Governor Announces Support for Medicaid Quality Assurance Assessment

Contact: Kelly Chesney (517) 373-7560
Agency: Technology, Management & Budget

Representatives from the nursing home and health maintenance organizations (HMOs) provider community and state legislators joined Governor John Engler today to announce that legislation will soon be introduced to establish a new Medicaid Quality Assurance Assessment Program. Funds raised through the assessment will be used to increase the reimbursements paid to nursing homes and HMOs that participate in Michigan’s Medicaid program.


“In this period of constrained state revenue, we must maximize every non-state revenue source available to us,” Governor Engler noted.


“I am pleased to support this very important initiative because it will allow Michigan to earn additional federal funding to help continue quality medical and long-term care to low-income families and the disabled. I applaud the efforts of these two provider groups – the Health Care Association of Michigan and the Michigan Association of Health Plans -- for working hard to identify ways to maintain quality health care during this difficult financial period.”


The Executive Budget for fiscal year 2003 includes an increase of $245 million to cover Medicaid cost increases caused, in part, by an increase in the caseload and the increased utilization of medical services. Additional state funding, however, was not available to increase payments to Medicaid providers. At least 26 states use revenues made available by their medical care provider communities to help finance their Medicaid programs. Adoption of this financing option in Michigan will allow the state to earn sufficient federal funding to increase Medicaid payments by 5 percent for HMOs and 7 percent for nursing homes.


The Michigan Medicaid Quality Assurance Assessment program is comprised of three elements: a uniform provider contribution, Federal matching funds and a Medicaid payment increase. In the case of nursing homes, each home will contribute $2.77 per bed daily, which will generate $44.7 million annually to earn $55.6 million in new Federal revenue. This will allow the Medicaid program to increase payments by a total of $100.4 million. This represents a 7 percent increase in Medicaid nursing home payments.


Reginald Carter, president and CEO of Health Care Association of Michigan, noted, “The nursing home community is pleased to participate in this cooperative financing initiative. The Medicaid funding increases will help nursing homes meet the needs of the frail clientele that they care for on a daily basis.”


A similar process will occur with HMOs. Each HMO that has a contract with the state’s Medicaid program will contribute an amount equivalent to 1.93 percent of their premium revenue, or a total of $55.7 million. This will qualify for Federal matching funds of $67.2 million, for a total of $122.9 million. This will allow the Medicaid program to increase payments by 5 percent for participating HMOs.


Gene Farnum, executive director of the Michigan Association of Health Plans, added, “Michigan’s HMOs recognize the state does not have the resources this year to increase Medicaid payments. This initiative will provide the funding HMOs need to continue to provide high quality care during this challenging fiscal period.”


Federal law requires that these assessments be established in state law. The necessary legislation will soon be introduced to establish this valuable program.