FRANKFORT — Legislative budget leaders are looking to the Cabinet for Health Services to resolve a projected shortfall in the state's Medicaid program.

        Harry Moberly told legislators in a budget briefing Wednesday that the cabinet will find ways within its budget to correct the shortfall, which could be at least $12 million.

        The shortfall eventually could result in a loss of more than $100 million that the federal government provides in matching dollars.

        Officials attribute the problem to underestimated growth in the Medicaid program and soaring medical costs and prescription drugs.

        “We're serving more people — and that is good, policy-wise. But from the budget standpoint, it's a potential problem,” said Mr. Moberly, D-Richmond.

        Covering the shortfall could hurt Medicaid recipients or medical providers in the program, Mr. Moberly said Wednesday.

        “We're looking at the budget to see how to cover the deficit,” said Health Services spokeswoman Barbara Hadley Smith. “There are optional benefit programs that Kentucky Medicaid provides which are not required by the federal government.”

        She said the cabinet is looking at rates paid for services and provisions within optional services that might include pharmacy, den tal, home and community-based programs. But cutting reimbursements to some providers might not be a good idea, some legislators said.

        “Our dental providers, for instance, are woefully underpaid,” said Rep. Kathy Stein, D-Lexington. “We don't want to backtrack from giving dentists increases.”

        The Medicaid program, with an annual budget of more than $3 billion, makes up 11 percent of the general fund, Mr. Moberly said. Kentucky provides about 30 percent of its Medicaid budget, then gets the rest from a federal government match.

        State budget officials have said the shortfall is in state funds. Early estimates of it range from $12 million to $14 million in 2001, and $50 million to $70 million in 2002.

        If the state estimate holds true, that loss, combined with the loss of federal funds, could push Kentucky's total Medicaid loss to $40 million to $47 million in 2001.

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