State budget introduced and hearings begin with budget management

• Does not raise taxes and preserves a 5.7 percent state income tax cut that was delayed under the Strickland Administration
• Cuts funding to local governments 25 percent per year and libraries by 5 percent
• Will allow for public employee pension reform to lessen local government contributions and increase employee contributions
• Cuts Medicaid spending by $1.4 billion
• Increases state aid to education by $170 million, but is significantly less than the $875 million of federal aid that was added in the last budget
• Allows for local governments to share emergency services and provides incentives for them to work together
• Will privatize five state prisons which will be sold and operated for about $200 million
• Will privatize the Department of Liquor Control

Health Transformation Team explains changes

In the House Finance Committee discussion, members heard from the directors of Medicaid and health agencies on their budget proposals. The Health Transformation Team, which is headed by Office of Health Transformation Director Greg Moody, includes:

• John Martin, director of the Department of Developmental Disabilities
• Bonnie Kantor-Burman, director of the Department of Aging
• John McCarthy, state Medicaid director
• Dr. Ted Wymyslo, director of the Ohio Department of Health
• Tracy Plouck, director of the Department of Mental Health
• Orman Hall, director of the Ohio Department of Alcohol and Drug Addiction Services (ODADAS)
• Michael Colbert, director of the Ohio Department of Job and Family Services (ODJFS)

Mr. Moody stated that the team’s directives are to align Medicaid policy priorities across agencies. Medicaid spending is about $20 billion of the state budget. Mr. Moody explained that the policy priorities are focused on better health outcomes for the 2.2 million Medicaid recipients as well as achieving a better value for Ohio’s taxpayers. Among the priorities is the Affordable Care Act’s (ACA) focus on medical homes, which could improve care and reduce costs by avoiding emergency room use, moving consumers away from hospitals to a lower cost site to receive their primary care, and reducing hospital admissions with earlier treatment. ACA provisions will also involve returning the control of prescription drugs to the managed care organizations, although the state will still be able to receive the supplemental rebates. In addition, the exchanges will provide another avenue for coverage for some citizens.

Another priority is the coordination of services to the state's dual eligible individuals who receive both Medicare and Medicaid. The budget also proposes Pediatric Accountable Care Organizations, which will create a new, evolving role for children's hospitals. 

Due to the loss of federal matching funds, Mr. Moody’s testimony explained where some of the reductions will be made to make up for $1.4 billion in Medicaid cuts:

• Per member per month rate for hospitals (- 1.8 percent)
• Outpatient hospitals (- 4.5 percent)
• Per member per month rate for outpatient hospitals (- 6.7 percent)
• Managed care plans (- 1 percent) in administrative/trend charges
• Community-based nursing services base rate (- 4.9 percent)
• Community-based aide services base rate (- 2.5 percent)