Valerie Acres, Sheehan Phinney Capitol Group 

Medicaid Managed Care -

Health and Human Services Commissioner Nicholas Toumpas gave two updates last week regarding implementation of managed care for the state's Medicaid population, a change that is expected to save approximately $16 million in general funds during the second year of the current biennium or $1.4 million per month from July 1, 2012 to June 30, 2013.

Not a lot of detail is available regarding how this new program will be structured, in part because contract negotiations with selected managed care organizations are currently underway. What we do know is this:

• The state's goal is to have three contracts approved and in place when the switch is made.
• The next public "checkpoint" will be joint Fiscal Committee review of proposed reimbursement rates, likely on March 9th.
• The contract(s) will be available to the public on March 23^rd and will be presented to the Governor and Executive Council for approval on March 28^th.
• The target date for implementation remains July 1^st; however, it will be delayed if necessary. If implementation is delayed, the anticipated savings of $1.4 million per month will have to be achieved by reductions elsewhere in the Department of Health and Human Services budget.

Right now, all key policy-makers appear to be on board with the goals and timeline for what is being called "Step One" of the implementation process, the step that includes acute care services for all Medicaid populations. There is significant confusion, however, regarding how implementation will be managed for "Step Two" which includes home and community-based long-term care services to the elderly and disabled and "Step Three" which includes the 40,000 to 50,000 newcomers to the Medicaid system, known as the "Medicaid expansion population," that will result from implementation of federal healthcare reform.

The business community has shown increasing interest in Medicaid issues in recent years since cost-shifting from this program is a large part of the reason health insurance premiums in the private market have exploded. While managed care can be a useful tool to control costs and minimize this cost-shift, it is unsettling for many policy-makers and other stakeholders that so few details are available.

Destination Specialty Hospitals -

HB 1642, a bill to pave the way for "destination specialty hospitals" to enter the state without going through the same regulatory process that other hospitals must follow, overcame its first hurdle today when the House Health, Human Services and Elderly Affairs Committee voted 10 to 8 to recommend that the bill pass with amendment. Debate on this bill was spirited to say the least. Supporters view it as a jobs creation and pro-business bill and view the existing certificate of need (CON) process as anti-competitive and monopolistic. One supporter went so far as to call the CON Board corrupt and the process unconstitutional. Opponents of the bill believe that the CON process should be improved, not eliminated or circumvented, and that all health care providers should enter and operate in the state on a level playing field.

HB 1642 is strongly supported by leadership in the House (indeed, many House leaders, including Speaker William O'Brien, are co-sponsors of the bill) and it is expected to pass in that chamber. Its prospects on the Senate side are less predictable at this time.

There is one piece of good news for existing hospitals. The amended version of HB 1642 would exempt specialty hospitals from CON review but would not eliminate their obligation to pay the Medicaid Enhancement Tax. This change maintains a level playing field with respect to payment of the tax and, since most specialty hospitals will not be serving Medicaid beneficiaries, it will lead to additional funds available for distribution to traditional hospitals through the Disproportionate Share Program.