Legislature passes FY 2020 budget

Posted on: 5/24/19

This was the final week of legislative session for 2019 and the Legislature focused on the FY 2020 budget. In last week’s Hotline, we covered the FY 2020 state budget found in the General Appropriations bill HB 2765 (Wallace/Thompson). As we stated last week, the budget reflects $62.8 million for Graduate Medical Education and $105 million for restoration of provider rates for physicians, hospitals and nursing homes. The spending limits bill for the Oklahoma Health Care Authority (OHCA), SB 1044 (Thompson/Wallace), directs the OHCA with federal funding increases in Federal Medical Assistance Percentage (FMAP) to restore provider rates, which is estimated to be a 5 percent increase to providers, effective Oct. 1, after CMS approval. There is a CMS approval process for any changes in rates, increases or decreases, so that must occur before the increased rates go into effect.

SB 1044 contains instructions to OHCA “to revise the payment methodology for hospital-based rural health care clinics (RHCs). This revision shall increase payments to maximize the federal match.” OHCA has not been following their own rules, nor federal rules, on payment rates. As of now, at least 30 rural hospitals operate these clinics. They would benefit from a correction and revision in OHCA’s rate methodology. OHCA estimated an annual cost of $3 million for this change, but has not yet determined exactly how to redefine the rate method, which will require federal approval.

Lastly, in SB 1044 the OHCA was instructed to “revise the methodology of the Disproportionate Share Hospital Program. The Authority shall then distribute the additional dollars from this revision to qualifying rural hospitals.”  Medicaid Disproportionate Share Hospital (DSH) payments are made to qualifying hospitals with a high percentage of Medicaid and uninsured patients. An annual federal allotment of matching funds is available for each state for this program. Oklahoma has not been using its entire federal DSH allotment.  Appropriating an additional $8.6 million to OHCA would draw down an additional $14.2 million in federal funds at the current matching rate, providing $22.8 million in additional DSH payments to hospitals. OHCA will modify their DSH program, distributing all of this additional money to qualifying rural hospitals.

A new fund was established at OHCA, HB 2767 (Wallace/Thompson) with $29 million in funding for FY 2020. The Rate Preservation Fund, to be overseen by the OHCA, is to maintain reimbursement rates to providers when decreases in FMAP would otherwise result in rate decreases. SB 86 (Simpson/McEntire) is the spending limits bill for the Oklahoma Department of Mental Health and Substance Abuse Services (ODMHSAS), which directs the agency to spend FMAP increases on restoration of provider rates and case management. It is unclear at the writing of Hotline what impact SB 86 will have on provider rates for those providers with ODMHSAS services. (Sandra Harrison)