LEGISLATIVE UPDATE
June 26, 2009The Legislature narrowly approved the state’s $11.5 billion budget last week that relies on one-time money (federal ARRA stimulus funds and JUA med mal funds) and tax and fee hikes, as well as another $20 million of unspecified cuts to be made by the Commissioner of DHHS.
The State’s 2010/2011 budget is based on unrealistic Medicaid caseload and utilization projections and relies on a patchwork of funding sources that are unlikely to be sufficient to meet the State’s fiscal needs. NHHA will be keeping a very close eye on the budget throughout the next two years for further cuts designed to keep the State budget in balance.
We’re very disappointed that lawmakers are continuing the State’s policy of underfunding health care for the women, men and children who rely on the Medicaid program. These reductions and policy changes are not in the best interests of hospitals and the patients they serve. Hospitals, along with health care providers of all types, are flat-funded at current Medicaid rates. Though legislators did not put money back into the Medicaid program in the way we wanted them to, the final budget retains current outpatient and inpatient hospital Medicaid payment rates.
What’s most troubling is that the Legislature underestimated utilization rates by employing lower Medicaid caseload projections than those recommended by DHHS and economic experts. In addition, legislators reduced the hospital catastrophic aid fund by $1 million dollars per year and instructed DHHS to apply more stringent criteria to inpatient claims that qualify for payment.
The Legislature suspended the payment of Direct Graduate Medical Education for two years, reduced Indirect Medical Education payments by approximately one-third, and directed DHHS to freeze payments to Boston Children’s Hospital that were scheduled to increase next year. On the other hand, with concerns about shrinking access to maternity services in Coos County, the Legislature provided $500,000 for these services subject to CMS approval.
One of the more disappointing outcomes of the budget is a mandate to the HHS Commissioner to develop a plan by January 2010 to be implemented by January 2011 to pay for the uncompensated care costs of hospitals and other providers by reducing DSH payments to certain other hospitals. And legislators stipulated that the plan generate an additional $5 million for the State’s General Fund. While the Commissioner is instructed to “seek input” from hospitals in the development of the plan, the Legislature is very clear about the end result.
NHHA will be watching Medicaid expenditures very closely, as well as developments concerning the uncompensated care plan. We’ll also be watching the budget with regard to whether revenues are keeping pace with expenditures. With so much uncertainty around the recovery of the economy, it’s anyone’s guess where this will all lead.
NHHA’s complete list of bills is available here.
