Alabama: Medicaid Reduces Primary Care Payments

Medicaid-participating providers will no longer receive enhanced payments for certain primary care visits and services, a cost-cutting measure triggered by an $85 million shortfall in the State’s most recent Medicaid budget. The change goes into effect August 1 and is expected to save the State $14.7 million. State Medicaid Commissioner Stephanie Azar and Governor Robert Bentley (R) have proposed additional cuts to Medicaid in response to the budget, including the elimination of prescription drug coverage. In a statement released in response to the rate cuts, Governor Bentley saidhis goal is to continue the State’s transition to managed care delivered through regional care organizations, though the State has sought to delay that transition due to Medicaid’s funding levels. The enhanced primary care rates were originally required under and fully funded by the federal government, though Alabama has funded the program with State dollars and federal matching dollars since 2015.

Ohio: Medicaid MCO Tax Ending, Projected Revenue Down $1.1 Billion

A State tax on Medicaid managed care organizations in effect since 2009 will be eliminated by June 30, 2017 due to non-compliance with federal regulations. The tax was projected to generate $558 million in State revenue and $195 million in county revenue in fiscal year 2018. The elimination of the tax is expected to decrease projected net State revenue by $1.1 billion for the next two-year budget cycle. The federal government first advised Ohio that the tax was noncompliant in 2014 and said it should be ended after “the next legislative session.”

Vermont: Department of Health Selects OneCare Vermont as “Next Generation” Medicaid ACO

The State Department of Health has selected OneCare Vermont to become the Medicaid accountable care organization (ACO). The State’s “Next Generation” Medicaid ACO program aims to align with the federal Medicare ACO program and establish regular, prospective, and capitated Medicaid payments to OneCare to move toward value-based purchasing and away from the State’s current fee-for-service model. This proposed financial structure and the recentagreement that the State’s three ACOs (including OneCare) will be centrally managed by a new entity called the Vermont Care Organization (VCO) help to position the State to implement its proposed all-payer healthcare model. The State remains in negotiations with the federal government over its proposed all-payer system and its Next Generation Medicaid ACO model.