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Joint Legislative committee works toward Medicaid reinvention

By Bill Britt
Alabama Political Reporter

MONTGOMERY—The Joint Legislative Medicaid Committee is working to fulfill the promise of the September 18 constitutional amendment which, in part gave the state a three year cushion to find a way to reinvent Medicaid. The promise being that Medicaid would be solvent, efficient and continued.

On Tuesday, the committee held two subcommittee meetings, one focused on the Medicaid delivery systems, funding, cost containment while to other looked at the State Health Agencies, Waivers and Grants.

Committee chairs Representative Greg Wren (R-Montgomery) and Senator Greg Reed (R-Jasper) have pledged to lead the effort until real solutions are found for the state’s ailing Medicaid system.

“We will work tirelessly toward transforming the Medicaid delivery system in our state,” Wren said, but also cautioned that the next 13 months would be critical.

Beyond the fact that Medicaid is underfunded and that the expansion under the Affordable Care Act looms large is the realization that much of what helps fund Medicaid is about to expire.

“Let me try to explain why the 2013 Legislative Session has become so important,” said Dr. Don Williamson. “There are two taxes and one funding stream that undergo very significant and substantive changes [this year] unless the Legislature does something.”

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Williamson, who is the long-serving head of the Alabama Department of Health and also-—at the governor’s request-—the interim leader of Medicaid, is a smart man who has a habit of delivering bad news unvarnished and un-apologeticly.

According to Williamson the Hospital Provider Tax generates $229 million and it expires on September 30, 2013. This tax is paid by the state’s private hospitals. Public hospitals do not participate in this tax scheme.


According to The National Conference of State Legislatures, “a “provider tax,” sometimes termed a “fee” or “assessment,” is a state law that authorizes collecting revenue from specified categories of providers. In most states, it is used as a mechanism to generate new in-state funds and match them with federal funds so that the state gets additional federal Medicaid dollars. In a majority of cases, the cost of the tax is promised back to providers through an increase in the Medicaid reimbursement rate for their patient treatment and services. Beyond Medicaid, states have the policy option to tax most types of providers and services and to designate or earmark the revenue for any state purpose.


In a matter of fact manner, Williamson addressed the committee saying, “So either we have to magically produce another $229 million of CPEs, not likely, or you have to replace that $229 million with state money or we have to have a plan that hospitals will accept and agree to extending the provider tax.”

Hospitals in recent years have agreed to go along with such taxes but this does not insure that levying a new tax will be greeted with welcome arms.

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The state of Alabama is the only state in the country that provides no state money for running its hospitals from Medicaid. Most state use some of its general fund money for its match for hospitals, Alabama uses none. The hospitals fund their own fund and pay their own match.

This in itself could be a bone of contention in the a discussion of renewing the hospital provider tax.

Williamson also warned the group that some portion of the $105 million that comes from the nursing homes and their provider tax will soon expire. “There is some debate about what this number is (this is probably the smallest number), $55 million of that $105 million expires on August 31, 2013,” said Williamson.

The crowning blow in Williamson’s statements may be that, “Last but not least, the disproportionate-share hospital (DSH) payments for hospitals begins declining on October 1, 2013. So, you have set up this interesting problem that the money to fund hospitals goes away and the dollars to cover uncompensated care all begin going away, it attrits down from October 1, 2013 through 2019.”

This, according to Dr. Williamson, places the state’s legislators “truly between the proverbial rock and the hard place.”

Both Wren and Reed know the challenges that face their committee. Reed has in the past characterized the decisions facing the legislature as, ”The more I look at this, the more I realized that the decisions we make on healthcare in Alabama are going to have a dramatic effect on our economy, on our tax revenues, and the use thereof. These decisions will affect every area of our lives, from the smallest communities to the future on our nation.”

Reed who serves as the Chairman of the Senate Health Committee is a very serious man who has deeply immersed himself in the challenges and opportunities that lay ahead concerning health and healthcare in Alabama. He says that he is confident that with Governor Bentley’s leadership, the support of the President ProTem Del Marsh and Speaker Mike Hubbard, that the committee will find solutions to continue Medicaid in a fiscally responsible way while still providing the necessary services needed.

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Perhaps, no one in the state of Alabama has put more heart and mind into the problems of Medicaid and the future of healthcare in the state than Representative Wren.

Wren, like Reed, at their own expense, has traveled wide and far to conferences and meetings to find answers to the state’s problems.

Wren says he is pleased and proud of the work the committee is doing and that he, like Reed, is buoyed by the support the committee has received from the state’s leadership and the healthcare community.

Written By

Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.


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