WeeklyFinancingNewsPulsefinal20090511.pdf (PDF | 462.79 kb)
SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 1 National Health Financing News President Obama Releases FY2010 Budget Details Legislators Make Health Care Proposals Kaiser Health News and the Philadelphia Inquirer Examine Baucus222 Medicare Expansion Proposal Legislators Confirm Health- Related Nominees Insurers Willing to Consider More Regulation, Cease Gender-Based Pricing DOL Seeks OMB Approval for ARRA COBRA Subsidy Appeal Form Obama Addresses Swine Flu WellCare and Coventry to End Medicare Advantage FFS Plans Social Security Benefits Unlikely to Increase in 2010, Implications for Medicare CMS Announces Proposed Regulations Competition Among Large Pharmacies May Change Industry Tenet Reports Declining Hospital Admissions and First Quarter Profits San Francisco Mayor Appointed to Task Force on Health Reform Studies Find Mental Health Prescription Utilization on the Rise Along with Mental Health Care Costs US Attorney Tells Senate Panel That CMS Must Make Changes to Stop Medicare Fraud AHRQ Report Says Health Care System has Made Little Progress Improving Patient Safety GE to Develop New Lower - Cost Medical Products Update: Few Hospitals Adopt VA222s EHR System Update: UAW Plans to Sell Chrysler Stock As Soon As Possible Around the Hill: Hearings on Health Financing Around the States: State and Local Behavioral Health Financing News Arizona California Colorado Delaware Florida Georgia Illinois Indiana Iowa Louisiana Maine Massachusetts Michigan Mississippi Missouri Montana Nebraska New Jersey New York Pennsylvania South Carolina Texas Utah Washington West Virginia Wisconsin For questions or comments, please contact Sarah Wattenberg (sarah.wattenberg@samhsa.hhs.gov). SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 2 National Health Financing News President Obama Releases FY2010 Budget Details : On May 7, President Barack Obama released his detailed FY2010 budget plan that cuts nearly $17 billion from the coming year budget by ending or reducing 121 federal programs. President Obama222s budget allocates $828 billion for the Department of Health and Human Services (HHS), including $78.3 billion in discretionary spending. In addition, the American Recovery and Reinvestment Act (ARRA) already allocate d an additional $22.4 billion for HHS over FY2009 and FY2010. The HHS FY2010 budget allocations include : $3.2 billion for the Food and Drug Administration (FDA), an increase of $5 11 million; $112.8 billion for the Department of Veterans Affairs (VA), an increase of $15.1 billion; $30.8 billion for the National Institutes of Health (NIH) , a reduction of $10 billion offset by $10.4 billion in ARRA funding; and $6.8 billion for the Ce nters for Disease Control and P revention (CDC) , a reduction of $300 million offset by ARRA funding. The budget also allocates an additional $73 million for rural health care initiatives, $92 million to address the country222s nursing shortage, $454 million for Indian Health Services (IHS) , and $59 million to expand drug courts under the Substance Abuse and Mental Health Services Administration (SAMHSA) . Medicare receives $452 billion in the new budget while Medicaid receives $290 billion, increases of 6 per cent and 10 percent respectively . The budget also proposes changes to Medicare , including linking hospital payments to quality of care and utilizing a competitive bidding process to alter payments for Medicare Advantage (MA) plans, allowing $288 billion in Medicare funds to be directed to the President Obama222s health care reserve fund over 10 years ( New York Times, 5/7 ; Kaiser Daily Health Policy Report, 5/8 ). The President222s budget is available on the Office of Management and Budget (OMB) website . Legislators Make Health Care Proposals : On May 6, Senate Finance Committee Ranking Member Chuck Grassley (R- IA) said that he is confident that President Barack Obama and Senate Finance Committee Chair Max Baucus (D - MT) will seek a bipartisan compromise on health care reform , rather than rely on the budget reconciliation process ( Kaiser Daily Health Policy Report, 5/7 ). In remarks made earlier in the week, Senator Baucus said that this year222s health care reform is unlikely to include a permanent fix to Medicare222s physician payment system, which calls for cost - controlling payment cuts that Congress has avoided every year since 2000 ( Kaiser Daily Health Policy Report, 5/5 ). In addition, several legislators have offered their own opinions and proposals regarding Congress222 health care reform efforts. On May 4, Senator Charles Schumer (D - NY) proposed that any new public health insurance plan be subject to the same rules and standards as private health insurance t o level the playing field between a potential public plan and private insurers. Notably, Schumer222s proposal would require any new public plan to be self - sustaining rather th an tax - funded ( Kaiser Daily Health Policy Report, 5/5 ). In contrast, on May 7, Senator Ben Nelson (D - NE) and the New Democrat Coalition, a group of 50 House Democrats, expressed opposition to a public plan, instead, favoring changes to the private employer-based system. Finally, House Ways and Means Committee Chair Charles Rangel (D - NY) has said that he opposes any tax on employer - provided health benefits, an idea which Senator Baucus has tentatively supported ( Kaiser Daily Health Policy Report, 5/8 ; New York Times, 5/6 ). Kaiser Health News and the Philadelphia Inquirer Examine Baucus222 Medicare Expansion Proposal: On May 4, Kaiser Health News and the Philadelphia Inquirer analyzed Senate Finance Committee Chair Max Baucus 222 (D - MT) proposal to expand Me dicare to individuals ages 55 to 64, targeting those who are uninsured or purchase insurance on the individual market. Senator Baucus222 plan would allow those individuals to enroll in Medicare until Congress approves major health care reform but would not provide government subsidies for the early enrollers. Though the plan does not include cost estimates, the Congressional Budget Office (CBO) analyzed a similar plan and found that SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 3 premiums would total $7,600 annually for beneficiaries between ages 62 and 64. Senator Baucus has also proposed allowing adults with incomes up to 100 percent of the federal poverty level (FPL) to enroll in Medicaid and eliminating the Medicare waiting period for disabled individuals under 65 ( Kaiser Daily Health Policy Report, 5/4 ). Legislators Confirm Health -Related Nominees: On May 6 , the Senate unanimously confirmed William Corr as deputy secretary of HHS and Yvette Roubideaux as director of IHS . Corr worked previously for Rep. Henry Waxman (D - CA) and former Senate Majority Leader Tom Daschle (D - SD) and served as chief of staff at HHS during the Clinton administration. Roubideaux , an assistant professor at the University of Arizona Colle ge of Medicine, worked previously at IHS ( Kaiser Daily Health Policy Report, 5/8 ). In related news, the Senate Health, Education, Labor and Pensions Committee (HELP Comm ittee) confirmed Margaret Hamburg as FDA commissioner and is expected to refer her nomination to the full Senate for a vote before May 25 ( Kaiser Daily Health Policy Report, 5/8 ). The HELP Committee accelerated Hamburg222s confirmation hearing to expedite FDA staffing in light of increasing numbers of H1N1 223swine flu224 cases in the U.S. ( Kaiser Daily Health Policy Report, 5/7 ). Insurers Willing to Consider More Regulation, Cease Gender -Based Pricing: During a hearing of the Senate Finance Committee on May 5 , President and CEO of America222s Health Insurance Plans (AHIP), Karen Ignagni said that health insurance companies would concede to greater government regulation and stop charging women more for health insurance coverage to avoid the creation of a new public health insurance . The moves come after AHIP has already said that, in exchange for shelving a public plan and instituting a health care mandate, insurance companies would stop basing premiums on health status and agree to guarantee coverage for all individuals with p re - existing conditions. In the individual insurance market, women c urrently pay 25 to 50 percent more for coverage than do otherwise- equivalent men ( AP, 5/5 ; Kaiser Daily Health Policy Report, 5/6 ). DOL Seeks OMB Approval for ARRA COBRA Subsidy Appeal Form: The U.S. Department of Labor (DOL) has proposed a 12 - page form that allows individuals to appeal an employer222s denial of the CO BRA premium subsidy included in the ARRA . The DOL is asking OMB to approve the form quickly so that department can begin reviewing subsidy denials later in May. The ARRA includes a 65 percent COBRA subsidy for employees of qualified companies who lose em ployer - sponsored coverage between September 1, 2008 and December 21, 2009 (Financing News Pulse, 2/20 edition ). The DOL is responsible for adjudicating disagreements surrounding Employee Retirement Income Scrutiny Act (ERISA) COBRA coverage and HHS is res ponsible for handling reviews for non - ERISA COBRA coverage. DOL estimates that 95,000 individuals will file COBRA coverage appeals ( Thomson COBRA Compliance Center, 5/6 ). Obama Addresses Swine Flu : In his weekly radio and internet address, President Obama said that his administration is taking all necessary precautions to address the H1N1 influenza virus (swine flu). He repor ted that the federal government released 10 million courses of antiretroviral drugs from the Strategic National Stockpile and plans to spend $251 million to purchase 13 million additional courses ( Kaiser Daily Health Policy Report, 5/4 ). However, an Associated Press (AP) survey found that 29 states have le ss antiretroviral medication on hand than HHS recommends ( AP via Los Angeles Times, 5/1 ). In addition, an analysis by the AP and the Miami Herald revealed that developing a vaccine might n ot effectively combat the virus because uninsured residents would be unlikely to get vaccinated. In response, Sen. Richard Durbin (D - IL) and Rep. Louis Capps (D - CA) proposed legislation ( SB 957 and HR SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 4 2231) mandating that the federal government pay for temporary medical care for the uninsured in the event of a public health emergency ( Kaiser Daily Health Policy Report, 5/5 ). W ellCare and Coventry to End Medicare Advantage FFS Plans: On May 4 and 5 , WellCare Health Plans and Coventry Health Care Inc . separately announced that they will no longer offer fee-for - service (FFS) Medicare Advantage (MA) plans next year. Coventry, which has 318,000 MA enrollees, said that federal reimbursement rates and cost trends have reduced profi tability in the MA market . WellCare, which covers about 110,000 members through MA FFS plans, cited government requirements that will force the plans to develop networks in 2011 as the company222s primary reason for withdrawing from the market ( AP via Forbes, 5/5 ). Social Security Benefits Unlikely to Increase in 2010, Implications for Medicare: According to the Obama administration and the CBO , Social Security beneficiaries will no t receive cost - of - living increases in 2010 or 2011. Because of a federal law which ties social security increases to Medicare Part B , 75 percent of Medicare beneficiaries222 premiums will remain constant; however, the 25 percent not protected by the law wil l likely see their premiums rise from an average of $96.40 per month this year to $119 in 2010, and $123 in 2011. Beneficiaries may also face premium increases for the Medicare 223Part D224 drug benefit because they are not protected by the law that tying pre mium increases to Social Security increases ( Kaiser Daily Health Policy Report, 5/4 ; Ne w York Times, 5/2 ). CMS Announces Proposed Regulations: The Centers for Medicare & Medicaid Services (CMS) announced numerous proposed regulations last week, including one proposal to reduce Medicare payments for inpatient hospital care by 0.5 percent and one reducing payments to skilled nursing facilities by 1.2 percent. CMS said the cuts are adjustments for excessive payments over the past years when the agency adjusted hospital coding procedure that unintentionally resulted in overpayments. In a pr ess release, CMS noted that the rate adjustments would total roughly 8.5 percent, which they intend to implement through 2012. CMS also released proposals to increase payments to long - term care hospitals by 2.4 percent and create data quality standards fo r those hospitals by 2012 ( Kaiser Daily Health Policy Report, 5/4 ). Competition Among Large Pharmacies May Change Industry: The Wall Street Journal (WSJ) reports that a greements between large pharmacies and employers pose new and direct challenges to the traditional role of pharmacy benefits managers that may cause major changes in the prescription drug industry. The WSJ cites one deal in which , Wal - Mart and Caterpillar , a heavy equipment maker, negotiated fixed markups on drug prices that reduced Caterpillar222s costs enough to allow them to waive copays for generic drugs purchased at Wal - Mart (F inancing News Pulse 4/6 edition). Similarly , Walgreens created a health care program that provides basic health care services at the Walgreens health centers and at certain employers, like Toyota, and is currently in talks with Toyota to develop a deal similar to the Wal- Mart agreement ( Kaiser Daily Health Policy Report, 5/4 ). Tenet Report s Declining Hospital Admissions and First Quarter Profits: Tenet Healthcare reported that hospital admissions dropped by less than 1 percent in the first quar ter of 2009 but that private insurance admissions decreased 2 percent. However, Tenet reduced expenses and earned $178 million in the first quarter of 2009, compared with a loss of $31 million in the first quarter of 2008. Industry analysts predict that private insurance admissions will continue to fall t hrough 2010 due to job losses ( Kaiser Daily Health Policy Report, 5/6 ). SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 5 S an Francisco May o r Appointed to Task Force on Health Reform: On May 4, the U.S. Conference of Mayors appointed San Francisco Mayor Gavin Newsom (D) to head the Mayors Task Force on Health Care Reform . The task force will work with the Obama administration and Congress on health care reform priorities. Mayor Newsom oversaw the creation and implementation of the Healthy San Francisco insurance program (Financing News Pulse 3/13, 4/6, 5/4 editions) that currently insures 39,000 city residents. Mayor Newsom is also a candidate in the 2010 California gubernatorial race ( San Francisco Business Times, 5/4 ). Studies Find Mental Health Prescription Utilization on the Rise Along with Mental Health Care Costs: Two stu dies recently published in Health Affairs and authored by Harvard Medical School health economist Dr. Richard Frank , found that, from 1996 to 2006, prescriptions for mental health medication increased by 73 percent among adults and 50 percent among ch ildre n. In addition, the number of seniors receiving psychotropic drugs doubled over that period. The studies also found that per - capita spending for mental health care increased by 30 percent over the same period with almost all the spending attributable to prescription drug increases. Dr. Frank attributes the increased costs and prescription rates to better access to care ( Kaiser Daily Health Policy Report, 5/5 ; Reuters, 5/5 ). Abstracts of both studies are available on the Health Affairs website here and here . US Attorney Tells Senate Panel That CMS Must Make Changes to Stop Medicare Fraud: After a report by the HHS Inspector General revealed that a disproportionate amount of Medicare fraud occurs in South Florida (Financing News Pulse 4/27 edition ), U.S. Attorney R. Alexander Acosta told the Senate Special Committee on Aging that, though his office has increased their prosecution efforts, the best way to combat Medicare fraud is to make policy changes at CMS. Acosta suggested that CMS pay providers more quickly , but use logical heuristics to detect and deny fraudulent billings ( Miami Herald, 5/7 ). AHRQ Rep ort Says Health Care System has Made Little Progress Improving Patient Safety: The Agency for Healthcare Research and Quality (AHRQ) released a report May 6 assessing the quality of care in the U.S. health care system. The report, the National Healthcare Quality Report, found measurable improvement in fewer than half of the 38 patient safety measures covered and further found that patient safety measures have declined by an average of 1 percent annually every year since 2003. AHRQ also released the National Healthcare Disparities Report, which found that the U.S. has not made substantial improvements in lessening health care disparities ( Kaiser Daily Health Policy Report, 5/7 ). In related news, Senator Jay Rockefeller (D - WV) proposed creating a new executive branch office to improve health care quality in federal programs and grant ing additional power to the AHRQ to coordinate health care quality efforts ( Kaiser Daily Health Policy Report, 5/5 ). Both AHRQ studies are available on agency222s website . GE to Develop New Lower -Cost Medic al Products : On May 7, General Electric (GE) announced an expansion of its health care business, allocating $6 billion over six years to develop 100 new medical devices by 2015. Each of the devices will meet health care quality improvement standards, lowe r health care costs, and increase access to care by 15 percent. The initiative allocates $3 billion for developing new products and $2 billion to expand GE222s electronic health records (EHR) service in rural and underserved regions ( Kaiser Daily Health Policy Report, 5/8 ). SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 6 Update: Few Hospitals Adopt VA222s EHR System: Last week222s Financing News Pulse (5/4 edition) reported on the Veterans Health Administration222s electron ic health records (EHR) system, Veteran222s Health Information Systems and Technology Architecture (VistA), which offers a low cost EHR solution for non - VA hospitals. However, few hospitals have elected to implement VistA. One major obstacle facing VistA implementation is that the system, though expandable, is not primarily designed for billing because the VA deals with only one payer 227 the federal government. In addition, there are only a small number of firms capable of installing and running VistA. In re lated news, Senator Jay Rockefeller (D - WV) has proposed a bill ( SB 890 ) which would develop open - source EHR technology for safety net and rural care providers at little or no cost. Senator Rockefeller is seeking $10 billion to fund the proposal ( Kaiser Daily Health Policy Report, 5/4 ). U pdate : UAW Plans to Sell Chrysler Stock As Soon As Possible : Last week222s Financing New Pulse (5/4 edition) reported that the United Auto Workers (UAW) settled with Chrysler Group to accept a 55 percent share in the company as part of Chrysler222s scheduled $10.9 billion contribution to the Voluntary Employees222 Beneficiary A ssociation (VEBA) which pays for the UAW222s retiree benefits. On Ma y 4, the UAW announced plans to sell its 55 percent stake in Chrysler as soon as possible to fund the VEBA , which begins paying out benefits in 2010 ( Kaiser Daily Health Policy Report, 5/5 ). Around the Hill: Hearings on H ealth Financing Senate Finance Committee: Health Care Overhaul 10:00 a.m. May 5, 106 Dirksen TBA, May 14, TBA Senate Special Aging Committe e: Medicare and Medicaid Fraud 2:00 p.m. May 6, 216 Hart Hou se Ways and Means Committee : Health Reform in the 21st Century 10:00 a.m. May 6, 1100 Longworth Senate Appropriations Subcommittee on Agriculture, Rural Development, FDA, and Related Agencies : Swine Flu 10:00 a.m. May 7, 106 Dirksen Senate Health, Education, Labor and Pensions Committee : Labor Department, FDA Nominations 10:00 a.m. May 7, 430 Dirksen 2:00 p.m. May 7, 430 Dirksen House Appropriations Committee : Fiscal 2009 War Supplemental 10:00 a.m. May 7, 2359 Rayburn House Veterans222 Affairs Subcommit tee on Health : VA222s Health Infrastructure 10:00 a.m. May 7, 334 Cannon House Education and Labor Committee : Flu Virus Preparedness 10:00 a.m. May 10, 2175 Rayburn House Veterans222 Affairs Committee : Innovative Technologies and Treatments for Veterans 10: 00 a.m. May 13, 334 Cannon SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 7 Around the States: State and Local Behavioral Health Financing News Arizona Medicaid Rolls Grow, Require Additional State Funds : The Arizona Health Care Cost Containment System (AHCCCS) reports that the state222s Medicaid program grew by 11 percent between April 2008 and April 2009, adding nearly 102,000 enrollees . In a memo to state legislators and Governor Jan Brewer222s (R) budget staff, the AHCCCS said the increased enrollment will cost the state an additional $253 million in t he coming fiscal year ( AP via Tucson Citizen, 5/7 ). California Lake County Board of Supervisors Cuts Mental Health Positions : On May 5, the Lake County Board of Supervisors accepted a recommendation from the Department of Mental Health to reduce the department222s 66 - person full- time staff by 18 positions, 12 of which are currently vacant. In addition, the board will lay off three part time staffers and transfer one employee. The depart ment had asked permission to consider the staff cuts in April (Financing News Pulse 4/20 edition) to address a $1.1 million budget deficit for the coming fiscal year. The staff cuts total $50 5,000 in savings for the county ( Lake County Record - Bee, 5/5 ; Lake County News, 5/6 ). Santa Cruz County Budget Proposal Includes Health Cuts : In an attempt to close a $25 million budget deficit, the Santa Cruz County Administrative Office released its FY2010 budget proposal that cuts 140 county jobs, reduces departm ent budgets by about 20 percent, and cuts funding for nonprofit organizations providing safety net services. The budget cuts the Department of Public Health by roughly $11 million and eliminates about 60 of its 530 - person staff. The cuts will affect mental health and substance abuse treatment as well as clinical care ( San Jo se Mercury News, 5/4 ). Colorado Governor Line - Item Vetoes Five Policy Statements, Signs Budget : The Financing News Pulse (4/27 edition ) reported that the Colorado L egislature approved an $18.8 billion budget for the governor222s signature on April 22. On May 1, Governor Bill Ritter (D) signed the budget bill ( SB 259 ) and line - item - vetoed five policy footnotes . To compensate for a $1.4 billion shortfall, the $17.9 billion budget t ransfers $65 million in tobacco settlement funds from health care programs t o the state222s general fund, cutting aid to health clinics but maintaining funding for safety net programs including Medicaid. The budget will not be balanced until several other budget bills pass, including a cigarette tax increase expected to generate an additional $30 million , are passed ( AP via Examiner, 5/1 ; D urango Herald, 5/2 ; Denver Post, 5/2 ). Delaware Proposed Bill Would Allow All Children to Enroll in SCHIP : A bill ( HB 139 ) proposed on April 30 by Lt. Governor Matt Denn (D) and two Democratic lawmakers would expand Delaware222s State Children222s Health Insurance Program ( SCHIP ) , Delaware Healthy Children, to all of the state222s children. The program current restricts enrollment to children in families with incomes up to 200 percent of the FPL and charges monthly premiums of $10 to $25. Under the proposed bill, children from families earning more than 200 percent of the FPL could enroll their children in the plan for a monthly premium of $110, SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 8 the average monthly cost of care under the program. The measure would prevent families from withdrawing their children from employer- sponsored coverage to enroll them in the program and would require that children be uninsured for three months prior to enrollment unless their coverage has been recentl y terminated ( Kaiser Daily Health Policy Report, 5/6 ). Florida Legislators Learn of Requirement to Expand Medicaid Pilot : State legislators recently learned that a prov ision in F ormer Governor Jeb Bush222s (R) Medicaid reform plan of 2005 requires the state to expand the program statewide or face a $300 million penalty. The Medicaid reform pilot , which se veral lawmakers feel has failed and some wish to end altogether (Financing News Pulse 3/6, 2/27, 1/30 edition s), shifts patients into a managed care plans to make the public system more like a private health care company. T he pilot currently operates only in Broward County and the Jacksonville area and l egislators plan to ask CMS for additional time to fulfill the st atewide deployment requirement. H owever, legislators are also debating saving $246 million in surplus hospital funds as a precaution in case they must fill the $300 million Medicaid funding gap. Hospitals, wh ich would face most of the Medicaid cut, favor saving the money but are split on when to allocate it. Charity care hospitals want the state to save the money and allocate it when necessary; whereas, Florida222s private hospitals want legislators to allocate the current share of the $246 million immediately ( Miami Herald, 5/2 ; Kaiser Daily Health Policy Report, 5/7 ). Legislature Sends KidCare Expansion to Governor : The Florida House and Senate both approved legislation May 1 ( SB 918 ) that shortens the amount of time families must wait after losing private health coverage before they can enroll in K idCare, Florida222s program subsidizing health insurance costs for families earning up to 200 percent of the FPL. The bill would also allow families dropped from the program for failure to pay to re - enroll in the program more quickly. The bill, initially s talled by Republican legislators for cost concerns, now heads to Governor Charlie Crist (R) ( Kaiser Daily Health Policy Report, 5/5 ). WellCare Agrees to Settle Medicaid , SCHIP Fraud Charges : On April 5 , the U.S. Attorney222s Office reached an agreement with WellCare Health Plans Inc., the largest Medicaid managed care provider in Florida, over allegations that the company defrauded the Florida Medicaid program and the stat e222s Healthy Kids Corporation of roughly $40 million between 2002 and 2006 . Under the agreement reached with U.S. Attorney A. Brian Albritton , WellCare will pay $40 million in civil penalties and an additional $40 million to the state health programs it defrauded. The U.S. Attorney will also appoint an independent monitor to review the company222s operations. Though the U.S. Attorney222s office was confident it could win the case , Albritton elected to settle to avoid crippling the company and hurting the comp any222s employees and beneficiaries ( Chicago Tribune, 5/5 ; Jacksonville Bus iness Journal, 5/5 ; Kaiser Daily Health Policy Report, 5/6 ). House Passes Legislation to Improve DCF Substance Abuse Services : On April 30, the Florida House passed a bill ( HB 1493 ) to establish regulation and oversight for substance abuse services provided by the Department of Children and Family Services (DCF). The bill would change licensing requirements to SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 9 reduce the number of licenses required by treatment providers and allow the department to better indentify eligible individuals ( West Side Gazette, 5/6 ). Legislature Approves Bill to Restructure Medicaid C ouncil: The Florida Legislature has approved a measure that will prohibit lobbyists from sitting on the Low Income Pool Council (LIP Council), which recommends how to distribute the state222s Medicaid funds (Financing News Pulse 4/27 edition). In addition, the bill allows the Senate president and House speaker to appoint six new council members. The bill now awaits approval from Governor Charlie Crist (R) ( Panama City News Herald, 5/7 ). Georgia Governor Approves Overhaul of State Health Services : On May 4, Governor Sonny Perdue (R) approved legislation ( HB 228 ) (Financing News Pulse 4/13, 3/13 editions) splitting the Department of Human Resources into three distinct agencies, a Department of Behavioral Health and Developmental Disabilities (DBHDD) , a Department of Community Health (DCH) , and a Department of Human Resources (DHR). The DCH, headed by current Community Health Commissioner, Dr. Rhonda Medows , will handle Medicaid, PeachCare, and other public health programs while the reformed DHR will focus on child, family, and elderly services and be head ed by Commissioner B.J. Walker . Dr. Frank Shelp, clinical director of Georgia Regional Hospital in Savannah, will head the DBHDD . Governor Perdue said the new agencies will be in place July 1 ( Atlanta Journal Constitution, 5/4 ; Kaiser Daily Health Policy Report, 5/6 ). Illinois State Still Owes Hospitals $25 Million for Medicaid: The Financing News Pulse ( 4/20 edition) reported that , since Illinois lagged behind in hospital Medicaid reimbursem ents, Governor Pat Quinn (D) drew down $200 million in ARRA funding for the Department of Healthcare and Family Services to pay hospitals. However, the state still owes over $25 million to hospitals in the Metro East and, as of April 9, the state owed mor e than $2 billion to hospitals throughout the state. The Illinois Hospital Association reports that the average Medicaid payment cycle is 160 days and that some hospitals wait as long as 350 days for Medicaid payment s. The state must resolve the payment delays and setup a 30 - day payment cycle by June 30 or risk losing ARRA Medicaid funding ( St. Louis Business Journal, 5/1 ). Indiana Hospital Freezes Staff Pay, Goes Forward With Expansion: St. Joseph Regional Medical Center in South Bend, Indiana announced plans to cut executive pay by 8 percent and cut the hours of some hospital departments while going forward with plans to open its $355 million new facility in Mishawaka , Indiana later this year. Hospital officials cited the rising number of charity care patients and low Medicaid and Medicare reimbursement rates as key factors in the decision. Nearby Elkhart General Hospital announced 4 percent e mployee pay cuts one week earlier ( AP via Chicago Tribune, 5/2 ). CMS Cuts Funding for Lake County Nursing Home : On April 30, CMS notified Sebo222s Nursing and Reh abilitation Center , owned by Extended Care Consulting , that the agency is terminating its Medicare and Medicaid contracts with the center on May 15. The action comes after an inspection found that SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 10 Sebo had 49 health violations between December 2007 and February 2009, four times the state average ( Post - Tribune, 5/1 ). Iowa Poll Shows Most Iowans Want a Public Health Plan: A poll conducted by the Des Moines Register found that 56 per cent of Iowa residents support the creation of a national public health plan . The poll also showed that, i f Congress passed a public plan, 47 percent of Iowans not already on a public plan would consider switching to the new plan ( Des Moines Register, 5/3 ). Louisiana State Cuts Medicaid Reimbursements : On May 1, the Department of Health and Hospitals issued an emergency rule cutting Medicaid provider payments by 7 percent effective immediately. The move is part of an effort to reduce Louisiana222s FY2010 budget by $445 million but will require approval from the legislature to continue into FY2010 on July 1. Department officials said that starting the cuts now all ow the state to save more, noting that waiting for legislative approval allows the state to cut the rate for only eight months due to legislative and administrative delays ( Kaiser Daily Health Policy Report, 5/7 ). Maine Governor Proposes Additional Budget Cuts to Combat Declining State Revenue : On May 1, Governor John Baldacci (D) proposed additional budget cuts aimed at closing the current - year $129 million budget deficit as well as the projected $440 million budget deficit for FY2010 and FY2011. The governor222s plan reduces funding to numerous state agencies, including health and human services, and increases health insurance cost sharing for new state employees , but do es not make additional layoffs ( Reuters, 5/1 ; AP via WMTW, 5/4 ). Massachusetts Governor Proposes Plan to Address Current Year Budget Problems: To deal with declining state revenues that have caused a $953 million shortfall in the remaining two months of the current - year budget, Governor Deval Patrick (D) plans to use $412 million in ARRA funds that he had planned to spend on education and $461 million from the state222s 223rainy day224 fund to make payments to cities and towns. The Legislature must approve the governor222s plan to draw money from the rainy day fund ( Boston Globe, 5/8 ; Boston Globe, 5/7 ). Hospitals Affected by Recession: A survey b y the Massachusetts Hospital Association found that 59 percent of hospitals reported fewer elective surgeries in fiscal years 2008 and 2009 than in previous years. In addition, the survey found that profit margins dropped from an average of 0.7 percent in the last quarter of 2008 to 0.3 percent in the first quarter of 2009. The association reports that, to cope with lowered profits, hospitals are cutting jobs and postponing expansions ( Kaiser Daily Health Policy Report, 5/5 ). Study Shows High Health Care Costs Affect Insured Residents Even Under State Mandate : A study by Families USA showed that 64 million people are part of families paying at least 10 percent of their pretax income on health care and that about 19 million U.S. residents spend over 25 percent of their SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 11 income on he alth care. The study fo u nd that, in Massachusetts , over one million residents pay at least 10 percent of their income on health care and 94 pe rcent of those residents are insured. The study concludes that the growing cost of health care is due to prescription drugs, hospital care, and medical screenings, which cannot be alleviated simply through an insurance mandate ( Kaiser Daily Health Policy Report, 5/5 ). Michigan Lawmakers Approve Governor222s Cuts, Health Programs Affected : On May 5, Michigan legislators approved Governor Jennifer Granholm222s (D) executive o rder to cut the state budget by $304 million. The governor222s cuts reduce funding for local communities by $41 million, including a 17 percent cut to local health departments and a $12.5 million reduction in local mental health funding. In addition, Gover nor Granholm reduced Medicaid payments to doctors and hospitals by 4 percent, to save $13 million in state funding and resulting in a loss of $53 million in total Medicaid funds . In total, the Department of Human Services will lose $121 million in state and federal funds and the Department of Community Health will lose $57.7 million. The executive order also cuts $3.8 million from the Healthy Michigan Fund . The cuts come as the result of the state budget deficit, now $1.3 billion, and many expect another executive order after the May 15 revenue estimates ( Detroit Free Press, 5/5 ; AP via Forbes, 5/ 5 ; Detroit Free Press, 5/4 ). Survey Finds More Doctors Report Full Practices , Fewer Accepting Medicaid: A su rvey conducted by the Michigan Department of Community Health found that 62 percent of Michigan doctors report that their practice is full or nearly full, up from 60 percent in 2007 and 42 percent in 2005. The survey also found that only 85 percent report ed providing care for Medicaid patients, down from 87 percent in 2007. Finally, the department222s survey found that 34 percent of the states physicians are primary care physicians, more than the national average ( Detroit Free Press, 5/4 ; Kaiser Daily Health Policy Report, 5/6 ). Waterford School District to Open Mental Health Clinic for Elementary Students : The Waterford School District opened the Counseling Connections Center on May 7 to provide mental health counseling and substance abuse prevention and education to Waterford222s students b etween ages 5 and 11. Funding for the school comes from a $5.7 million Safe School/Health Students Federal Grant that the district won last year. Fifty - six other districts also won the grant, including Muskegon Public Schools in Michigan ( Detroit Free Press, 5/6 ). Mississippi Legislators Fail to Reach Budget Agreement, Medicaid a Sticking Point : Despite a ten tative Medicaid agreement reached in April 29 (Financing News Pulse 5/4 edition), Mississippi lawmakers adjourned on May 8 without reaching a compromis e on the state222s FY2010 budget, vowing to reconvene May 26 with an agreement. The main issue of contenti on is over Medicaid funding; House leaders seek to increase spending by $45 million while Senate leaders and Governor Haley Barbour (R) are seeking a $90 million increase (Financing News Pulse 3/13 edition) ( Memphis Commercial Appeal, 5/8 ). SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 12 Missouri House Rejects Medicaid Expansions; Legislators Agree to Pursue Other Health Care Options : On May 6, the Missouri House rejected a budget bill ( HB 11 ) that would have used hospital funds, including those from a new hospital tax, to raise $52.6 million and draw down $94.2 million in federal matching funds . The plan would have used the money to raise the income eligibility cap for parents on the state222s Medicaid program to 50 percent of the FPL and insure roughly 35,000 additional residents. Republicans in the House used their majority to defeat the bill; however, House and Senate lawmakers agreed to fund another health expansion for the same amount but have not settled on any plan details ( Kansas City Star, 5/6 ; Kansas City Star, 5/6 ; Missouri Net, 5/6 ; AP via Forbes, 5/7 ; Kaiser Daily Health Policy Report, 5/8 ). Montana Update: Three Mental Health Bills Become Law Without Governor222s Signature : Three mental health bills ( HB 130, HB 131, and HB 132 ) covered previously in the Financing News Pulse (5/4, 4/27, 4/13 editions) became law without Governor Brian Schweitzer222s (D) signature. The bills, which will cost roughly $2.5 million, authorize state matching funds to pay counties for crisis beds, require the Department of Public Health and Human Services to con tract with hospitals and mental health treatment centers for crisis beds, and allow individuals facing involuntary confinement to opt for inpatient treatment ( AP via Billings Gazette, 5/5 ). New Behavioral Health Unit in Helena : Saint Peter222s Hospital of Helena, Montana unveiled a new behavioral health unit, scheduled to open next week, which will provide mental health treatment for up to 23 adults. The facility is expected to bring 31 jobs to the Helena area when operating at full capacity ( CBS, 5/5 ). Nebraska Child Behavioral Health Bill Advances : On April 30, Ne braska legislators gave second round approval to a modified child behavioral health bill ( LB 603 ) that spends $16 million over two fiscal years to create a statewide crisis hotline, hire employees to help families navigate the state222s behavioral health sys tem, and expand mental health services for children. The bill dedicates state funds to expand mental health care for children by raising the income eligibility cap for Nebraska222s SCHIP, drawing as much as $3.7 million in additional federal funds. The bill originally sought $160 million (Financing News Pulse 2/27 edition) ( Omaha World - Herald, 5/1 ; AP via Grand Island Independent, 4/30 ). Legislature Gives Budget First Round Approval: On May 5, the Nebraska Legislature gave first round approval to two - year $7 billion budget. Spending in the budget increases an average of 1 percent each year, far below the historical average of 7 percent, and relies on $515 million in ARRA funds for education and Medicaid. The budget reduces a scheduled 2 percent Medicaid provider reimbursement increase by .5 percent and draws over $254 million from the state 222s reserve fund to close a budget shortfall ( AP via Forbes, 5/6 ). SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 13 New Jersey Bayonne Board of Education Changes Employee Health Plan: As part of a plan to pre vent the 2009 - 2010 school budget from raising local taxes, the Bayonne Board of Education voted on April 29 to impose numerous spending reductions including a change to the employee222s health benefits plan that the Bayonne Teacher222s Association claims is a violation of the teachers222 contracts. The change switches the teachers from the current self - insured plan to a state program, saving the school district more than $8 million in the coming year. Horizon Blue Cross/Blue Shield would continue to administer the new plan that teachers say provide a lower standard of coverage than the current self - insured plan . The change will also switch teachers to the state prescription drug program, which will increase copays from $2 to $10 under the old plan to $25 under the new plan . The Teachers Association plans to sue the Board over the change ( Hudson Reporter, 5/6 ). New York Mayor Drops Plan to Ask City Workers to Pay a Portion of Their Health Coverage: Mayor Michael Bloomberg (I) announced May 1 that he will no longer pursue a plan under which city employees would pay 10 percent of their health care premiums, saving the city $350 million. The mayor had hoped to negotiate the deal with unions; however, administration officials were unsuccessful in those negotiations and instead plan to fill the $4 billion deficit through other means, including sales tax increases ( New York Times, 4/30 ; New York Times, 5/1 ) Saratoga Pharmacy Sues State over Medicaid Pharmacy Reimbursements : Saratoga Pharmacy is appealing a decision by the Department of Health admin istrative law judge that the Lyell Avenue pharmacy failed to provide proper Medicaid paperwork and must forfeit $3.3 million in Medicaid payments from 2004 and 2005 (Financing News Pulse 2/27 edition) . The pharmacy contends that state law does not require pharmacies to document drug deliveries more stringently than in- store pickups and notes that Medicaid beneficiaries did not dispute that the medication was delivered. The state Supreme Court has scheduled a hearing for May 14 ( Democrat and Chronicle, 5/4 ). Update: HHS Names New York222s Medicaid Fraud Control Office Best in U.S. : Last week 222s Financing News Pulse (5/4 edition) reported that New York Attorney General Andrew Cuomo 222s Medicaid Fraud Control Unit recovered $263.5 million from Medicaid fraud cases in 2008 and recorded 143 convictions. On May 6, the HHS Office of Inspector General named New Y ork222s Medicaid fraud control office the best in the U.S. ( Kaiser Daily Health Policy Report, 5/8 ). Pennsylvania Senate Approves GOP Budget : On May 6, the Pennsylvania Senate approved a $27.3 billion Republican budget on a 30 - 20 party - line vote . The plan spends less than Governor Ed Rendell222s (D) proposed $28.9 billion budget and eliminates the governor222s proposals to take $375 million from the 223rainy day224 fund and rais e the state cigarette tax to generate $61 million. The budget also cuts $279.6 million in fun ding for charity care hospitals. The Senate budget uses $2.7 billion in ARRA funding and $26.2 billion in state revenue ( AP via Philly.com, 5/6 ; Pittsburgh Post - Gazette, 5/6 ; The Bulletin, 5/7 ). SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 14 State Moving Towards COBRA Expansion for Small Businesses : On May 5, the Pennsylvania Senate Banking and Insurance Committee approved a change in the state222s insurance law that would grant COBRA coverage to individuals laid off from companies with fewer than 20 employees. The bill ( HB 1089), which was referred to the Appropriations Committee on May 6, would make small business employees eligible for the COBRA subsidies included in the ARRA (Financing News Pulse 5/4, 4/20, 2/20 edition s). At least 40 other state s have passed similar 223mini- COBRA224 legislation to grant small business employees access to ARRA subsidies ( Bucks County Courier Times, 5/6 ; Philadelphia Inquirer, 5/5 ). South Carolina Health Bills and Cigarette Tax Stall in Senate : A bill to increase South Carolina222s cigarette tax from 7 cents per - pack to 50 cents per - pack and raise $150 million, including $100 million for a new health care program , has stalled in the Senate Finance Committee (Financing News Pulse 4/13 edition) . The program would cover 75 percent of health plan premiums for workers with annual incomes up to $21,600 and 67 percent of premium s for policies offered by businesses with 25 or fewer low - income workers; however, it would also require federal Medicaid waivers for those individuals, which some lawmakers worry would not be available in time. Senate Minority Leader John Land (D) said t he state should put the money into the Medicaid program where it c ould draw down $450 million in federal matching funds ( Kaiser Daily Health Policy Report, 5/7 ). Texas State Needs Additional $1 Billion for Health Care: On May 5, state officials announced that the state need s $1 billion to cover rising health care costs, largely due to increased Medicaid enrollment. The Chairman of the Senate Finance Committee, Steve Ogden (R- Bryan) says that, in light of the higher- than - anticipated health care costs, lawmakers must appropriate more money in the next two - year budget cycle currently under discussion and pass a separate emergency spending bill to cover the current year fund ing needs . If the state revenue estimates do not increase, state legislators may have to cut more than 1 percent from the budget currently under debate ( AP via Houston Chronicle, 5/5 ; Dallas Morning News, 5/6 ; Kaise r Daily Health Policy Report, 5/7 ). Proposed Legislation Would Add Children to Medicaid Program for Two Years : A proposal ( HB 1541) by Rep. Sylvester Turner (D - Houston) would expand the state222s Medicaid enrollment period from six months to one year and would likely add roughly 258,000 children to the Medicaid program. Designed to expire after two years, the bill is estimated to cost $297 million, which Turner wants to pay with ARRA Medicaid funding ( America - Statesman, 5/4 ). Legislature Approves Bill to Allow Medicaid Buy - In for Children with Disabilities : After approval the Texas L egislature , a bill ( SB 187 ) allowing children with c erebral p alsy, Down syndrome, or severe a utism to enroll in Medicaid regardless of income was sent to Governor James 223Rick224 Perry (R) for approval. Under the new legislation, children from families earning more than the current Medicaid income eligibility cap would pay a sliding scale fee to join the program. The author of the bill expects it will enroll 5,000 new children in the state222s Medicaid program ( Austin American Statesman, 5/1 ; Texas Legislature ). SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 15 House Approves Bill to Fund Local Regulation of Private Board and Care Home s : On May 1, the Texas House passed a bill ( HB 216 ) that would require the Health and Human Services Commission to set standards for private board and care homes that have avoided state regulation because they do not provide medical or therapeutic services. State mental health officials say the homes provide extremely poor care for many of the state222s mentally ill residents. The bill would cost $500,000 annually to fund five $100,000 local grants. A bill approved in the Senate on April 30 would require t he state to regulate the homes directly and will cost Texas $2 million annually ( Dallas Morning News, 5/2 ). Utah Hospitals Affected by Medicaid Cuts : The Utah Hospitals and Health Systems Association reports that 25 percent cut s to Medicaid reimbursements, effective July 1, are much steeper than hospitals anticipated and may require hospitals to impose fees on insured patients or reduce charity care to offset costs. In the current recession, 5,700 residents have enrolled in Utah222s Medicaid program and hospitals are facing increasing expenses from uninsured patients and technical change s in the Medicaid billing system ( Kaiser Daily Health Policy Report, 5/4 ). Washington State Releases Guidelines for Journalists Reporting on Mental Illness: Washington222s Mental Health Transf ormation Project and the University of Washington School of Social Work announced two new information resources to help the media report accurately on mental health and mental illness. The May 5 announcement unveiled the Media Guide to Reporting on Mental Illness and a new website, www.mentalhealthreporting.org . A content analysis of 10 years of news stories prompted the guide when it revealed that stories often used derogatory terms to describe indivi duals with mental health problems ( Washington State Department of Social and Health Services Press Release, 5/5 ). West Virginia Governor Vetoes Mental Health Bill, Promises to Fund Mental Health: On May 7, Governor Joe Manchin (R) vetoed a bill ( SB 672 ) that would have increased Medicaid reimbursement rates for community mental health treatment providers. Instead, the governor has promised to devote $12 million in combined federal and state funds, to reduce crowding in the state222s psychiatric hospitals and improve community - based care. On the same day, the governor also signed SB 687 to maintain the West Virginia Comprehensive Behavioral Health Commission ( AP via Charleston Daily Mail, 5/7 ; ABC, 5/7 ; CBS, 5/7 ). Behavioral Health Bureau Releases Tentative Treatment Budget : This week , the Bureau of Behavioral Health and Health Facilities sent its tentative FY2010 budget allocations to behavioral health care providers in the state. In previous years, the budget figures were concrete and allowed providers to plan their budgets; however, this year, the budgets are projections based on proposed cuts to West Virginia222s budget. The Bureau222s budget estimates that behavioral health cuts will total $2.5 million but the Dep artment of Health and Human Resources called the number 223very preliminary224 ( West Virginia Gazette, 5/3 ). SAMHSA222s Weekly Financing News Pulse May 11, 2009 5/11/09 16 Wisconsin Governor Proposes Budget Cuts; Medicaid Services Safe, Provider Reimbursements Not : On May 7, Governor Jim Doyle (D) proposed a plan to offset the state222s budget deficit, now estimated to reach $6.5 billion by mid- 2011. Among his proposed cuts, Governor Doyle suggests across - the - board agency cuts of up to 5 percent and sixteen days of furloughs for nearly all state workers over two years. The governor notes that, though agency cutbacks may result in layoffs , he will not allow the state to reduce Medicaid services. The governor d id not rule out provider reimbursement cuts. Governor Doyle222s plan also suggests postponing a planned expansion of BadgerCare Plus , the state222 s health insurance program for childless adults ( AP via Chicago Tribune, 5/ 7 ; Wisconsin Sate Journal, 5/7 ).
