Legislative Update
FY2005 State Budget Update
House Ways and Means Committee (HWM) Chairman John Rogers (D-Norwood) recently released his $22.5 billion FY2005 budget recommendation, which increases funds for health care and hospitals and keeps state program funding at the same level as the previous fiscal year. The HWM budget restores most of Governor Romney’s proposed FY05 Medicaid reductions for hospitals, and increases free care pool funding by $125 million. Some other highlights include:
Uncompensated Care Pool
• Hospital and Insurer Liability. The HWM budget proposes overall funding of at least $715 million for the pool, with statewide hospital and insurer liability increased by $2.5M each over FY2004. This is $22 million more for the pool than FY04 funding of $693 million. Overall pool funding is still projected by MHA to result in a $215 million shortfall in FY2005 for hospitals, but the outlook for PHS hospitals improves from a $43 million impact to a $6.6 million impact under the HWM proposal
• Free Care at Community Health Centers. Free Care Pool funding for Community Health Centers will grow from $28 million to $30 million in FY05.
• Primary/Preventive Care and Disease Management Pilot Program. $5 million in pool funds will go to DMA to fund a pilot program for primary and preventive care and disease management for patients with chronic illness. The cost-neutral pilot is intended to reduce ED utilization, and must extend program eligibility to certain elderly, disabled and child populations.
• Emergency Psychiatric and Substance Abuse-Related Free Care. Sets aside a $35 million “pool within a pool” to reimburse hospitals for psychiatric and substance abuse related free care, rendered as emergency care.
Medicaid
HWM increases Medicaid spending overall to $6.6 billion, up from $6.1 in projected FY04 spending. Medicaid provisions include:
• Restores Acute Hospital Rate Reductions. The budget restores at least $70 million statewide in proposed rate reductions recommended by the Governor's FY05 Budget, including graduate medical education payments. The budget also prevents reduction of the chronic disease and rehab hospital supplemental day rate.
• Hospital-Based Primary Care Allowed. HWM budget allows hospital outpatient departments to serve as primary care clinicians for MassHealth patients.
• Maintains MassHealth Coverage for Basic, HIV, and Breast and Cervical Cancer Patients. Maintains coverage for these populations.
• Pilot Program for Disabled Populations. Requires DMA to develop a pilot program for disabled managed-care eligible MassHealth members.
• Incentives for Community Health Center Primary Care. Provides $500K in incentive payments to CHC’s for enrolling MassHealth patients in MassHealth managed care organizations, and a “pass-through” of up to $5 for patients whose primary care physician is at a CHC.
• Prescription Drug Prior Authorization Program Report. Requires DMA to report on the efficacy of the program, including any cost-shifting to physicians because of additional time spent dealing with the prior authorization process, as well as additional physician visits or hospitalizations attributable to the program.
Department of Mental Health Funding
Overall mental health funding is reduced by $6.7 million or 1 percent below FY04 appropriations of $592.8 million. Funding for payments to hospitals and CHMC’s is reduced by 3 percent as compared to cuts of 5 percent under Governor Romney’s proposed budget. For contracted acute inpatient and emergency programs, funding is increased by $468K or 2 percent. Child and adolescent mental health services funds are modestly increased.
For more information on other provisions visit
http://www.state.ma.us/legis/05budget/house/frame.html