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Despite Fiscal Crisis, Future of Medicaid Looks Brighter

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by Alison Hirschel

Despite grim economic times, the Granholm Administration is expecting good news for the state Medicaid program in the next few months. At a Medical Care Advisory Council (MCAC) meeting two days after the election, Medical Services Administration (MSA) director Paul Reinhart noted that Congress is likely to enact a very substantial relief package for the states. The assistance is expected to include approximately a 4% increase in the Federal Medical Assistance Percentage (FMAP), the percentage of each Medicaid dollar that is paid by the federal government in the joint federal/state program. At the MCAC meeting, Reinhart noted that the increase was likely to be offered for a year and a quarter and would equal approximately a $500 million increase for Michigan. On November 10, however, at a meeting of the Olmstead Coalition, Reinhart noted that he understood the relief would probably be offered for even longer, thus providing additional funds for the state.

The Granholm Administration’s optimism is not limited to the FMAP increase. After experiencing strained relations with the Centers for Medicare & Medicaid Services during the past several years, the state is expecting to have an easier time working with CMS under President-elect Obama. For example, the Adult Benefits Waiver is due to expire on January 31, 2009, shortly after Obama takes office. Although CMS has not been encouraging about the possibility of extending the waiver after that date, state officials are now hopeful that the Obama Administration will be supportive of extending that important coverage. In addition, Reinhart mentioned that it may be possible to liberalize eligibility requirements for Medicaid without using waivers and that doing so would be consistent with Obama’s goals to extend health care coverage to more individuals. Other issues that the state is in the midst of negotiating with CMS include a proposed state plan amendment regarding estate recovery and the payment methodology for personal care supplement payments to individuals in adult foster care or homes for the aged; discussions on both issues might be more successful under a new Administration.

At the MCAC, Reinhart also talked about his goals of enhancing provider reimbursements in FY 2010 to assure access for Medicaid recipients, expanding programs for children, and embarking on other efforts to increase coverage or expand eligibility. He and his staff have prepared proposals to implement these changes that he believes will be possible even if Congress fails to pass a substantial state relief packet. Reinhart observed that the next couple years could be exciting for the state Medicaid program. He also revealed that despite the likely need for significant state budget cuts in the near future and the fact that Medicaid is a substantial target whenever budget cuts are required, MSA had prepared a number of proposals that would create finance based savings without any harm to consumers.