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Alabama Medicaid to reduce services, provider payments for FY 2012

May 17, 2012

MONTGOMERY -- The Alabama Medicaid Agency will implement reductions in covered services and provider payments starting June 1 in order to balance its budget following the 10.6 percent proration of the state’s General Fund budget. 


Declared in March by Governor Robert Bentley, proration required that the Agency’s original $643 million allocation from the state General Fund be reduced by approximately $68 million for the current fiscal year which ends September 30, 2012.


The budget reductions were achieved by a combination of administrative and program cost savings, use of one-time funds, voluntary increases in provider taxes and other sources following an in-depth financial analysis led by State Health Officer Dr. Don Williamson   Dr. Williamson was recently chosen by Governor Bentley to conduct a review of Medicaid’s operations and finances. 


“These are difficult, but necessary cuts that will allow the Agency to operate over the next few months while we look at other ways to reduce costs and reorganize the way we provide care,” said Dr. Williamson.


The Agency will implement these cuts in three ways:

·         Reduction of payments to certain provider groups by 10 percent:

o   Physicians

o   Dentists

o   Physician Lab & X-ray

o   Durable Medical Equipment

o   Independent Lab & X-ray

o   Other licensed practitioners

o   Maternity primary contractors (Effective for services on or after May 14, 2012)

·         Reduction in optional services to adults (benefits to children remain unchanged)

o   Change coverage of routine eye exams  and work-up for refractive error to once every three years (now one eye exam every two years)

o   End coverage of eyeglasses as a benefit (now one pair every two years)

o   Limit drugs to one brand-name drug per month; generics and covered OTCs remain unlimited.  Allowances will remain for up to 10 brands per month for anti-psychotics, anti-retrovirals, and switchovers.   (In addition to children, long-term care recipients are excluded from this reduction.)

·         Reduction in optional coverage of cough/cold drugs for all recipients

o   Certain over-the-counter drugs will continue to be covered.


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