Ohio’s two-year budget could devastate some community health services; cost jobs, businesses

COLUMBUS, Ohio — Devastation. That’s what many health care professionals see in Ohio’s two-year buget, passed Monday evening by the General Assembly, now waiting for a signature from Gov. Ted Strickland.

Mental and behavioral health organizations see thousands of Ohioans losing services, some even being turned out of group homes. Will the group homes survive? Hospitals see job loss and service cuts. Some medical equipment and service providers also see job loss and potentially going out of business.

Children’s hospitals, however, see at least a continuation of the status quo, in terms of Medicaid money through the state. And economic development organizations were heartened Tuesday by the preservation of state technology investment programs.

In a two-year budget that had a $1.2 billion hole in last week, status quo might be the best-case scenario.

Mental and behavioral health organizations would see millions of dollars in funding cuts, said Jim Mauro, executive director of the National Alliance on Mental Illness of Ohio. Despite a phone call from Strickland’s office this morning who said the coalition might have used incorrect financial information to reach its conclusion, the coalition expects community addiction prevention and treatment services to fall by 30 percent and community mental health services to fall by 16.5 percent over the next two years.

“We’re hoping that’s true,” Mauro said of the incorrect information, which could add $64 million to the mental and behavioral health budget. But Mauro wasn’t hopeful Tuesday. “The position we’ve taken all along, this is going to have an impact on providers. There are going to be fewer dollars in the system. That results in loss of capacity. And that means less service for people.”

A reduction in “residential state supplement” — federal money that helps keep low-income adults who don’t need nursing home care in adult foster homes — could put 2,500 residents out on the street, Mauro said. “These are very sick people,” he said.

By the calculations of Cheri L. Walter, chief executive of the Ohio Association of County Behavioral Health Authorities, about 14,000 Ohioans could lose mental and behavioral health services. “That’s a lot of people who could lose services at a time when we are seeing more people who need services because of the recession,” Walter said, saying the system could collapse.

Nursing home organizations say their members could lose $184 million in the next two years, at the same time their costs continue to climb. That’s “less bad” than the $227 million loss initially proposed under the budget, which would have caused 2,000 job cuts among Ohio’s skilled nursing facilities, said Wayne Hill, spokesman for the Skilled Nursing Care Coalition.

And the Ohio Association of Medical Equipment Services says some of its member companies would lose Medicaid reimbursements for providing five medical services to nursing homes. Two Northeast Ohio suppliers of complex rehabilitative wheelchairs said last week they would be forced to cut between 20 percent and 50 percent of their workers if the so-called “bundling of ancillary services” provision stayed in the state budget.

That Ohio budget change would further challenge durable medical equipment suppliers already dealing with a controversial Medicare bidding process, which could cut reimbursements and force more layoffs.

Meanwhile, hospitals were still considering what to do after the announcement that some of a new hospital franchise fee would not be reimbursed to the health systems. Officials estimated that hospitals would have to absorb between $125 million to more than $143 million of the fee used to lure more federal matching funds to the state.

Officials warned of layoffs in early rounds of budget testimony. Ohio Hospital Association spokeswoman Tiffany Himmelreich said the issue isn’t just jobs, but the potential of lost services or increased costs. George Stamatis, spokesman for University Hospitals in Cleveland, said it was too early to discuss the impact of the state budget on jobs there.

Some hospitals have shown the economy has changed for them — at least somewhat. The Cleveland Clinic, for example, recently announced $60 million in raises to its staff. But Tiffany Himmelreich called that the “only bright news” she’d heard in awhile while noting rural hospitals have continued incremental layoffs. Oliver Henkel, Cleveland Clinic vice president of governmental relations, said the health system would have to absorb “tens of millions” of dollars in fee levies, and he was unsure how that would happen.

The governor has said he doesn’t want to impose a tax on anyone during these hard economic times, Henkel said. But it’s “splitting hairs in the extreme to say (this fee) is not a tax. It’s a tax on hospitals. There’s just not a tax on individuals.”

Henkel noted that a provision in the legislation that eliminated the franchise fee after two years was taken out of the final budget bill. That opens the door to a levy that continues past the two-year budget. Henkel also said it was a mistake for the governor to opt for slot machines — which Henkel said would fuel an addiction — to raise revenues over a tobacco tax, which studies have shown would force smokers to quit.

Tim Maglione, senior director of government relations of the Ohio State Medical Association (OSMA), stated the 3 percent cut in the Medicaid fee-for-service payment to doctors “further exasperates funding for a public program which already does not keep pace with the financial realities of running a medical practice.” He stated in an OSMA release that he hoped the legislature would change this ruling later in the session, but he also applauded a series of legislative changes in the budget, including a requirement that all third-party payers pay claims electronically.

Bill Considine, chairman of the Ohio Children’s Hospital Association and chief executive and president of Akron Children’s Hospital, also saw some hope in the budget bill. Considine thanked the governor and state legislature for “the wise decision to ensure Ohio’s children’s hospitals can continue to provide essential, high quality health care for our state’s youngest citizens.”

[Photo credit: Ohio Statehouse Rotunda photo from Flickr user Elessar]

Chris Seper contributed to this report.