Tuesday, March 22, 2011

Special Session - Day 6 Update

House Takes Action on HB 1

House Bill 1 took a big step forward today, as the House passed an amended version of the bill containing a "bi-partisan" plan to resolve the Medicaid budget shortfall. A copy of the House Committee Substitute to HB 1 is available HERE. Here are a few of the highlights:

- Moves $166 million from FY 2012 to FY 2011 to balance Medicaid budget.
- Governor has to certify to the General Assembly by August 15, 2011 that he can achieve the $139 million in savings necessary in FY 2012 through Medicaid managed care.
- If the Governor can not meet those savings projections then the Governor is directed to make across the board cuts beginning October 1, 2011. However certain agencies are exempted from cuts including: all levels of education except the Council on Postsecondary Education, veterans affairs, local government economic development and assistance funds, and teachers retirement.
- The House plan also re-opens the mandated budget reductions that passed as part of the 2010 budget related to $169 million in FY 2012. It further restricts the Governor's options to achieve that savings and forces him to make cuts to government contracts and to reduce non-merit personnel.
- Further the House restricts the Governor's use of furloughs in FY 2012.

The House Appropriations & Revenue Committee met and the committee substitute was adopted without a dissenting vote. Then within a few minutes the full House approved the bill by a vote of 94-4. The four No votes were from House Republicans: Rep. Stan Lee, Rep. DeCesare, Rep. Kerr, and Rep. Fischer.

The legislative process now turns to the Senate for them to review the House version of HB 1, and to begin to formulate their position on the House bill and their approach to solving the Medicaid budget shortfall. During the Regular Session and in a letter they sent to the House last week, the Senate has favored across the board cuts to most state agencies including education to achieve the needed savings.

The House adjourned until 10:00 a.m. on Tuesday. The Senate took no action on the floor today and adjourned until 2:00 p.m. on Tuesday.


House A&R Committee

The House Appropriations & Revenue committee had another informational meeting today and heard testimony from Sec. Miller regarding Medicaid managed care and how they would achieve the needed savings. A copy of that presentation is available HERE. In the committee meeting, Secretary Miller discussed how the administration is limited in how they can handle the Medicaid deficit, and that if they are not allowed to shift funds and implement managed care, then the only way to deal with the shortfall is either to reduce benefits or cut provider reimbursement.  She said that reducing the benefits is not an option that this administration is comfortable with.  From December of 2007 to December of 2010, KY Medicaid enrollment increased by 95,000 members.  Miller discussed that Kentucky is one of 20 states looking at expanding managed care and then touched on various independent studies that show savings can be achieved.

A good amount of time was spent discussing the timelines for implementing managed care.  The timeline is as follows:
  • RFPs Issued - April 1
  • RFP Responses Due - May 15
  • RFP Contract Awards - July 1


We will continue to keep you updated as the attention turns to the Senate.

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