Agency pinching state, official says

CARSON CITY -- The state government's financial woes could get a lot worse.

The deputy director of Nevada Health and Human Services said Thursday that the federal government is balking at paying a primary component of Medicaid expenses.

Mike Torvinen told the Legislature's Audit Subcommittee that the federal Centers for Medicare and Medicaid Services does not want to reimburse physicians for their office costs when it pays its portion of the bills to treat the poor and disabled.

If doctors cannot include office expenses within Medicaid bills, then Torvinen said many simply will refuse to see Medicaid patients.

"It will destroy access to physicians," he said. "Essentially you can't expect them to provide services if they can't cover their full costs."

After the meeting, Torvinen asked, "When is the last time your doctor treated you in a parking lot?"

He said doctors, like owners of any business, need an office to perform their work, and their expenses include keeping the lights on and water running in the restrooms. The costs should be included in the bills for Medicaid patients, and the federal agency should not hesitate to pay them, he said.

If the federal agency rejects the expenses, the potential loss to Nevada could be huge, he said.

"It will decimate our budget," added Torvinen, who could not give an estimate.

About 200,000 low-income Nevada children and families, with disabled and elderly people, receive free health care through Medicaid, a program whose costs are shared by the state and the federal governments.

The federal government pays $650 million year to cover its 52 percent of Medicaid costs in Nevada. Expenditures on Medicaid are larger than those of any other single program in Nevada state government except public education.

A Centers for Medicare and Medicaid Services spokeswoman did not respond to a call for comment Thursday.

Meanwhile, because of declining sales and gaming and other tax revenues, Gov. Jim Gibbons has asked the Health and Human Services agency to cut its budget by $80 million.

Torvinen said that Nevada has not lost any money at this point but that his staff has engaged in heated discussions with federal officials. The state is considering litigation, he said.

"We are at the point where the only thing they want to pay is the direct costs of (health care provider) salaries, medication and some supplies," Torvinen said. "We are struggling with them mightily on this point."

But in an interview, Torvinen said the federal government is not trying to avoid paying all office-related expenses when it reimburses the state for Medicaid expenses. He said the agency wants health care office expenses calculated as administrative expenses, which would be paid at a lesser rate.

Members of the subcommittee sympathized with Torvinen. State Sen. Dean Rhoads, R-Tuscarora, said he would write a letter to Nevada's congressional delegation and seek their intervention.

Assemblywoman Sheila Leslie, D-Reno, said members should consider subpoenaing federal officials to answer questions about the impasse.

"It is getting to the point from the legislative point of view that we have to have some kind of action," she said. "This is getting serious. I'd be happy to haul them in here."

Torvinen's agency is preparing a cost allocation plan to submit to the federal agency early next year. In that plan, the agency must show how it sets the Medicaid rates Nevada pays doctors to treat the poor and disabled.

"We are documenting our costs, how we established our rates," he said. "Their concern is the rates being established are excessive for what Medicaid wants to pay."

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or (775) 687-3901.