Shumlin’s Medicaid rate increase faces trouble in the Vermont House

Gov. Peter Shumlin’s proposal to raise the state’s Medicaid reimbursement rate by 2 percent may not pass muster in the House of Representatives.

Increasing the Medicaid reimbursement rate is important to addressing the shift in health care costs from people with publicly financed coverage to the commercially insured, according to state regulators and other officials.

Lawmakers on the House Ways and Means Committee, who are responsible for raising revenue, aren’t enamored with Shumlin’s proposal to double the claims assessment. They say it is a tax on insurers who will pass the cost on to customers through premiums.

Part of the increase in the claims assessment would go to cover the Medicaid rate hike.

“Our committee rejected a similar proposal last year, and I don’t think the view of the committee has changed in that time,” said Ways and Means Chair Jane Ancel, D-Calais.

The House Appropriations Committee, which handles expenditures, isn’t sure the state can afford the increased reimbursement rate without raising the claims assessment or some other equivalent revenue boost, said Martha Heath, D-Westford, chair of the Appropriations Committee.

Mitzi Johnson, D-South Hero, the committee’s vice chair, said: “One of the first places we’ll look to cut are places where the governor proposed an increase, and that includes the Medicaid reimbursement rate increase.”

But not increasing the Medicaid reimbursement rate would hurt middle-income Vermonters and small businesses, according to Al Gobeille, chair of the Green Mountain Care Board.

“Next year if you don’t properly fund Medicaid you’ll put the burden on small businesses and individuals to carry the bulk of the increase in health care spending,” Gobeille said.

If Medicaid payments don’t keep pace with provider costs, the difference is passed on to people paying commercial insurance premiums, said Mark Larson, commissioner of the Department of Vermont Health Access.

Abandoning the Medicaid rate increase casts doubt on whether state government would be a responsible payer when it replaces commercial insurance as part of Green Mountain Care, according to Bea Grause, director of the Vermont Association of Hospitals and Health Systems.

“If the Medicaid budget is analogous to the whole public financing discussion, where you’re going to have to have a conversation about financing Green Mountain Care each year, then it’s worrisome,” she said.

The Shumlin administration committed last year to increasing the Medicaid reimbursement rate by 3 percent each year for three years.

But the hospital association supports the administration’s proposal to raise the rate by 2 percent tied to inflation, because it shows a commitment to addressing the disparity among payers.

Ancel said the two money committees in the House are working to iron out the stresses on the budget, and make decisions that are in Vermonters’ best interest.

Those committees have a tough job, Shumlin said at a press conference Monday, and he doesn’t want to quarterback their decision making too closely.

“We went through the same exercise that they’re going through now, only we had more lead time, because we had to present the budget,” he said.

His team picked the claims assessment to pay for the Medicaid rate increase because it was the best option they could find, Shumlin said.

The resistance to raising the claims tax is going to leave lawmakers with a $14 million hole to fill, he said.

But the $14 million hole Shumlin is referring to doesn’t correspond to  the amount needed to pay for the Medicaid reimbursement rate increase.

Lawmakers on Ways and Means have balked at the increase because the administration hasn’t explained exactly what it’s being used to pay for.

The claims assessment feeds the Health Care Resources Fund, which is used to cover the state’s Medicaid budget as well as a wide array of other health care expenses.

The fund is filled by numerous revenue sources including the General Fund, cigarette taxes, a hospital provider tax and assessments on employers and health care claims. That money is then pooled and used to cover the state’s health care costs.

Administration officials have said that makes it impossible to tie revenue increases for the fund directly to expenditures.

Shumlin’s proposed budget includes $8.33 million for increasing the Medicaid reimbursement rate. That sum contains $4.3 million to raise the rate 2 percent this fiscal year, and $4 million to cover the remaining cost of last year’s 3 percent increase.

Because of how the increases are spread over the fiscal year, the state hasn’t finished paying for last year’s increase. The federal government matches the increased spending, so the actual rate hike comes out to more than $19 million for providers.

Johnson, who focuses on health care spending for the appropriations committee, said she’s committed to covering the cost of last year’s increase, but what her committee is considering cutting is the $4.3 million increase Shumlin proposed for this year.

However, even the combined increase for this year and last year doesn’t add up to the $14 million Shumlin wants to bring in using the claims tax.

Johnson said the decision to fund the state’s costs of Vermont Health Connect through the Health Care Resources Fund are putting additional stress on that account.

“When we allowed Vermont Health Connect to be paid for out of the Health Care Resources Fund it increased pressure on the Medicaid budget,” she said.

Both Ancel and Johnson said a possible solution would be a more modest increase in spending out of the Health Care Resources Fund that would trigger less need for new revenue.

Morgan True

Comments

  1. Patricia Crocker :

    “If Medicaid payments don’t keep pace with provider costs, the difference is passed on to people paying commercial insurance premiums, said Mark Larson, commissioner of the Department of Vermont Health Access.” So what happens when there is no commercial insurance to shift the costs to? This whole healthcare scam reeks! Democrats ruined our healthcare system in VT. Remember this when you go to the voting booth in November!

  2. My name is Robin Hall and I am a Supervisor of a Peer Run Crisis Bed called Maple House for Washington County Mental Health (WCMH, DA), the first of its kind.

    Our Crisis Bed has been running for over one year now, supported solely by WCMH, and the need is growing. Our bed has supplied support for peers over 250 days out of 365 days during 2013, not including those who we had to turn away, when our bed was full. Along with that simple statistic, the cost for clientele/peers to come through Maple House in relation to having them go to the hospital, for any amount of days, is comparing apples to oranges. This choice for clientele/peers will not be able to continue if the purposed increase is not passed.

    The future of services which Maple House offers, within WCMH will not be able to expand to assist the clientele/peers needing trained peer mental health support and these individuals will end up in the hospital or the ER, costing our state greater amounts of money.

    Lastly, I believe if this increase does not occur, it will come full circle and you will have people continue to request for mental health services because mental health suffering will just never ‘go away’.

    I hope you and your colleagues, who are voting on this increase, will vote YES and understand the repercussions if this increase does not pass.

    Thank you for your time.
    Sincerely,
    Robin P. Hall
    Supervisor/Team Lead
    Maple House
    Temporary Support Crisis Bed
    WCMH
    229-8011 ext. 303

  3. Ann Raynolds :

    And we private mental health practioners have never understood why the Designated Agencies for mental health receive a much higher reimbursement rate for mental health codes. Yes, they have administrative costs, but so do we. We pay for the headaches of billing multiple insurance companies, each with their own rules, we pay for rent for offices, we pay for required number of further education units for licensing, we pay for licensing, and on and on. Above all, when the State so desperately is in need of front line mental health services, please at least raise the rates for private practioners.

  4. Ellen Fiske :

    Yes, vote for this increase, and vote no on S.287, the bill that would add to the ability for psych meds and their “side effects” to suck Medicaid dry at the expense of patients’ mental and physical health.

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