By Mike Shields, KHI News Service, March 08, 2010
TOPEKA — A bill that is key to a plan to collect privilege fees or taxes from the state's three Medicaid managed care contractors in order to draw down more matching federal dollars was endorsed today by the House Social Services Budget Committee.
The subcommittee members agreed to a "gut-and-go" procedure whereby they inserted language from House Bill 2723 into Senate Bill 200. It was a procedural step intended to expedite movement of the legislation through the process.
Supporters said the faster the bill becomes law the sooner additional federal aid can be tapped to help solve the state's budget problems.
The bill would resolve some details of a plan set in motion last week when Kansas Insurance Commissioner Sandy Praeger issued a letter repealing the waiver the managed care companies had been granted from the 1 percent "privilege tax."
Other managed care operators in the state have been paying the tax or assessment on gross receipts for decades, but the Medicaid contractors were exempted because they essentially perform state services.
It was the contractors themselves, in consultation with the Kansas Health Policy Authority, that came up with the plan to pay the tax and then use that money to help draw down matching federal Medicaid dollars.
The Medicaid program is currently funded about 70 percent by the federal government and 30 percent by the state.
Brad Smoot, speaking to the committee on behalf of managed care contractor Children's Mercy Health Partners, said the $4 million a year raised by collecting the privilege fee could be leveraged into about $26 million.
He said the companies stepped forward with the plan with the goal of seeing the $26 million appropriated to them by the Legislature so that they could then pass the dollars through to the medical providers with whom they work. The other two managed care companies are Unicare Health Plan of Kansas and ValueOptions of Kansas.
Children's Mercy and Unicare provide general health services mostly to children enrolled in the state's HealthWave program, which is overseen by the Kansas Health Policy Authority. ValueOptions provides substance abuse treatment and is overseen by the Kansas Department of Social and Rehabilitation Services.
The governor, effective Jan. 1, ordered a 10 percent reduction in the reimbursement rates paid to Medicaid providers. That order was part of ongoing efforts to keep the state budget balanced. The governor, legislators and others have been looking for ways to rollback or mitigate that rate cut ever since.
The plan by the managed care companies to tap the privilege tax was in response to those cuts.
Smoot said money raised by the tax and matched with federal funds could spare a deeper call on the state general fund to pay for Medicaid services.
The bill was endorsed unanimously by the committee.