Medicaid payments cut as O’Malley works to reduce state’s deficit


Maryland’s Board of Public Works recently approved more than $280 million in reductions to several aspects of the state’s budget, including health care, leaving one organization concerned about additional cuts.

The three-person panel authorized the budget actions July 22, cutting millions amidst a projected budget shortfall of more than $700 million for the current budget year, according to the governor’s office.

Martin O'Malley

Martin O'Malley

The board approved cuts, proposed by Gov. Martin O’Malley, $75 million in cuts in Medicaid reimbursements that will now be covered by federal matching funds as the state unemployment rate grows, as well as another $34 million in reductions in Medicaid payments to hospitals, nursing homes and other health care providers.

O’Malley said the past 2 1/2 have produced “some very tough circumstances,” including a structural deficit in the state and a nationwide recession, forcing Maryland “to make some difficult choices.”

“We’ve made these choices with an eye toward protecting our core priorities of education, public safety, the environment, protecting our most vulnerable families, and protecting those things that keep Maryland positioned for economic growth and recovery,” the governor said in a statement. “Were it not for these decisions we made together, the choices we’d face today would be far difficult and Marylanders would be facing many of the nightmare scenarios plaguing other states.”

Nancy Fiedler, a spokeswoman for the Maryland Hospital Association, said the group, representing the state’s major medical providers, is concerned about the state’s recent budget cuts, “and even more concerned” about additional cuts O’Malley could make prior to Labor Day.

“This round of cuts limits the number of days a Medicaid patient can stay in the hospital,” Fiedler told “That falls disproportionately on hospitals that care for the greatest number of Medicaid patients and patients who are often the sickest patients. “

She noted that hospitals that can least afford it, including Bon Secours and Prince George’s Medical Center, are “already in extremely fragile financial condition.”

“It is important to remember that every dollar cut in Medicaid results in program reductions of $2, because the federal government matches the state contribution dollar for dollar,” she said.

Other cost cutting measures included trimming $40 million in higher
education, including the University System of Maryland and abolishing 39 filled and 18.5 vacant state jobs.

O’Malley said the combined cuts bring the current state operating budget below $13 billion, representing the first known incidence of general fund declines for three straight years in the history of Maryland.

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