The Ohio Hospital Association prefers the Senate’s state budget proposal to the plan offered earlier this year by the House of Representatives.
That’s because the Senate plan removes one provision related to Medicaid from the House budget that OHA didn’t like, and preserves a key Medicaid-related measure that the hospital group endorses.
First, the Senate plan removes “non-contracting” language that OHA says would “destroy Ohio hospitals’ ability to negotiate fair contracts with Medicaid managed care plans (MCPs).”
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Even though Medicaid is largely a publicly financed program, people enrolled in it receive coverage through for-profit health plans that contract with the state. Those health plans then negotiate deals with hospitals for service rates, payment terms and dispute resolution.
If hospitals couldn’t reach contractual agreements with Medicaid plans, the House budget proposal would’ve required hospitals to treat patients covered by the plan and pay standard Medicaid rates.
A Columbus Dispatch editorial called that setup a “sweet deal for managed care plans.”
“They could stonewall reasonable contract demands by hospitals, knowing that even without a contract, they can send their patients to the hospital and pay lower rates to boot,” the Dispatch said.
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Hospitals were most concerned that MCPs would have bargaining power and not have to negotiate certain contract terms, such as prompt payment or maintaining a robust network of providers, an OHA spokeswoman said.
Additionally, the House budget proposal keeps a franchise fee that costs hospitals $580 million during the last two years, a measure OHA has backed. While it may seem odd that hospitals would essentially ask the state to take more of their money, there are two good reasons for the OHA’s support of the measure.
First, the hospital franchise fee is designed to help the state draw in more matching federal dollars for Medicaid. Second, hospitals are currently being reimbursed for the fee, which was initiated in 2009 by former Gov. Ted Strickland and initially planned as a temporary measure. “Think of it as hospitals loaning money to the state to allow Ohio to leverage the funds and bring in more federal money,” The Plain Dealer explained earlier this year.
Medicaid is the single-largest expense in Ohio’s budget, accounting for nearly $1 of every $3 spent. About 2.1 million Ohio residents obtain healthcare through Medicaid.
