April 24, 2013

Connecticut General Assembly Appropriations Committee Releases Budget For FY 2014-FY 2015 Biennium

Connecticut General Assembly Appropriations Committee Releases Budget For FY 2014-FY 2015 Biennium

Review of Changes Relating to Health Care Service Provider Payments

The Appropriations and Finance committees of the Connecticut General Assembly released their proposed tax and spending plans for the fiscal years 2014 and 2015 on April 19, 2013. The detailed budget document provides the public with its first look at the extent to which the legislature will implement the two year budget blue print that was presented by Governor Malloy on February 6, 2013. The Appropriations and Finance committees did not make substantial changes the Governor’s proposals. Action on the budget by the full General Assembly is scheduled to be completed by the 2013 Legislative Session end date of June 5, 2013.

Hospitals – The Appropriations Committee budget includes the savings related to the Governor’s proposal to phase-out Disproportionate Share Hospital (DSH) payments over two years based on anticipated increased coverage of uninsured individuals under the Affordable Care Act (ACA) beginning on January 1, 2014. The proposed reductions of $194.7 million and $328.9 million in FY 2014 and FY 2015, respectively, were strongly opposed by hospitals since being announced in February. The Committee budget includes $15.0 million to fund Medicaid payment increases to hospitals with low costs and above average Medicare and Medicaid utilization.

The budget presented by the Appropriations Committee includes new anticipated savings of $25.0 million in FY 2014 and $30.0 million in FY 2015 attributable to a preventable hospitalization initiative. The Committee also proposes to implement Medicaid co-payments of up to $7.90 per visit for non-emergency use of emergency room services that is expected to generate $675,000 in annual savings.

Nursing Facilities – Savings totaling $25.8 million over two years in the Governor’s Recommended Budget associated with a proposed Medicaid payment reduction of approximately 1.2% are accepted in the Appropriations Committee budget. The rate cut proposal partially reverses a 3.7% increase to rates that went into effect on July 1, 2011 in conjunction with a $39.4 million increase to the Nursing Facility Provider Tax. Since the $39.4 million tax increase funded the state’s 50% Medicaid share of the July 1, 2011 rate adjustment and also provided a net gain of $9.9 million to the state, the proposed rate reduction will increase the state net gain associated with the FY 2011 rate and tax increases by $7.4 million to an estimated $17.3 million if rate reduction is adopted.

Federally Qualified Health Centers – The budget document released by the Appropriations Committee adds $10.0 million for updates to rates paid to community health centers. There is no detail on the proposed adjustments to the current rate-setting method. Under the current method, cost-based rates that were set in 2001 are adjusted each October 1st by the increase in the Medicare Economic Index (MEI) for primary health services.

Residential Care Homes – The Committee did not agree with a proposed payment reduction of $500,000 in both FY 2014 and FY 2015 that was included in the Recommended Budget. The Recommended Budget did not specify how RCH rates would be revised over the biennium but the projected savings equated to approximately a 0.75% payment reduction.

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