John Selig (AP Photo/Danny Johnston)

LITTLE ROCK, Ark. (AP) — Changes in the way Medicaid pays for services in Arkansas and other efforts to save money won’t eliminate the up to $400 million shortfall the state program faces next year, Department of Human Services Director John Selig said Monday

Selig and state Medicaid Director Andy Allison told a legislative panel Monday that they’ll have a firmer number on the state’s Medicaid shortfall later this year. State officials previously have estimated the program could have a deficit between $250 million and $400 million in the budget year that begins July 1, 2013.

Later this year, Arkansas will begin changing the way it pays for services —paying for “episodes” of care rather than each individual treatment — in a handful of areas, and Selig said the program is also looking at other ways to keep its expenses down in the coming fiscal year. But he warned that those efforts, as well as proposals to find fraud and abuse in the program, would not completely close the impending deficit.

“I don’t want anybody to think we can just get rid of this shortfall,” Selig said. “But if we can get it smaller, it’s a little more manageable for you and the governor.”

The Medicaid shortfall is expected to be the Legislature’s top agenda item when it convenes for its regular session in January. Republican legislators have expressed skepticism about the payment reforms proposed by Democratic Gov. Mike Beebe. The GOP has pledged to find other ways to save money and curb the growing costs of the Medicaid program if they win control of the Legislature in November.

Selig and Allison said an unknown factor for that estimate is the impact of the federal health care law, noting that it could swell the state’s Medicaid rolls. Selig said DHS will likely have a better financial estimate after the U.S. Supreme Court rules on the health care law this summer.

He warned that lawmakers will face tough choices about the program and potential cuts if additional revenues aren’t found.

“Without significant new revenues, there’s just not any way to not make some really deep cuts in this program,” Selig said.

-ab