MHA Values Work of Michigan Legislature on FY 2022 State Budget

MHA CEO Brian Peters

The following statement can be attributed to Brian Peters, CEO of the Michigan Health & Hospital Association. 

MHA CEO Brian PetersOn behalf of Michigan hospitals and health systems, we value the work of the Michigan Legislature to pass a budget that protect MHA priorities that include fully funding the Healthy Michigan plan, the rural access pool, the obstetrical stabilization fund, and maintaining rate increases for Medicaid and critical access hospitals. We also commend the legislature for expanding postpartum coverage to a full year for mothers on Healthy Michigan. However, more work remains, particularly to address the behavioral health crisis in Michigan. We look forward to working with the legislature through the supplemental appropriations process to secure transformational behavioral health solutions. 

Proposed Policy on Medicaid Payments for Rural Hospitals Released

The Medical Services Administration (MSA) recently released a proposed policy to implement the supplemental budget appropriation for fiscal year (FY) 2020, which included additional general funds to increase critical access hospital reimbursement.  Pending approval by the Centers for Medicare & Medicaid Services (CMS), the proposal would:

  • Restore the rural access pool for small rural hospitals and sole community hospitals.
  • Remove critical access hospitals (CAHs) from the rural access pool.
  • Increase Medicaid outpatient rates for CAHs effective Jan. 1, 2020

Medicaid outpatient services provided by CAHs on and after Jan. 1, 2020, would be paid 71.7% of the Medicare outpatient prospective payment system (OPPS) rate, excluding an area wage adjuster, upon approval by the CMS. All other hospitals are paid 50.3% of the Medicare OPPS rate. The MSA will adjust the reduction factors annually to reflect changes to Medicare rates and maintain budget neutrality, consistent with current policy. The MHA encourages hospitals to review the proposed policy and submit comments to the MSA by April 8.  Members with questions should contact Jason Jorkasky at the MHA.

Executive Budget Recommendation Protects Hospital Funding

Chris Kolb

The fiscal year (FY) 2021 executive budget recommendation was presented to the Legislature Feb. 6 by State Budget Director Chris Kolb, and a FY 2020 supplemental budget request was also released.

 State Budget Director Chris Kolb presents the FY 2021 executive budget recommendation to the Legislature. While the state is facing flat general fund revenue and $600 million in increased ongoing fund costs in the FY 2021 budget, the administration presented a recommendation that addresses these challenges without making significant cuts to Michigan hospitals. Key elements in the proposals for FY 2020 and 2021 are as follows:

  • As a direct result of the MHA’s advocacy efforts, the governor proposed the first outpatient Medicaid fee increase since 2002, which would begin April 1, 2020, and extend through the FY 2021 budget. If approved by the Legislature and the Centers for Medicare & Medicaid Services, this is projected to result in nearly $300 million in net new revenue to hospitals from April 1, 2020, to Sept. 30, 2021 and will help address the challenges that inadequate outpatient Medicaid reimbursement rates place on all hospitals in Michigan, particularly the small and rural.
  • The executive budget recommendation protects Critical Access Hospital funding, the Rural Access Pool and Obstetrics Stabilization Fund from reductions.
  • Disproportionate share hospital payments and graduate medical education funding are also protected from reductions, continuing to reflect the MHA’s 2016 budget deal.
  • The state’s obligation for Michigan’s Medicaid expansion, the Healthy Michigan Plan, is fully funded. In addition, the executive recommendation includes $25 million in funding for extended postpartum coverage of 12 months for new moms who rely on Medicaid, which follows the announcement in the governor’s Jan. 29 State of the State address. The MHA will continue to work with this and future administrations and legislatures to ensure its protection at the state and federal levels.

The MHA will continue to keep members apprised as budget negotiations continue with the Legislature this spring. As outlined by a media statement issued by MHA CEO Brian Peters, the MHA will work with legislators and state officials on improving maternal health in the state while protecting our long-standing priorities to ensure every Michigander continues to receive the highest quality healthcare in Michigan’s hospitals.  Members with questions may contact Adam Carlson at the MHA.