Wednesday, April 6, 2011

2011 Special Session Update

As the Dust Settles

Here is a quick update on where things stand on the 2011 Special Session:

Beshear Issues Veto
Governor Beshear issued his veto statement on House Bill 1 from the Special Session, get a copy HERE. As you are aware the Governor used his line item veto on significant portions of House Bill 1 to remove cuts to education, veterans affairs and other agencies, as well to remove numerous language provisions related to everything from debt restructuring and furloughs, to provisions specific to Medicaid like face to face enrollment and analysis of Medicaid managed care savings.

The implications of his vetoes are this:

- After the significant vetoes, very little is left of the Senate or House versions of House Bill 1. Basically, the Governor has vetoed the bill back to his original plan to move $166 million from FY 2012 to FY 2011. There is no mechanism for cuts to government to be triggered if the administration is unable to generate the savings necessary to make up the $166 million in FY 2012. There are also no special mechanisms for legislative oversight, other than the usual interim committee meetings, to monitor whether the predicted savings are being realized.

- The Governor's plan for filling the $166 million shortfall that now exists in FY 2012 in the Medicaid program is to utilize savings generated by instituting Managed Care and from "other" efficiencies in the Medicaid program, yet to be identified. However, without the forced cost savings triggers, that existed in both the House and Senate versions of HB 1, Medicaid and Secretary Miller have a little more flexibility in their timeline for instituting managed care, because there are no statutory deadlines to meet.

Special Session...Is it Over?
As you will recall, the House and Senate both passed House Bill 1 last Thursday, March 24. After delivering the bill to the Governor, the Senate adjourned until April 6 at which time they plan to return to consider the Governor's veto message on House Bill 1. The House adjourned Sine Die, a procedural motion to end the session, and in essence ends the session because the House does not plan to return. This has brought up several questions including: can one chamber adjourn a Special Session, are legislators being paid during this time, and most importantly is the session over?

Our interest is less on the legislative pay and constitutional questions, but whether the session over. Based on information provided by the Legislative Research Commission it doesn't appear that the Special Session is over until the Senate also adjourns Sine Die, which we will anticipate will happen on April 6. House Minority Leader Hoover and others have asked House Speaker Stumbo and other House Democrat leaders to return to Frankfort on April 6 and consider overriding the Governor's vetoes. At this point that doesn't seem likely.

Medicaid Managed Care
In many respects by addressing this issue, last of the three items we are writing about is in essence burying the lead. The long-term implications of the Beshear administration's move to managed care for Medicaid will have long-term and far reaching implications for virtually all, if not all, health care providers in the Commonwealth. Here are a few main points on Medicaid Managed Care:

1.   The Governor's plan to manage the Medicaid budget through managed care will begin with the issuance of RFPs on April 1, this Friday.  Responses will be due on May 15 with contracts signed by July 1, the beginning of the new fiscal year.
2.   At this point there remain many unanswered questions about the managed care that will be implemented:  How many vendors will be involved?  How will the managing vendor(s) get services in place under the short timeline?  To what extent will providers in rural areas cooperate?  Will the Passport region stay intact or be expanded?
3.   There will be other unidentified efficiencies will be implemented as well.
4.   The renewal of the Passport contract with the Cabinet is now under negotiation.  In testimony, Sec. Miller indicated changes to the Contract.
5.   Systematic scrutiny of billing practices and service provision by providers will occur.

Once the RFP's are issued we will provide further analysis.

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