03/18/07 — County will be short on Medicaid

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County will be short on Medicaid

By Andrew Bell
Published in News on March 18, 2007 2:11 AM

Wayne County could soon be one of several counties vying for state funds to offset increasing Medicaid costs.

Of the nearly $7 million budgeted for Medicaid last year, Social Services Director Judy Pelt said the county has enough left to pay for March's Medicaid services. The county could overspend its Medicaid budget by about $1.2 million by the time the fiscal year is complete in June.

Over the past several months, Medicaid costs have continued to rise. From December to January costs increased more than $70,000. Costs increased by about another $90,000 in February to about $751,000.

If that trend continues for the remainder of the fiscal year, Smith said spending would have to come "to a screeching halt" because the county doesn't "want to end the year on a bad note."

But there is still the possibility of receiving state funds to give the county the cushion it needs to make it through the end of the fiscal year.

Last year, legislators approved a one-time cap for Medicaid costs at their 2005-06 level, which is intended to provide some relief for counties.

That cap provides about $27.5 million for counties that overspend their Medicaid budgets, but that money is available on a first-come, first-served basis.

County Manager Lee Smith said he fears several counties will overspend their Medicaid budgets and everyone will be racing for state funds at the same time.

Through conversations and e-mails with other social services directors in the state, Mrs. Pelt said many other counties will be in a similar situation.

If that is the case, there could be nothing left in the fund by June, causing county officials to have to find a possible $800,000 in the existing budget to cover that mandated expense.

Although Smith said he has already discussed the issue with Finance Director Pam Holt, he added that he doesn't want the county to be in that situation in coming months.

Instead, Smith and Mrs. Pelt said they would like to see some kind of relief from the state. North Carolina is the only state that requires counties to pay for all Medicaid services.

There are several resolutions before the General Assembly in Raleigh, most of which are focused on a gradual phaseout to help counties. Mrs. Pelt said more legislators should focus their attention on a stronger cap.

If state officials developed a cap formula that takes a county's Medicaid population, current spending and projected spending into account, that county would have a stronger safety net during a fiscal year, she added.

"I would feel better if we knew there was money in a pot designated for us if we needed it," Mrs. Pelt said.

The commissioners agreed during a work session last Wednesday -- approving a resolution asking the state to reformulate its current Medicaid cap so counties that run out of money during the fiscal year will have guaranteed available funds.

Some might think that the county has "guaranteed funds" in its fund balance reserve, but Smith said it is not that simple.

Although the county has a fund balance reserve of about 24 percent, which is about three times more than the state-mandated amount, Smith said officials won't want to spend from that reserve because it will affect the county's borrowing ability on the large capital projects, mainly schools, that are coming in the near future.

But the county must find some way to pay for the increasing Medicaid costs, Smith said. He added that he remains hesitant about asking the state for additional support.

"If they help us, that's millions of dollars, but they might take it out of something," Smith said, referring to the county having to pay more for another services despite help with Medicaid costs.

And Medicaid costs are not expected to decline in the near future, Mrs. Pelt said.

The state requires Social Services employees to assess a customer's eligibility for all available services.

For example, a person eligible for Medicaid could also be eligible for food stamps. And most people will take any services they are eligible for, she added.

The state also requires Social Services to actively recruit more people for its services, which costs more money. That, in turn, requires the department's employees to do more paperwork, which is also an added expense.