MHA Board Discusses State Healthcare Budget and Proposed Cuts to Medicaid

Posted on February 14, 2020

The MHA Board of Trustees addressed several critical policy and advocacy matters at its Feb. 12 meeting. They included a review of Gov. Gretchen Whitmer’s fiscal year (FY) 2021 budget priorities.

Despite challenges to the state general fund, the MHA worked with the administration to avoid cuts to hospitals in the FY 2021 budget. The governor’s executive budget recommendation included continued funding for rural and obstetrical care, protections for disproportionate share hospitals and graduate medical education, additional Medicaid coverage for postpartum women, and a proposed rate increase for outpatient services. If approved by the Legislature and Centers for Medicare & Medicaid Services (CMS), it could mean a $300 million increase in Medicaid reimbursements for hospitals from April 1, 2020, to Sept. 30, 2021, the first increase in nearly 20 years.

The governor’s proposed budget would pay for the increased hospital funding largely through additional retention taxes, which are an important mechanism used by Michigan and many other states to fund state Medicaid programs in lieu of raising state general fund dollars.

The continued viability of certain retention programs and other special financing mechanisms was another key topic the board discussed. The CMS has proposed changes to Medicaid program financing and supplemental payments, known as the Medicaid Fiscal Accountability Regulation (MFAR), that could result in drastic underfunding of state Medicaid programs and significant provider payment cuts. If the CMS MFAR rule is implemented, the state of Michigan could face a $600 million hole in its Medicaid budget. The MHA has been working closely with the American Hospital Association (AHA), as well as Whitmer’s office, to oppose this proposed rule. AHA General Counsel Mindy Hatton joined the MHA Board of Trustees by phone to discuss state and federal strategies to oppose the implementation of MFAR.

In furtherance of the board’s identification of workplace safety as a key priority, the board heard a report on efforts of the MHA Keystone Center to address this growing area of concern through data collection tools and training collaboratives. The board also received an update on the work of a task force chaired by Tina Freese Decker, president & CEO, Spectrum Health, Grand Rapids, and MHA Board officer, charged with providing recommendations on the governance, specific use and long-term strategies relative to the collection and use of an expanded set of data to improve hospital advocacy and regulatory needs, as well as operational needs to manage financial risk and care management. The task force will complete its work by June 2020.

Finally, a standing agenda item over the past several years is the opportunity for a board member to present an experience from their organization that highlights hospitals’ commitment to improving patient safety and quality. For the February board meeting, Rob Casalou, president and CEO, Trinity Health Michigan Region, shared a story related to opioid awareness and safety. Members with questions should contact Amy Barkholz at the MHA.

Tags: Medicaid, AHA, CMS, state budget, MHA Board of Trustees, Amy Barkholz

Posted in: Issues in Healthcare, Member News

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