State DHS warns of cuts to Medicaid

By Kevin O’Brien

Thousands of Wisconsinites could potentially lose their health insurance if Congress follows through with plans to cut Medicaid spending and impose new work requirements on participants, according to Wisconsin Medicaid director Bill Hanna. “It’s not like these people just disappear,” he said during a Zoom call on Monday with reporters from around the state. “They still need care. Now, they just won’t have the insurance, meaning hospitals again will be picking up additional costs, which gets passed on to all health consumers.”

According to a press release sent out ahead of Monday’s conference call, the Wisconsin Department of Health Services believes “substantial impacts” to Medicaid and other health programs would be “unavoidable” under a budget blueprint published by the House of Representatives calling for $880 million in cuts to federal spending in the next budget.

A 10-page report released by the DHS outlines how federal spending cuts would impact Wisconsin’s Medicaid programs in three ways: capping the amount of money that can be spent per person, “imposing new red-tape requirements on hard-working Wisconsinites,” and reducing the amount of money spent on administrative functions, such as fraud prevention.

The biggest financial impact to the state, according to the report, would come from the proposal to no longer pay Medicaid expenses on a percentage basis, but on a perperson cap. With Wisconsin currently being reimbursed for about 60 percent of all medical expenses incurred by Medicaid patients, the state could lose as much as $16.8 billion over the next 10 years if that formula was scrapped, according to the report.

When a reporter asked why the DHS’s

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projections for Wisconsin were so much higher than those put out by the non-profit Kaiser Family Foundation, Hanna acknowledged that there are “a lot of unknowns” at this point, so the agency’s report included a range of scenarios, with a low-end estimate of $6.4 billion in lost revenue if costs rise at a slower rate.

Hanna said state lawmakers have four basic options to choose from when responding to Medicaid cuts: finding more money in the budget to offset reductions in federal spending; changing eligibility requirements so that fewer people qualify for Medicaid; covering fewer medical services; and cutting reimbursement rates to health care providers.

No matter which option legislators choose, Hanna said federal cuts will have an impact on both patients and providers, whether that’s hospitals or municipal ambulance services that rely on Medicaid reimbursements for a sizable portion of their revenue.

At this point, Hanna said Gov. Evers is concentrating on getting his budget proposals passed, so his administration has not devoted much time to talking with legislators about how to handle potential Medicaid cuts.

“We’re all trying to read the tea leaves about what will or won’t happen at the federal level,” he said. “I think, until there is more certainty, the focus is on getting the current state budget approved by this summer.”

Hanna was also asked how much improper payments contribute to the waste, fraud and abuse that Republicans are trying to eliminate.

“Improper payments are not fraud, waste and abuse,” he said. “Improper payments are often a documentation error that can be a number of reasons.”

In the most recent audit report on the state’s track record of verifying Medicaid eligibility, Hanna said the improper payment rate was just .05 percent – or three clerical errors.

“We have a very robust system with very few errors,” he said.

Fraud prevention might actually become more difficult if Congress reduces the amount of money it pays to help administer Medicaid, which includes everything from reviewing claims to vetting applications. The reimbursement rate for determining eligibility is currently at 75 percent, and the federal government covers as much as 90 percent of any new technology needed to assist in the eligibility process, according to the DHS report.

“If, all of a sudden, all of those admin dollars dropped to 50 percent, that’s a significant loss of funding to focus on those eligibility operations and those IT systems that protect the integrity of our program,” Hanna said.

Wisconsin has traditionally prioritized coverage for children – one-third of whom rely on Medicaid or the Children's Health Insurance Program (CHIP) – so Hanna believes the people most at risk of losing coverage are adults who are either physically unable to work or would not be able to complete the additional eligibility requirements proposed by Congress.

The DHS report says that 52,000 Wisconsinites are “highly likely to lose their health coverage” if additional barriers are put in place for enrolling in Medicaid.

“Eligibility is not an easy process, certainly in Wisconsin. There’s lot of proof you have to send in,” he said. “Adding an additional burden to this population will certainly result in fewer people making it through.”

Rep. Tiffany responds

When asked for a comment about the DHS report and Hanna’s statements, Congressman Tom Tiffany (R-7th District) cited a 2023 advisory referendum in which 80 percent of Wisconsin voters supported work requirements for able-bodied, childless adults.

“I will preserve Medicaid for the most vulnerable – the disabled, pregnant women, single mothers, and low-income children. To protect the program, we must implement reforms to root out fraud, enforce work requirements for able-bodied, working-aged, childless adults, and ensure benefits do not go to illegal aliens,” Rep. Tiffany said. “Wisconsin voters overwhelmingly support these measures, and with over half a trillion dollars in improper Medicaid payments over the past decade, they are just common sense. Republicans are committed to safeguarding Medicaid, so it remains a lifeline for those who need it.”

Tiffany also cited a study by the Economic Policy Innovation Center indicating that $567 billion in improper payments – either to the wrong person on in the incorrect amount – were paid out by Medicaid nationwide over a 10-year period.

“Improper payments by definition are improper and shouldn’t be happening,” he said. “Isn’t it a good thing to make sure these payments are cleaned up?”

Rep. Tom Tiffany