02/2002: State Legislative Update

Published February 1, 2002


In a letter to state legislative leaders, Gov. Gray Davis (D) renewed his push for legislation to ensure continuity of care for patients when their doctors and managed care organizations have contract disputes.

Bills to ensure such coverage stalled in the last week of the legislative session in September. Davis said passage of such legislation is “imperative” to protect as many as 800,000 residents from “disruptions in their health care.”

Under current law, only those patients in the final months of pregnancy or those who are being treated for “serious illnesses” such as cancer or AIDS may continue to see their doctor during contract disputes.


The state is weighing a new type of managed care plan, called an exclusive provider organization, or EPO. Florida’s Medicaid program, which costs the state about $10 billion per year, currently requires beneficiaries to choose either a Medicaid managed care plan or traditional Medicaid, which is called Medipass in Florida.

State Rep. Frank Farkas (R), vice chair of the state House Health and Human Services Appropriations committee, said, “The Medipass model is very expensive. And there are some areas in the state where there are no Medicaid HMOs available, so patients have no choice but to enroll” [in Medipass].

Of the state’s 1.8 million Medicaid beneficiaries, about 550,000 are enrolled in a managed care plan. To save costs and offer patients another managed care option, the state is considering an EPO, a less-restrictive option than an HMO. Under an EPO plan, Medicaid will cover care for beneficiaries only if it is provided by doctors within a network.

“This would be a good compromise,” Farkas said. “We’re trying to give Medicaid patients the ability to contract with doctors who might save [the state] money.”


The Iowa Department of Human Services’ Council on Human Services, a policy-making board, has agreed to reconsider cutting 4,000 Medicaid recipients whose limited resources keep them just above the eligibility line for medical services.

Faced with eliminating $18.6 million in Medicaid spending to comply with 4.3 percent in cuts ordered by the state, the council had agreed to drop all 4,000 medically needy beneficiaries from Medicaid.

However, Lt. Gov. Sally Pedersen (D) has convinced the council to discuss the issue further. State Department of Human Services Director Jessie Rasmussen said eliminating the 4,000 beneficiaries could save the state between $8 million and $10 million.

If the council ultimately decides not to cut medically needy beneficiaries, members suggested cuts could be made to “a range” of Medicaid services or to care providers’ reimbursement rates.


Acting Gov. Jane Swift (R) vetoed $250 million from a state budget plan approved by the state legislature and released a $600 million supplemental budget request that would restore funding for Medicaid and mental health programs.

Faced with a $1.4 billion budget deficit, state lawmakers approved a $22.6 billion budget that would cut $650 million from earlier spending plans, including $22 million earmarked to place mentally disabled adults in group homes. The legislature’s budget also would cut spending for AIDS treatment and prevention programs by $12 million, and reduce the Department of Mental Health’s budget by $27 million.

Swift’s vetoes included cutting a $17 million allocation to smoking cessation programs. Stephen Crosby, Swift’s administration and finance secretary, said the governor decided the smoking prevention efforts are “less important” than funding “direct services,” such as care for people with mental illnesses.


Faced with a “serious” economic situation because of declining tax revenues, Minnesota Finance Commissioner Pam Wheelock has “halted indefinitely” about $200 million in state grants to not-for-profits and nongovernmental organizations, including groups that provide health care services.

State agencies that contract with the organizations are uncertain how the funding freeze will affect them. At the Department of Human Services, for example, about 80 percent of its contracts are for programs mandated by the federal government that cannot be halted. However, money for other initiatives, such as substance abuse programs, could be withheld, according to Michael O’Keefe, commissioner of the Human Services department.


The Missouri House Interim Committee on Nursing Home Caregiving recommended a plan that would reform the system the state uses to determine reimbursement rates nursing homes receive under Medicaid, which covers about 60 percent of the state’s nursing home residents.

Under the present system, nursing homes receive daily, per-resident payments based on 1992 cost reports filed by the facilities, with “annual adjustments for inflation and other factors.” The process has resulted in a “wide range” of rates.

The committee has recommended the state use more recent cost reports to update Medicaid reimbursement rates. Doing so could cost the state an additional $57 million to $132 million per year, according to a state audit.

State Rep. Sam Berkowitz (D), chair of the committee, said increased Medicaid reimbursement rates would improve the quality of care in nursing homes.

Although Missouri faces budget problems, the committee said the state could fund the proposal through use of the Medicaid loophole. Under the loophole, states pay city- or county-owned health care facilities more than the actual cost of health services, receive additional federal matching funds from the federal government, and require the facilities to return the additional state funds. Missouri is expected to draw at least $270 million this year through the loophole.

New York

The Empire State, which has long had among the most expensive Medicaid programs in the country, is leading the push in Washington, DC for still greater federal funding.

Gov. George Pataki (R) went to Washington to urge congressional leaders to include such a provision in the economic stimulus package. “The growing state budget shortfalls in nearly every state will continue to be a major drag on economic recovery,” he said in a letter to Congress, adding, “I urge that the final economic stimulus package build upon the existing federal-state partnership by including a temporary increase” in federal Medicaid funding.

While the question of whether Congress will act to increase Medicaid funding remains up in the air, some struggling states have already begun to reduce benefits to deal with budget shortfalls. California, for example, has delayed expanding its CHIP program to adults until 2003. Other states, including New Jersey and Ohio, have considered using their shares of the national tobacco settlement to deal with costs.


The right-to-die advocacy group the Hemlock Society has launched a campaign urging lawmakers to “override” Attorney General John Ashcroft’s decision to pursue disciplinary action against doctors who prescribe lethal doses of drugs for terminally ill patients under Oregon’s physician-assisted suicide law.

Under the law, doctors may provide, “but not administer, a lethal prescription to terminally ill patients who are Oregon residents.” Two physicians must concur that the patient has “less than six months to live, has voluntarily chosen to die, and is able to make health-related decisions. “

While an Oregon judge has temporarily blocked the order, the Hemlock Society is using newspaper advertisements and letters asking lawmakers to act or persuade President Bush to overturn Ashcroft’s directive.