State Senate Panel Approves Budget, Increases Medicaid Primary Care Fee Uplift

The Michigan House and Senate Appropriations Subcommittees returned from the two-week spring break on April 12 and immediately began work on the fiscal year 2016-2017 budget. Both subcommittees considered and passed their respective budgets, as proposed, sending them to the full Appropriations committee in each chamber for further deliberation.

The House budget proposal for the Michigan Department of Health and Human Services (MDHHS), House Bill 5274 (H-1), includes overall funding of $24,730,517,900, which is approximately $350 million (1.4 %) less than the Governor’s budget request. The House budget included several notable provisions of interest to MAFP, including:

• Level funding of $33 million GF* for the Medicaid Primary Care Fee Uplift, which increases Medicaid reimbursement rates for certain primary care services performed by eligible primary care providers to 78% of Medicare rates.
• No cuts to Graduate Medical Education (GME), requesting funding of $162.8 million gross ($56.1 million GF).
• Level funding for the Michigan Essential Health Provider Program, also called the State Loan Repayment Program, at $3.591 million gross.
• $15 million in funding for evaluation and assistance to residents exposed to lead in the City of Flint, which aligns with the Governor’s budget request.
• $108.7 million GF, $3.42 million gross for the Healthy Michigan Plan. The program has been funded entirely by the federal government; however, as was anticipated, the state is expected to begin contributing, starting with a 5% match in FY 2017. The House budget proposal removes $19.5 million gross ($5.6 million GF) for the Healthy Michigan call center and reduces Healthy Michigan marketing and advertising $1 million Gross ($500,000).
• $112.7 million gross ($46.8 million GF) to support 5,250 persons receiving Hepatitis C treatments and for estimated Cystic Fibrosis treatment costs.
• New language requiring MDHHS to work within a workgroup to make recommendations on policy and financing to improve coordination of behavioral and physical health services. The Governor’s budget proposed the transfer of management of Medicaid behavioral health services from Community Mental Health (CMHs) to the Medicaid Managed Care Organizations.
• New language permitting MDHHS  to pilot a Direct Primary Care program.
• Revised language on submission of quality data and program costs for hospitals that are receiving GME payments.
• $850,000 for the Western Michigan University Homer Stryker MD School of Medicine to identify relevant biomarkers that predict the risk of opioid abuse and overdose.

As is typically the case, the Senate’s proposal, SB 789 (S-1), deviated somewhat from the House. Two specific highlights include an increase in the Medicaid Primary Care Fee Uplift by 6%, effectively bringing Medicaid reimbursement rates for those services to 83% of Medicare—a big victory for primary care—as well as a detailed Direct Primary Care (DPC) pilot proposal. Under the proposal, 2,400 Medicaid enrollees from Wayne, Oakland and Livingston counties in the following six eligibility categories will be eligible for coverage in a DPC arrangement: 1) Childless adults, (2) Children ages 0-6, (3) Children ages 7-18, (4) Parents, (5) Elderly, and (6) Disabled. The monthly DPC enrollment fee will not exceed $70 a month for all primary care services, and any and all costs outside of the eligible primary care services, including catastrophic costs, will be covered by the Medicaid health plan. Fifty percent of the net total savings resulting from implementation of the pilot, while the remaining 50% shall return to the state as lapsed Medicaid funds.

Much of the final state budget work will be completed in a conference committee once both chambers pass their respective budgets for each department, and following the May revenue estimating conference where projections are made that determine the revenue available for appropriation. Lawmakers are anticipating a June deadline to complete work on the fiscal year 2016-2017 budget before a busy campaign season kicks off.

*GF = General Fund or state dollars