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Medicaid funding plan set to take effect in September

Gov. Haley Barbour announced August 1 that he has formulated a funding solution for Medicaid, the state’s healthcare program for poor, elderly and disabled.

In a press release announcing the solution, Barbour said this new plan would require no legislative action.

The new solution, Barbour says, means funds cut from reimbursement payments to hospitals will be replaced in like amount by distributions from a different Medicaid program, resulting in approximately $370 million being paid to hospitals to make up for cuts required by state law.

The new plan is scheduled to take effect September 1.

“Medicaid requires a fair, permanent, sustainable funding solution, but the Legislature hasn’t enacted one,” Barbour said in a statement. “The Senate passed a fair, permanent, sustainable solution in May, but the House has failed to do so. The solution I am announcing today is a fair, permanent, sustainable way to fully fund Medicaid.”

The plan has gained preliminary approval from the federal Center for Medicare and Medicaid Services (CMS). Formal approval will come when the agency receives written documentation of the plan.

“We have been working with CMS throughout this process, but it was not until a detailed analysis could be made in light of Judge Singletary’s July 10 ruling that we could seek approval of this solution,” Barbour said.

Barbour was referring to a ruling by Hinds County Chancery Judge William Singletary made that said it would be unconstitutional for a funding mechanism to be put in place without legislative approval, and dealt with Barbour’s efforts to enact a prior plan without lawmakers voting on it.

The state has met its $90-million Medicaid obligation the last two years with one-time money received from Hurricane Katrina recovery funds. That money is gone, and finding a replacement has been difficult. The regular legislative session and a special session that was on and off again through most of the summer have failed to produce a solution. The Republican controlled Senate passed 41-7 a plan that would have put the burden on hospitals, through Medicaid provider fees, to fund the state’s portion. The Democratic House wanted to increase the state’s cigarette tax or use that and an assessment on hospitals. The impasse has lasted for months.

Whether or not Barbour’s new plan goes into effect is uncertain. House leaders have the option of challenging it in court.

Contact MBJ staff writer Clay Chandler at clay.chandler@ msbusiness.com .

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