House, Senate Community Health Budgets Clear First Hurdle


This week, House and Senate Appropriations Subcommittees on Community Health completed work on their respective budget proposals for Fiscal Years (FY) 2016 and 2017. Both budgets had notable differences from the Governor’s budget proposal released in February, including competing approaches to addressing Graduate Medical Education (GME) funding, a pharmacy benefit carve-out, as well as the Health Insurance Claims Assessment (HICA).


Graduate Medical Education (GME)

While the House subcommittee concurred with the Governor’s recommendation to raise revenue for GME through an increase in the hospital provider tax for the upcoming fiscal year, House appropriators did not concur with the recommendation to finance special payments to rural hospitals through a provider tax.

The Senate subcommittee took an entirely different approach, and proposed a full restoration of state general fund dollars for GME. To finance the proposal, the Senate proposed leveraging a hospital provider tax mechanism that would, in effect, have no net impact on the hospitals. Interestingly, the Senate budget also includes boilerplate language that would require hospitals to submit a report to the Department of Community Health (DCH) disclosing all direct and indirect costs associated with residency training programs. The language also directs DCH to convene a workgroup to develop new metrics, based on the reporting, for the distribution of GME funding.

MAFP supports full restoration of GME funding in concert with policy changes that will provide more transparency and accountability to the program.

Medicaid Pharmacy Benefit

The House and the Senate subcommittees also split with the Governor over a proposed change to the Medicaid pharmacy benefit, which would create a single formulary under the Medicaid program. While they do not concur with the change, the budgets still assume savings that is assumed under the Governor’s proposal, requesting that DCH and the contracted Medicaid health plans work together to achieve the formulary savings.

MAFP supports the Governor’s proposal to create a single formulary under the Medicaid program so long as it is not more restrictive than the current formulary for traditional Medicaid.

Health Insurance Claims Assessment (HICA)

In addition, both subcommittees rejected the Governor’s proposal to raise HICA from 0.75 percent to 1.3 percent over concerns that, “it would increase the cost of health care in Michigan,” according to Robert VerHeulen (R-Walker), House Community Health Subcommittee Chairman. Instead, the respective chambers’ budgets include proposed reductions in other parts of the budget to finance the resulting budget shortfall.

MAFP has no official position on HICA.

Healthy Michigan Plan

Both budgets concurred with the Governor’s funding request for the Healthy Michigan Plan, which remains entirely federally funded.

MAFP supports the Healthy Michigan Plan which expands access to Medicaid for adults in Michigan with incomes at or below 133 percent of the federal poverty line (among other things). 

Other Issues

Finally, proposed budgets concurred with the Governor’s recommendation to continue funding for the Medicaid Primary Care Fee Uplift (with the Senate budget requiring DCH to examine including neonatal subspecialists in its definition of “primary care provider”), as well as the Michigan Primary Care Loan Repayment program – both welcomed developments for Family Physicians and Family Medicine residents and students in Michigan.

MAFP supports both maintaining the Medicaid fee uplift and making it permanent, and has been an outspoken advocate for the loan repayment program.

What's Next?

Now the bills move to the full Appropriations committees for further debate. Final decisions will likely hinge on the outcome of the May Revenue Estimating Conference.