The Division of Medicaid Services is seeking $1.03 billion in funding for fiscal year 2018, its biggest appropriations request to date.

Ironically, the request, which is a 2.2 percent increase over last year, comes at a time when the state’s Medicaid enrollment is falling. But at an appropriations meeting Tuesday, Dr. David Dzielak, the program’s executive director, said that medical costs keep going up, even as recipients drop.

“It’s the ever-escalating cost of medical services,” Dzielak said.

The Division of Medicaid employees 900 people across the state and operates 30 regional offices. Even so, only 2.9 percent of funding goes to administrative services. The rest is used to reimburse providers, such as doctors, hospitals and pharmacies.

“We have some of the lowest administrative costs in the country,” Dzielak said. “Ninety-seven percent of our budget goes back out in our provider community to provide services for our beneficiaries.”

But the downside of this is that, unlike state agencies that spend the bulk of their budgets on workforce, Medicaid has fewer areas available to cut.

As a result, Dzielak said he’s hopeful legislators will honor the $75 million deficit appropriation that his department requested last week. If they don’t, he said, he’s unsure how the agency will absorb the cuts.

“There is no good answer to that because any cut that we make is going to affect the provider community as well as the beneficiaries,” Dzielak said.

During the last session, the Legislature appropriated $950 million to Medicaid, which is $63 million less than the agency had requested. Then in September, agencies were hit with a series of mid-year cuts to address a $57 million “accounting error” that overestimated expected revenue to the state. Medicaid’s cut was $15.4 million.

Deficit appropriations are nothing new for the Division of Medicaid, however. Dzielak said this is the sixth year in a row that his agency has made a deficit appropriation.

“It’s because we don’t get the money we request from the Legislature (during the regular session), and we do do a good job of predicting what we’ll need,” Dzielak said. “They’ve always made up for it, not exactly what we’ve asked for but close enough to get by.”

Sen. Brice Wiggins, R-Pascagoula, expressed skepticism that fully funding Medicaid’s request would be the best use of state funds in a “year with no new money.”

“Let’s just say you were appropriated a hundred percent of the request. What is to ensure us that next year we won’t be up at a $1.05 billion? … What’s to ensure that the costs won’t continue to go up?”

Dzielak answered that while costs will continue to rise with medical services, the department’s actuaries reliably predict the budget each year.

Wiggins, who chairs the Medicaid committee, will hold a joint meeting Thursday on Medicaid to address this and other issues.

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Larrison Campbell is a Greenville native who reports on politics with an emphasis on public health. She received a bachelor’s from Wesleyan University and a master’s from Columbia University's Graduate School of Journalism.Larrison is a 2018 National Press Foundation fellow in public health, a 2019 Blue Cross Blue Shield Foundation of Massachusetts fellow in health care reporting and a 2019 Center for Health Journalism National Fellow.