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House Co-Sponsorship Memoranda
House of Representatives
Session of 2023 - 2024
Regular Session
MEMORANDUM
| Posted: | May 31, 2023 10:36 AM |
|---|---|
| From: | Representative James B. Struzzi, II |
| To: | All House members |
| Subject: | IFO Medicaid Rate Analysis |
| I will be introducing legislation to require the Independent Fiscal Office (IFO) to develop payment rates for the Commonwealth’s Medical Assistance program. By way of background, significant portions of the Commonwealth’s Medicaid program are administered through “managed care,” where DHS contracts with managed care organizations (MCOs) to coordinate health care and other services for Medicaid recipients. The MCOs are paid a capitated payment, a fixed dollar amount per recipient per month, to cover the cost of services rendered. The capitated payments made to the MCOs are required to be actuarially sound, meaning that they must be developed by a qualified actuary and be sufficient to provide for all reasonable, appropriate, and attainable costs that the MCOs are likely to incur for services provided to Medicaid recipients. Capitated payments account for the bulk of the costs associated with the Capitation and Community HealthChoices appropriations – the two largest DHS line items. Managed care has provided a number of benefits for the Commonwealth’s Medicaid program, including better health outcomes for the Medicaid population as well as greater budget certainty. However, the bundling of Medicaid service costs into capitated payments severely limits visibility into the specific services that the Medicaid managed care systems—and ultimately Pennsylvania taxpayers—are paying for. To increase transparency within our Medicaid program, my legislation will direct the IFO to develop capitated payment rates for the physical health component of the HealthChoices managed care system that serves low-income individuals and families. Specifically, by May 1 of each year the IFO will develop and submit to the General Assembly capitated payment rates that are sufficient to maintain the services and benefits currently offered. Additionally, the IFO will breakout the components of the rates to show the cost of mandatory services that the Medicaid program must provide, optional services that the Commonwealth has opted to provide, and any nonmedical services or benefits that the Medicaid program currently offers. Ever-expanding DHS spending is the largest component of our General Fund budget, accounting for more than $18 billion, or 42% of the General Fund, in the current 2022-23 fiscal year. In order to control these rising health care and human services related costs, we must have a better understanding of the services and benefits that are being offered. The legislation is an important step in providing the General Assembly with the information we need to make informed budgeting decisions. I hope you will join me in cosponsoring this legislation. |
Introduced as HB1596