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Health care groups unveil AHCCCS funding plan

Several health care industry groups that hope to stop the state from kicking a quarter of a million people out of the state’s public health care system unveiled the outline of their proposal to fund the state’s Medicaid program.

In a meeting with Gov. Jan Brewer on Friday, the Arizona Hospital and Healthcare Association, Arizona Association of Health Plans, Arizona Health Care Association and several other industry representatives released details of a long-awaited plan they say would generate $1 billion through the end of 2013 by taxing hospitals, nursing homes and AHCCCS health plans.

The plan’s goal is to prevent the state from cutting about 280,000 childless adults from AHCCCS, as Brewer proposed in her budget plan. AzHHA President Laurie Liles said the number of patients who could be funded through the proposal would depend on a number of factors.

Liles said she hopes to get legislative approval for the plan in time to implement the new assessments by Oct. 1, the date Brewer hopes to make her proposed AHCCCS cuts.

“I hope that we can engage a bipartisan group of legislators to support this within the next few days and weeks. We don’t have very much time,” Liles said.

Brewer spokesman Matthew Benson said the governor is pleased the health care groups came forward with a proposal, but that she is still evaluating the plan and hasn’t decided yet whether to support it.

“This was an opportunity for them to share their plan. Really, it was a listening session of sorts. So, the governor’s taken their information. She hasn’t made any decision at this point,” Benson said. “From our perspective, ultimately, any plan dealing with Medicaid is going to have to be humane, fiscally responsible and politically feasible.”

To be politically feasible, the plan will need the support of a Legislature that is wary of new taxes or any proposal that might increase costs to patients on private sector health care plans. House Majority Leader Andy Tobin said he would have to examine the plan before he decides whether to support it. He couldn’t say if it was feasible to pass a provider tax this session.

“I’ll have to talk to the governor. Everybody, I think, is a little up in the air with where we’re going here,” said Tobin, who has met frequently with AzHHA over the past year.

Under the plan, hospitals would pay a $275-per-day assessment for in-patient stays, which would generate about $360 million per year for AHCCCS. A 4-percent assessment on AHCCCS health plan providers would generate another $100 million for the Medicaid program, while a nursing home assessment would bring in another $5 million.

The taxes would generate about $549 million in the fiscal year 2012 and $732 million in fiscal year 2013, Liles said, with the majority of the money going to AHCCCS. The public health care system would receive $348 million in 2012, $465 million in 2013 and $232.5 million in the first half of the fiscal year 2014.

Tobin said he and other lawmakers likely wouldn’t support any proposal that passed on the costs of an assessment to hospitals and patients. Liles, however, said the proposal won’t.

The rest of the money would go to a funding pool for hospitals and would be eligible for a two-to-one match from the federal government, which Liles said would offset the cost of the assessment to hospitals.

“The rest of the money would be used to create a funding stream for hospitals,” Liles said. “That’s a really important feature of the assessment proposal.”

The taxes would expire on Jan. 1, 2014, when the Patient Protection and Affordable Care Act requires state Medicaid programs to cover anyone earning up to 133 percent of the federal poverty level. At that time, states will receive additional federal money to help cover those costs.

The plan calls for the state to not reduce payments to AHCCCS health care providers while the assessments are in place. It also would freeze AHCCCS enrollment on July 1 and implement a membership cap beginning Jan. 1, 2012. The number of childless adults who would be funded under the plan would largely depend on when AHCCCS implemented the freeze, Liles said.

The plan included a number of other cost-sharing and personal accountability provisions, Liles said, including increasing the co-payment for non-emergency use of emergency rooms by $10 to $15; implementing co-payments for urgent care visits; and higher co-payments for office visits. The plan also proposed eliminating coverage of some “durable medical equipment,” gastric bypass surgery and transportation for non-emergency medical care.

Liles said those proposals would generate only a small amount of money.

“There’s not a lot of savings to the state associated with increasing those co-payments,” she said.

The U.S. Department of Health and Human Services in January rejected Brewer’s request to eliminate non-emergency medical transportation.

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