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PROVIDENCE, R.I. (AP) — A working group formed by Gov. Gina Raimondo has identified $91 million in savings for the state through changes to the Medicaid program.
The $91 million cut in the 2016 fiscal year represents a 9 percent of the state funding for the program, which serves about 257,000 Rhode Island residents.
The group presented its findings and recommendations Thursday. Cuts to hospitals and nursing homes account for about a third of the savings.
The Democratic governor initially proposed a straight decrease to the payments for these providers, but the group added an incentive program. Hospitals and nursing homes can earn a portion of the money back in fiscal 2017 by lowering utilization rates and meeting other quality and cost-saving goals.
Health and Human Services Secretary Elizabeth Roberts said group members focused on managing the Medicaid budget more efficiently and paying for quality services. She said they didn't want to cut benefits or remove people from coverage, so they turned to hospitals, nursing homes and managed-care organizations to help them reshape the system.
"That allows the state the opportunity to invest in other services, infrastructure, job creation, education, but also has us meet a very fundamental responsibility that we have, which is providing health care services to about a quarter of Rhode Island's population," she said.
Hospital and nursing home advocates have said they're worried the cuts could lead to layoffs in their industry, particularly since they lose matching funds from the federal government.
Dennis Keefe, the working group's co-chairman, leads the Hospital Association of Rhode Island and the Care New England health system. Keefe said the group members don't agree on all of the initiatives, but recognize the budget challenges the state faces.
"Transformative change is never easy, and tough changes are necessary," he said.
The total savings to the state and federal government from the proposals would be $148.5 million. Most of the initiatives would be implemented through health plans that provide coverage to Medicaid enrollees.
Raimondo thanked the group.
"Any cuts are hard. We're taking care of the most vulnerable, and your budgets are already strapped," she told them Thursday. "But the health care industry is changing. It is changing, that's a fact."
Since 7 percent of Medicaid enrollees account for more than two-thirds of the costs, the group looked for ways to provide quality care in the community instead of in an emergency room or long hospital stay, Roberts said.
The group has proposed relying more on community care providers to work with people who utilize Medicaid the most. They would coordinate care and intervene early in cases, so people can be treated in a cheaper setting, such as a doctor's office rather than an emergency room.
All of the initiatives are intended to help move the system to one that pays for services based on quality and efficiency, rather than volume. There are recommendations for targeting fraud, waste and abuse, and for making the administration of Medicaid more efficient.
The General Assembly will determine which ones are implemented through the budget.
Raimondo's $8.63 billion budget proposal seeks to eliminate a $190 million deficit while implementing no new broad-based tax changes.
The working group was charged with identifying $91 million in savings. Those savings were included in the budget projections.
It will issue another report by July 1 with a broader vision for transforming the payment delivery system.