Legislative Update for June 29, 2017

General Assembly Wraps Up State Budget

Earlier this week, the Ohio General Assembly passed House Bill 49, the state operating budget for FY18 and FY19. The republican-led state legislature approved HB 49 largely along party lines, wrapping up nearly six months of committee hearings, debates, and amendments. Governor Kasich must sign the budget by June 30th and is expected to line-item veto a number of provisions, including some Medicaid-related measures (see below).

The General Assembly rejected Governor Kasich’s entire tax reform package, which included an income tax cut paid for through increases in the state sales tax, tobacco tax, and severance tax on oil and gas drilling. Governor Kasich’s sales tax expansion would have impacted elective cosmetic surgery—the Ohio Chapter, along with other allies, worked to remove this provision. During Ohio House consideration of HB 49, lawmakers added a provision requiring health plans to cover telemedicine services. The Ohio Senate removed this measure and it was not reinserted during Conference Committee.

Governor Kasich included language in his budget proposal that would have repealed Ohio’s controversial health price disclosure law. Two years ago, lawmakers added this language to the previous operating budget (HB 64). It required healthcare providers to provide patients with a good faith estimate of total charges, insurance reimbursement, and projected out-of-pocket costs for any non-emergency service. After several unsuccessful attempts to modify this unworkable law, the Ohio Hospital Association and other healthcare groups including the Ohio Chapter filed a lawsuit to overturn the law. The General Assembly removed language in HB 49 repealing the health price disclosure law, effectively restoring the current law that is the subject of the OHA lawsuit.

Finally, lawmakers included a provision that would have freeze hospital reimbursement for Medicaid at FY17 levels. This was in response to a Kasich Administration proposal to reduce hospital reimbursement following enactment of HB 49. Governor Kasich is expected to veto this provision and due to declining state revenues, the Ohio Department of Medicaid is projecting a shortfall in funding for the fiscal biennium. To close this gap, the Department might propose a 5% across the board rate cut for all Medicaid providers.

Read More: Columbus Dispatch: $65.5 billion state budget passes; veto battle with Kasich looms

Future of Medicaid Expansion in Ohio

Citing unsustainable growth in Medicaid spending, Republican Lawmakers took aim at Medicaid Expansion in HB 49, adding a number of provisions to curb and limit the program. The debate over Medicaid Expansion in Ohio paralleled Congressional action on Healthcare Reform and any future changes to Medicaid funding at the federal level will force tough decisions for every state.

Most notably, the Ohio Senate adopted a freeze in new enrollment for the Expansion population (Group 8) beginning in FY 19, or July 1st, 2018. This freeze is estimated to reduce Medicaid enrollment by 500,000; adults struggling with mental health issues or drug addiction would still be allowed to enroll. Governor Kasich is expected to veto the Medicaid Expansion freeze provision, though Republican legislative leaders have indicated the General Assembly could return next week to override the veto.

In addition to freezing Medicaid Expansion, lawmakers also adopted other provisions aimed at increasing requirements for adults enrolled in Medicaid. Under language approved by both the Ohio House and Ohio Senate, adults enrolled in Medicaid must either be over 55, employed or in school, struggling with drug addiction, or have a serious mental or physical health issue to be eligible for coverage. Additionally, legislators added a provision requiring the Ohio Department of Medicaid to establish the HealthyOhio program; this program would establish HSA’s for adults enrolled in Medicaid and require monthly contributions. Both of these provisions require approval by the Centers for Medicare and Medicaid Services.

Finally, lawmakers placed new restrictions on Medicaid funding and reimbursement. Language in HB 49 would require any rate increases to be approved by the Joint Medicaid Oversight Committee and state funding for Medicaid Expansion must be authorized by the Ohio Controlling Board. Should Congress enact legislation that reduces the enhanced reimbursement rate for Medicaid Expansion, Ohio’s program would be abolished.

Read More: Columbus Dispatch: Lawmakers’ Medicaid freeze sets up Ohio budget showdown with Kasich