Governor’s Budget Bill: Medicaid Rates Hold Steady

Governor Charlie Baker released his proposed FY 2021 state budget last week, and it contains, for the second year in a row, an update to MassHealth spending of less than 1%.
Under the Baker proposal, MassHealth is funded at $16.772 billion in FY21, a 0.6% increase from FY20; the proposed budget assumes MassHealth enrollment will rise by 0.7%. Because of federal-state Medicaid cost sharing, the net state cost of the FY21 MassHealth budget is $6.740 billion, or 40% of the total.
Provider rate reimbursement is essentially held flat in FY2021, although the budget contains a targeted investment of $11 million for fee-for-service rates at inpatient psychiatric hospitals. There are other investments in behavioral health, fulfilling the administration’s focus on improving this sector of the healthcare system.
The proposed budget contains language allowing for $15 million in state funding for the health safety net, but the budget language is “permissive” in nature, meaning the state “may” fund “up to” $15 million. In recent years, the budget appropriated amount has been sent to the safety net; in previous years it was not.
After years of level funding, the governor proposes a $31.07 million budget for Center for Health Information and Analysis (CHIA), which represents a 13.3% increase relative to the FY2020 appropriation. The governor recommends a $10 million budget for the Health Policy Commission (HPC), a 1.7% increase. Acute care hospitals, ambulatory surgical centers, and insurers are responsible for funding the expenses of CHIA and the HPC. 
The governor’s budget is considered a starting point for the budget deliberations that will occur over the next six months. The House budget is due in April.