

If the 2.5 percent increase had gone into effect, Georgia’s hospitals would have received $22 million this year. Doctors would have gotten about $13 million, and nursing homes $6.7 million.

Bailey said she hasn’t calculated exactly how much the medical center lost by not getting that payment increase. But any extra amount would have been welcome.

"We certainly were counting on an increase," she said. "We were very pleased it was passed by the General Assembly."

Fortunately, the hospital has a balanced payer mix, which somewhat softens the blow. Only 14 percent of patients at Northeast Georgia Medical Center are covered by Medicaid, and many of those are in the obstetrics department. About 12 percent of the hospital’s patients are uninsured, 41 percent have private insurance, and 33 percent are on Medicare, the federal program for the elderly.

Bailey said since the hospital can’t count on higher reimbursements, they’re constantly trying to find ways to cut expenses by improving efficiencies.

Medical providers may have to tighten their own budgets if the state’s situation doesn’t improve. To meet Perdue’s 5 percent mandate, the Department of Community Health has to cut $113.8 million in each of the next two fiscal years.

Only $49 million will actually have to be cut for fiscal year 2009, because of a surplus created by tightening enrollment requirements for Medicaid and PeachCare. But in fiscal year 2010, there is no projected surplus, and the Department of Community Health will need to cut an extra $102 million from the program.

The state hopes to make up some of the difference by charging a "quality assessment fee" to managed care companies that participate in Medicaid.

Without that fee, the department may have to postpone the Medicaid payment increase until July 1, 2010. Officials are also looking at possibly cutting patient services in 2010, including removing PeachCare dental benefits and eliminating coverage for some disabled and medically needy children.

Edwards said the department’s budget recommendations have been sent to the governor’s office and will have to be voted on, along with all the other proposed state budget cuts, when the General Assembly reconvenes in January.