Medicaid glitch puts $60M hole in proposed budgets

Posted June 4, 2014

DHHS oversight committee receives Medicaid update

— Unexpected, budget-busting Medicaid shortfalls have become something of a rite of spring for lawmakers, and this year's came to light Tuesday.

In a very technical-sounding news release issued late Tuesday afternoon, Budget Director Art Pope and Department of Health and Human Services Secretary Aldona Wos said they were abandoning a plan to levy Medicaid assessments on local mental health agencies. An "assessment" is money a health care provider hands back to the state for participating in the Medicaid program for the poor and uninsured. However, levying that kind of assessment on local management entities – LME/MCOs in the acronym-laced vernacular of the mental health community – is against federal rules, according to the Centers for Medicare and Medicaid Services, or CMS.

Or as Pope and Wos put it in a joint statement: "Due to guidance from CMS and the Office of Inspector General’s report on Pennsylvania’s gross receipts assessment on Medicaid Managed Care Organizations, OSBM and DHHS have decided not to pursue an assessment on LME/MCOs. We are considering additional options at this time and working with the Legislature to achieve savings through other methods."

The result: $60 million the governor and Senate thought they were going to save is now going to have to come from tax dollars.

That aggravates lawmakers such as Sen. Ralph Hise, R-Mitchell, one of the budget writers responsible for Health and Human Services.

"It's a huge frustration," Hise said, noting that the assessment was something the governor had used as a tool in two years worth of budgets. "Now we're being told it doesn't meet the guidelines of CMS, and we're discovering the work's not been done on the governor's end. When you propose it to a legislature ... you would assume that someone had done some due diligence and (had) some conversations with CMS about whether that was allowable or not."

During budget meetings earlier this year, DHHS officials guaranteed lawmakers that they had the Medicaid budget under control and that there would be no late-spring surprises from unexpected cost overruns. While this isn't a billing error or computer glitch like those that have plagued the department in the past, it is a nasty fiscal shock that comes in the middle of the budget process.

"Without that provision, the Senate budget is $60 million out of place," Hise said.

The Senate has already completed work on its proposed budget. House budget writers are beginning to put together their proposal. The two documents will have to be reconciled before going to McCrory for his signature. 

The new Medicaid hole, Hise said, will complicate budget negotiations between the House and Senate.

"This is the basic definition of what is non-sustainable, irresponsible and just shows no fiscal responsibility," Hise said, wondering out loud how something like this happens.

Pope and Wos offered the following background:

  • On May 14, the Governor’s Recommended Budget Adjustments included implementing a 3.5 percent assessment on the LME/MCOs, which would have saved the state about $60 million. This provision was also included in the Senate’s budget.
  • On May 28, the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) issued a report on Pennsylvania’s assessment on Medicaid Managed Care Organizations, finding that the assessment is not allowable for Medicaid funding purposes.
  • In the report, the OIG also recommended that CMS clarify its policy concerning permissible provider assessments.
  • Since the budget is now in the North Carolina House, OSBM and DHHS will work with members of the House to remove this provision and achieve the savings through other methods.

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  • Bill Mooney Jun 4, 2014
    user avatar

    These guys are incompetent. They know how to raise political money by spouting right wing ideology but they have no idea how to run things. They are so anti-government that they don't believe in governing well.

  • AngryBird Jun 4, 2014

    View quoted thread

    That is all fine and good for the next three years. But then the state would be on the line to cover 10% of the expense for the expansion. So if the state is struggling now to pay the Medicaid bills, imagine where we will be expanding it and then having to cover and additional 10% of the expansion cost?

  • Kenny Dunn Jun 4, 2014
    user avatar

    The very idea of an "assessment" against the mental health providers is immoral. Sounds like more of a "kick back" except it's wasn't going into an individuals pocket.

  • archmaker Jun 4, 2014

    the republicans want a $60M kickback, oh sorry, "assessment" for participating in the program?

    from mental health care? the same mental health care that is the republican "reason" why we have so much gun violence?

    the system is broke! - well, you broke it so stop complaining its broke and fix it.

  • Brenda Lawrence Jun 4, 2014
    user avatar

    These types of shenanigans are why we need the Moral Monday protestors!!

  • kevin30 Jun 4, 2014

    This was a budget gimmick from the start, so there should be no surprise over the result. The Medicaid budget will continue to be stressed by increases in enrollment until the state accepts the additional assistance that comes with an expanded system under the ACA.

  • 42_wral_mods_suck_i'm_gone Jun 4, 2014

    Wos/Pope: "We are considering additional options at this time and working with the Legislature to achieve savings through other methods."

    That's a very long winded "we don't know""

  • Brenda Lawrence Jun 4, 2014
    user avatar

    There is no charity in the hearts of these so-called Christian legislators!!!!

  • tllight Jun 4, 2014

    Wow....Wos didn't do her due diligence?? Sounds like a vinyl record going round and round playing the same sad, old tune. Guess Guv Pat keeps putting his trust with incompetent leaders...will NC voters remember this at election time...and vote for ANYONE BUT PAT???

  • 42_wral_mods_suck_i'm_gone Jun 4, 2014

    A 60 million hole. The GOP will just find some more disabled people to throw off Medicaid.