State Budget Alert:

Pennsylvania Legislature Gives the Department of Public Welfare Authority to Make Sweeping Changes to Medical Assistance

On June 30, the General Assembly enacted significant changes to the statute known as the Public Welfare Code, 62 P.S. § 101 – 1503, which governs many of Department of Public Welfare’s programs, including Medicaid (also known as Medical Assistance).  These were signed into law by the Governor on June 30 as Act 22 of 2011.  These changes grant DPW the authority to make significant changes to Medical Assistance benefits and provider reimbursement rates without the usual oversight by the General Assembly or the Independent Regulatory Review Commission.

In the past, when expenditures, especially for Medical Assistance, exceeded the amount appropriated in the budget, the Governor would ask for one or more “supplemental appropriations” to fund the additional costs.  Act 22 makes clear that DPW will have to “live” within the budget as passed on June 30, without any supplemental appropriations later in the year.  DPW may move money around within its various line items but cannot exceed the aggregate amount appropriate to DPW in the budget.  Act 22 mandates DPW to make a variety of changes, including Medical Assistance, to keep costs within the amounts appropriated in the budget for this fiscal year.

Those changes include:

  • Reducing eligibility standards;
  • Changing the “nature & extent of assistance”;
  • Allowing providers to deny services for non-payment of copays;
  • Modifying existing benefit packages or create new ones;
  • Establishing benefit limits & exceptions to those limits;
  • Revising provider payment rates, fee schedules & reimbursement methodologies;
  • Restricting or eliminate presumptive eligibility; and
  • Establishing provider qualifications.

DPW will be able to take all the actions above, to the extent they are “consistent with law”, by publishing “final omitted” regulations.  It appears that DPW can avoid the regulatory process and just publish a notice in the official state publication, the Pennsylvania Bulletin, which will “set forth the copayment schedule”.

In the weeks and months ahead, as DPW determines what Medical Assistance program changes to make, an open and inclusive process is essential.  The Pennsylvania Health Law Project will monitor and highlight the economic and human impact of these changes.




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