Providers expect 3% cut, Medicaid delivers 4.5%

ST. PAUL, Minn.--In an unusual move, Gov. Tim Pawlenty bypassed state lawmakers in June and reduced Medicaid payments for durable medical equipment by 4.5%. Providers had expected a 3% reduction.

“We knew we were going to get cut, but this was higher than what we had anticipated,” said Todd Knorr, branch manager for Rice Home Medical in Redwood Falls, and Minnesota chairman for the Midwest Association of Medical Equipment Services (MAMES). “It's a big problem on top of the federal cuts and private insurers are reducing their payments, too.”

Minnesota lawmakers had been struggling with how to slash $2.7 billion from the state budget for the next two years. The legislative session ended May 18 without a consensus, clearing the way for the governor to go through the budget line-by-line and make cuts - a process called unallotment, a rarely used executive privilege.

The cut, effective July 1, is part of an overall $236 million cut to health and human services. It applies to DME and supplies across the board, said Knorr.

Even before the legislative session ended, providers had little time to take action against any proposed cuts, said Rose Schafhauser, executive director of MAMES.

“We had about two days that there was a budget bill going through and our legislative members couldn't see anywhere specifically where DME was specified,” she said. “By the time we looked again, it was too late.”

Providers are already looking ahead, said Knorr.

“We're hoping to get it readdressed next year when the House and Senate reconvene,” said Knorr. “But like everyone else, we're standing in line.”