Engler Backs Medicaid Hospital Plan

    GRAND RAPIDS — After making his point about one of the ballot proposals going to voters in November, and seeing the opportunity possibly slipping away, Gov. John Engler reversed course and backed an initiative designed to temporarily funnel millions in new Medicaid funding to hospitals across Michigan over the next two years.

    The Legislature this month passed a new version of the Medicaid Quality Assurance Assessment that’s designed to leverage federal funding and generate $149 million in new Medicaid money in its second year for hospitals through a self-imposed tax.

    The program will provide some relief for hospitals coping with cuts in Medicaid and Medicare reimbursements in recent years, and will also provide a two-year window for lawmakers on the state and federal levels to work out more permanent fixes.

    “We’ve got a couple of years to look at ways we can bring more funding and revenues into the health care system,” said Bruce Rossman, manager of media relations at Spectrum Health.

    Medicaid funding was a main issue during the recent Spectrum Health-Blue Cross Blue Shield of Michigan negotiations on a new participating agreement, as the health system sought to offset some of the $30 million lost annually on providing indigent care by securing higher payments from the health insurer.

    Given the circumstances facing hospitals, Spectrum Health welcomes any new Medicaid funding coming down from the state, even if only on a temporary basis, Rossman said.

    “Some people call it a ‘Band-Aid’ but we consider it a significant Band-Aid. It does a lot to help indigent care in this state for the next two years,” he said.

    The Medicaid assessment program was resurrected following Engler’s veto of a similar measure in May. The governor at the time said he could not support the assessment with the proposed Healthy Michigan Amendment, backed by the Michigan Health and Hospital Association, which will appear on the Nov. 5 ballot as Proposal 4.

    Things have since changed, including the potential that the federal government may do away with programs that enable states to levy assessments to leverage matching Medicaid money and increase funding.

    “If we don’t look at doing this now, there’s a possibility we may not have the opportunity to do it at all,” Engler spokeswoman Susan Shafer said.

    A belief that public awareness about Proposal 4 is growing also convinced the governor, who steadfastly opposes the measure, to support bringing the Medicaid assessment back. Proposal 4, if passed, would redirect more than $300 million the state receives annually from the national tobacco settlement toward health care and anti-smoking programs.

    As passed, the measure would levy a 0.76-mill assessment on hospitals’ non-Medicaid revenue and use the $66.5 million in proceeds to leverage an additional $40.2 million from Washington, for a total of $106.7 million in additional money for the system during the state’s 2003 fiscal year, according to Michigan Department of Community Health estimates.

    The program would generate a total of $149 million in FY 2004. The state would distribute the money to hospitals each year based on their Medicaid patient volumes.

    Specifics on how individual hospitals would fare under the program were unavailable last week.

    The Legislature passed, and Engler signed, similar measures last spring for nursing homes and HMOs.           

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