Rhode Island seeks revamp of its Medicaid

Congress is reacting warily to the state’s proposal.

PROVIDENCE, R.I. (AP) — Rhode Island is proposing an unprecedented overhaul of its Medicaid program that Gov. Don Carcieri says will save this cash-starved state millions of dollars — but could risk leaving the poor and elderly with fewer services should the plan not work.

Instead of having the federal government reimburse Rhode Island more than 50 cents for every dollar the state spends to care for the needy, disabled and elderly, Carcieri wants the state to get its federal money in a lump sum.

The federal government would benefit because its spending would be capped over the three-to-five-year experiment.

In return for agreeing to spending limits, Carcieri wants freedom from rules governing how the money can be used.

For example, his administration wants to use Medicaid money to help keep seniors in their homes with care instead of moving them to nursing facilities.

That freedom comes with a risk. If Rhode Island miscalculates and exhausts its funding too quickly, state officials say they may have to cut services for Medicaid recipients deemed the least needy.

Carcieri’s administration is also seeking the authority to charge recipients more for Medicaid coverage.

The plan could affect some 200,000 recipients, or about a fifth of the state’s population. Carcieri and outside experts say no other state has tried such a radical approach, although Vermont came close in 2005 when it negotiated dual caps on its Medicaid spending.

So far, Rhode Island mainly controlled Medicaid spending by kicking thousands of people off the health-care rolls. Rather than dismember the system piece-by-piece, the state needs special federal permission — called a waiver — to revamp the program, said Gary Alexander, director of the Rhode Island Department of Human Services.

Carcieri’s is negotiating with the federal Centers for Medicare and Medicaid Services, but it is unclear whether the Republican governor can reach an agreement before President Bush leaves office in January. A CMS spokeswoman said a decision on Rhode Island’s proposal is not imminent.

Since so much hinges on financial management, Rhode Island’s recent track record is hardly inspiring. Even before the current financial meltdown, the state was coping with massive budget deficits.

A series of budgets have been stitched together by slashing welfare and health-care programs, forcing hundreds of state workers into early retirement and even selling land.

Already, Democrats in Congress are deeply skeptical.

Rhode Island Sen. Sheldon Whitehouse wrote a joint letter with Sen. Max Baucus of Montana, chairman of the Senate Finance Committee, and Sen. Jay Rockefeller of West Virginia, who leads the Senate Subcommittee on Health Care, that criticized the Medicaid plan.

They questioned whether the lump-sum system is legal, fault it for shifting costs to the federal government and object to increasing co-payments for beneficiaries and creating waiting lists for long-term care.

“While Rhode Island talks a good game about reducing costs, there isn’t much in the way of infrastructure to suggest they can actually turn the talk into reality,” Whitehouse said in a recent interview.

Carcieri argues the state has little choice. By 2011, Medicaid will consume about 30 percent of the state’s budget, leaving less money for other priorities such as education or highways. The problems will only get worse as baby boomers age.

Judith Solomon, a senior fellow at the Washington-based Center on Budget and Policy Priorities, call Carcieri’s proposal a “dangerous precedent.”

She estimates it would leave Rhode Island $1.6 billion short of its estimated Medicaid needs. If Carcieri fails to wring enough savings from the system, Solomon fears state leaders will simply cut benefits.

“You’re really endangering the idea of having a program where those who are eligible get benefits,” she said. “That’s the fundamental nature of the Medicaid program.”

Solomon and other critics are generally sympathetic with several of Carcieri’s goals, even if they disagree with his methods.

For example, the state hopes to reduce its reliance on nursing homes by using Medicaid to fund adult day care, home-delivered meals to shut-ins, transportation and provide assistants who can help the elderly take their medication and perform other daily tasks.

Under the plan, Medicaid recipients would be monitored by case managers to make sure they are getting care in the most appropriate setting and not visiting emergency rooms for minor ailments.

If the plan is adopted, a state assessment team would be responsible for determining which chronic and long-term patients are eligible for what services. Advocates for the elderly wonder how those decisions will be made. Carcieri has said that no one currently in a nursing home will be pushed out.

Dorris Lalime, 85, who lives in a North Smithfield nursing home, said the new system must adjust to the fluctuating needs of Medicaid recipients. She formerly lived at an assisted living center but transferred to a nursing home after an illness.

Her health has improved, and, until recently, her caretakers considered Lalime a borderline case, someone too frail to live alone but not quite ready for nursing care.

“You’re at home, you like your home, you do all your cooking, your baking, all of that,” Lalime said. “But when you fall sick and you can’t help yourself, there isn’t always someone to help you.”