| When Punxsutawny Phil did not see his shadow Friday, it was a mixed blessing – yes, we want Spring to come, but shorter winters also remind us of the urgent need to address climate change. While our work on this continues, this week’s letter discusses the rate review process for behavioral health services and revisions to the State’s use of federal pandemic relief funds.
A. Reviewing Medicaid Provider Reimbursement Rates
My first Finance Committee meeting two years ago introduced me to the holes in our safety net for people needing social and human services. At that time, the General Assembly approved a temporary patch of federal funds to supplement inadequate Medicaid reimbursement rates. Over the past year, the Office of Health Insurance Commissioner reviewed of those rates. On January 30, Commissioner made a Presentation describing the process and findings.
1. The Commissioner’s Cost Model
The Commissioner assessed the adequacy of Rhode Island’s Medicaid reimbursement rates by comparing them to neighboring states, and by developing an independent provider cost model. Based on these models, the Commissioner found a $44 million gap in current reimbursement rates for these services. (Other Medicaid rates were not discussed at this hearing.) Any rate increase would be funded by a mix of State and federal funds at a ratio of roughly 44% (state)/56% (federal). The Commissioner noted that the General Assembly’s charge to him did not request a review of primary care reimbursement rates; however, he recommended conducting such a review in the coming year.
2. The Governor’s Budget
While the Governor’s budget documents note the Commissioner’s rate review, they do not explicitly quantify its impact. In fact, the Governor’s 2025 overall budget of the Department of Behavioral Healthcare and Developmental Disabilities and Hospitals (which includes a number of other items not subject to rate review) proposes a $7.7 million reduction next year from the current year’s revised budget.
B. Repurposing Soon-To-Expire Federal Pandemic Relief Funds
In my January 7 letter, I discussed the Pandemic Recovery Office’s review of federal aid from the State Fiscal Relief Fund (SFRF) of the American Rescue Plan Act that was at risk of forfeiture due to the State’s failure to meet federal obligation and spending deadlines. Last Wednesday, that office issued a updated report with recommendations.
1. The Pandemic Relief Office’s Recommendations
The updated report recommends canceling than $65 million of currently unobligated and unspent federal fund projects, including funds for COVID response ($20 million plus), the South Quay Terminal project ($35 million), while also substituting $20 million of unrestricted surplus to pay for a water treatment plant at URI, which cannot be completed within the federal funding deadlines. The administration will be presenting its updated SFRF budget to the Finance Committee this Thursday, February 8.
I look forward to receiving more information about this budget. As noted in my January 7 letter, I want to ensure that some proposed funding substitutions comply with federal guidelines, and that the the budget spends this one-time money both promptly (to avoid forfeiture) and in the State’s best interest.
2. Compliance With Broad Federal Goals
I also am concerned with the program’s consistency with the goals Congress presented when approving this funding. As noted in my November 14 2021 letter, federal guidelines identified four permitted uses of SFRF money, namely (1) responding to the public health crisis and its economic impacts, (2) supporting essential workers, (3) replacing lost state revenue and (4) water/sewer/broadband infrastructure. The Governor’s budget describes how the State’s SFRF budget matches these categories with this pie chart: |
