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Medicaid bill passes House, goes to Senate

Tuesday, March 22, 2011   (0 Comments)
Posted by: Leila Faucette
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After finishing the Regular Session without agreement on legislation to address the Medicaid shortfall, the House this evening passed its version of a solution – one that incorporates the Governor’s proposal to move $166M from Fiscal Year 2012 to FY ’11, coupled with the House’s insistence on protecting education from cuts, and incorporates suggestions from the Senate version of HB 305 which would have made cuts across nearly all areas of government and restricted the Governor’s ability to restructure debt and furlough state employees as money-saving actions.

This legislation –HB 1 Committee Substitute – "holds the Governor’s feet to the fire” by requiring that managed care contracts be signed by July 1st to substantiate Medicaid savings, and requires cuts across all three branches of government, sparing only education, if sufficient savings do not materialize by August 15th. If some version of this legislation is approved by the Senate and receives final concurrence with the House, it will prevent the 35% cuts to Medicaid providers which the Governor had said would go into effect on April 1st. Negotiations on the legislation during the first week of the Special Session were limited to the House Democrats & Republicans and not with the Senate, so it is unclear what position the Senate leadership will take with regard to HB 1. Stay tuned! Sheila

For Immediate Release from LRC March 21, 2011

Medicaid bill passes House, goes to Senate

FRANKFORT — The House voted 94-4 tonight to allow the governor to fill a $139 million state Medicaid shortfall through expanded Medicaid managed care programs.

House Bill 1, sponsored by House Appropriations and Revenue Committee Chairman Rick Rand, D-Bedford, would allow the $139 million to be drawn from $166 million that the Executive Branch would be allowed to move from the fiscal year 2012 Medicaid budget to meet this fiscal year’s obligations. Medicaid expenses for fiscal year 2012 would be met through managed care efficiencies, according to the legislation. The governor would also be allowed to use $23.1 million freed up through government transfers, if necessary, to meet next year’s Medicaid budget.

HB 1 also includes a provision that Rand said would allow the governor to "take full advantage” of an enhanced federal Medicaid match, saving the state around $12 million.

If the governor cannot certify to lawmakers by August 15 of this year—after state Medicaid managed care contracts are signed—that he can meet the fiscal year 2012 obligations through managed care savings and other authorized actions, he would have until Oct. 1 "to demonstrate to us the cuts that would need to be made in order to balance the budget for the remainder of the year,” Rand said. Lawmakers have said those cuts, if necessary, would be made across state government with few exceptions including, but not limited to, K-12 education and state universities.

"We have every confidence that the governor can make (the managed care approach) work,” Rand said. "It’s working in other states.”

Rep. Stan Lee, R-Lexington, said he understands that HB 1 would create a roughly $420 million hole in Medicaid that would have to be filled in fiscal year 2012. Rand said that is "roughly accurate,” adding that the governor assures lawmakers that he can handle fiscal year 2012 obligations through expanded managed care.

Rand explained the House’s intent to allow the governor to manage Medicaid, as has been the custom in the Commonwealth.

"We have always let the Chief Executive in this state manage the Medicaid budget, and that is what we are doing now,” he said.

HB 1 also limits the governor’s debt restructuring this budget cycle, requires the governor to meet $169 million in already-required efficiency savings next fiscal year through contract reductions and non-merit employee reductions, and orders any surplus state revenue be placed into the state’s "rainy day fund”—or budget reserve trust fund—among other things.

A provision that moves $18.9 million in postsecondary education funding from fiscal year 2012 to fiscal year 2011 is also found in the bill.

HB 1 now goes to the Senate for its consideration.

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