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Arkansas MedicaidRight now, Arkansas’ Medicaid budget is in better shape than previously reported… but federal matching funds are scheduled to decrease, putting more pressure on Arkansas’ budget. Governor Mike Beebe says projected shortfalls for FY2013 won’t hit Arkansas until FY2014 due to cost management measures and a below-projected number of eligible individuals.

Arkansas’ Department of Human Services had projected a $200 million budget deficit for the fiscal year starting July 1, 2013, which includes an estimated annual 5% increase in the number of individuals eligible for Medicaid.  Director John Selig says Arkansas has done a “good job” of managing costs, and that the increase in eligible people measured around 2% for the last couple of years.

On the other hand, Arkansas’ per-capita income has risen so federal Medicaid matching funds will go down from 71% to 70%. That one percent decrease in the federal match translates to an additional $50 million that Arkansas must spend (our annual Medicaid budget is around $5 billion).

Beebe wants to change Arkansas Medicaid’s fee-for-service to a “bundled” payment system, but even with the longer projection in mind, the Governor’s office will pursue that plan “with the same urgency that we are already,” says Beebe’s aide Matt DeCample. “We’re not going to slow it down because of the change in the projection. It just means that we do have a little more time before the biggest hit comes.”