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<TITLE>: CONFERENCE REPORT (7-15-03) - FY 2003-04 COMMUNITY HEALTH BUDGET</TITLE>
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<p><span style="font-family: 'Arial', sans-serif">FY 2003-04 <a name="3"></a>COMMUNITY HEALTH BUDGET - H.B. <a name="1"></a>4392 (CR-1): CONFERENCE REPORT</span></p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-left: none; border-top: 0.04in double #7f7f7f; border-bottom: 0.04in double #7f7f7f" valign="top"><p><span style="font-family: 'Arial', sans-serif"><span style="font-weight: bold">FY 2002-03 Year-to-Date Gross Appropriation<span>. . . . . .&am p;#160;. . . . . . . 0;. . . . . . . .&a mp;#160;. . . . . . .&# 160;. . </span></span></span></p>
</td>
<td class="table1column2" width="20%" style="border-left: none; border-right: none; border-top: 0.04in double #7f7f7f; border-bottom: 0.04in double #7f7f7f" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif"><span style="font-weight: bold">$9,278,149,412</span></span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; padding-top: 0.0433333in; padding-bottom: 0.02in; border-left: none; border-top: none" valign="top"><p><span style="font-family: 'Arial', sans-serif"><span style="font-weight: bold">Changes from FY 2002-03 Year-to-Date:</span></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none; padding-top: 0.0433333in; padding-bottom: 0.02in" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif"> </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; padding-top: 0.0433333in; padding-bottom: 0.02in; border-left: none; border-top: none" valign="top"><p><span style="font-family: 'Arial', sans-serif"><span style="text-decoration: underline">Items included by the Senate and House</span></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none; padding-top: 0.0433333in; padding-bottom: 0.02in" align="right" valign="top"><p style="text-indent: 5.72833in; margin-left: -5.72833in"><span style="font-family: 'Arial', sans-serif"> </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; padding-top: 0.0433333in; padding-bottom: 0.0416667in; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif"> 1.<span>  </span></span><s pan style="font-weight: bold">Medicaid Special Financing.</span> The Conference Committee concurred with the
Executive’s adjustments to Medicaid special financing. <span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none; padding-top: 0.0433333in; padding-bottom: 0.0416667in" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">(203,897,900) </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; padding-top: 0.0433333in; padding-bottom: 0.02in; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif"> 2.<span>  </span></span><s pan style="font-weight: bold">Annualization and Other Adjustments to Base Funding.</span> The Conference
Committee <span style="font-family: 'Arial', sans-serif">concurred with the Executive’s annualization of Executive Order and
Budgetary Savings reductions and also concurred with non-GF/GP adjustments to
correct line item authorizations.</span><span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none; padding-top: 0.0433333in; padding-bottom: 0.02in" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">(87,265,400) </span><span style="font-family: 'Arial', sans-serif"></span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; padding-top: 0.0433333in; padding-bottom: 0.02in; border-left: none; border-top: none" valign="top"><p><span style="font-family: 'Arial', sans-serif"><span style="text-decoration: underline">Conference Agreement on Items of Difference</span></span><span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none; padding-top: 0.0433333in; padding-bottom: 0.02in" align="right" valign="top"><p style="text-indent: 5.72833in; margin-left: -5.72833in"><span style="font-family: 'Arial', sans-serif"> </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; padding-top: 0.0433333in; padding-bottom: 0.02in; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif"> 3.<span>  </span></span><s pan style="font-weight: bold">Medicaid Match Rate.</span> The Federal Medicaid match rate was originally slated to
increase from 55.42% to 55.89%, for a GF/GP savings of $35,601,900. Recently-passed Federal legislation increases that rate to 58.84% for the first three quarters
of FY 2003-04 for an additional $168,400,000 GF/GP savings.<span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none; padding-top: 0.0433333in; padding-bottom: 0.02in" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">0 </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; padding-top: 0.0433333in; padding-bottom: 0.02in; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif"> 4.<span>  </span></span><s pan style="font-weight: bold">Increases in Federal Funds. </span>The Conference Committee recognized significant
increases in Federal grants<span style="font-family: 'Arial', sans-serif">, including over $42 million to combat potential
Bioterrorism in Michigan.</span><span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none; padding-top: 0.0433333in; padding-bottom: 0.02in" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">56,971,000 </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; padding-top: 0.0433333in; padding-bottom: 0.02in; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif"> 5.<span>  </span></span><s pan style="font-weight: bold">Medicaid Adult Benefits Waiver.</span><span style="font-family: 'Arial', sans-serif"> The Conference Committee mostly concurred
with the Executive’s Medicaid Adult Benefits Waiver proposal, which would expand
limited benefits to some indigent adults, limit benefits for some eligibles, and retain
caretaker relative coverage. The Conference Committee retained podiatric,
chiropractic, and hearing aid benefits.</span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none; padding-top: 0.0433333in; padding-bottom: 0.02in" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">(224,012,700)</span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; padding-top: 0.0433333in; padding-bottom: 0.02in; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif"> 6.<span>  </span></span><s pan style="font-weight: bold">Medicaid Base, Caseload, and Utilization Adjustments and Quality Assurance
Assessment Program (QAAP).</span> The Conference Committee concurred with the
consensus base adjustment for the major Medicaid line items. The Conference
Committee also included a $257,417,600 Gross, $0 GF/GP adjustment to reflect
Gross funding needed to implement the QAAP programs for hospitals, nursing
homes, and health maintenance organizations.<span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none; padding-top: 0.0433333in; padding-bottom: 0.02in" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">698,953,900 </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif"> 7.<span>  </span></span><s pan style="font-weight: bold">Mental Health Issues. </span>The Conference Committee included funding for a 1.6%
increase in Medicaid mental health rates over final FY 2002-03 rates. Also
recognized were funding changes<span style="font-family: 'Arial', sans-serif"> from State facilities, including the closure of the
Northville Psychiatric Hospital.</span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">57,776,800 </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif"> 8.<span>  </span></span><s pan style="font-weight: bold">Savings from Medicaid Changes. </span>The Conference Committee concurred with the
Executive’s proposals on Medicaid restructuring and pharmaceutical cost reduction.<span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">(139,485,200)</span><span style="font-family: 'Arial', sans-serif"></span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif"> 9.<span>  </span><span style="font-weight: bold">Detroit Medical Center (DMC). </span>The Conference Committee included funding for
DMC.</span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">50,000,000 </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif">10.<span> </span></span><span style="font-weight: bold">Economic Adjustments. </span> Limited economic adjustments were made.<span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">115,900 </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif">11.<span> </span></span><span style="font-weight: bold">Tobacco Revenue.</span> The Conference Committee increased Tobacco support of the
Medicaid base from $30.8 million to $58 million for a savings of $27.2 million
GF/GP.<span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">0 </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif">12.<span> </span></span><span style="font-weight: bold">Other Changes.</span> The net effect of other changes is a decrease to the budget.<span style="font-family: 'Arial', sans-serif"></span></p>
</td>
<td class="table1column2" width="20%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="right" valign="top"><p><span style="font-family: 'Arial', sans-serif">(689,812)</span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p style="text-indent: -0.291667in; margin-left: 0.291667in"><span style="font-family: 'Arial', sans-serif">13.<span> </span></span><span style="font-weight: bold">Comparison to Governor’s Recommendation. </span>The Conference Committee report
is $22,406,500 below the Governor’s level of GF/GP appropriations, and is above the
Governor’s Gross budget by $369,269,100.</p>
</td>
<td class="table1column2" width="20%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.0133333in solid" align="right" valign="top"><p> </p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-left: none; border-top: none" valign="top"><p>Total Changes<span>. . . . . . 60;. . . . . . . .& amp;#160;. . . . . . .& #160;. . . . . . .  . . . . . . . .&am p;#160;. . . . . . . 0;. . . . . . . .&a mp;#160;. . . . . . </span ></p>
</td>
<td class="table1column2" width="20%" style="border-left: none; border-right: none; border-top: none" align="right" valign="top"><p>$208,466,588 </p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-left: none; border-top: 0.04in double #7f7f7f; border-bottom: 0.04in double #7f7f7f" valign="top"><p><span style="font-weight: bold">FY 2003-04 Conference Report Gross Appropriation<span>. . . . . .&am p;#160;. . . . . . . 0;. . . . . . . .&a mp;#160;. . . .</span></span></p>
</td>
<td class="table1column2" width="20%" style="border-left: none; border-right: none; border-top: 0.04in double #7f7f7f; border-bottom: 0.04in double #7f7f7f" align="right" valign="top"><p><span style="font-weight: bold">$9,486,616,000 </span></p>
</td>
</tr>
<tr>
<td class="table1column1" width="80%" style="border-right: none; border-left: none; border-top: none; border-bottom: none" valign="top"><p><span style="font-weight: bold">Amount Over/(Under) GF/GP Target:</span> $0</p>
</td>
<td class="table1column2" width="20%" style="border-left: none; border-right: none; border-top: none; border-bottom: none" align="right" valign="top"><p> </p>
</td>
</tr>
</table>
<div style="margin-left: -0.125in">
<table width="732px" cellpadding="6" cellspacing="0">
<tr>
<td class="table2column1" width="100%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.04in double #7f7f7f" valign="top"><p><span style="font-family: 'Arial', sans-serif">FY 2003-04 <a name="4"></a>COMMUNITY HEALTH BUDGET - BOILERPLATE HIGHLIGHTS</span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p><span style="font-family: 'Arial', sans-serif"><span style="font-weight: bold">Changes from FY 2002-03 Year to Date:</span></span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p><span style="font-family: 'Arial', sans-serif"><span style="text-decoration: underline">Conference Agreement on Items of Difference</span></span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif"> 1.<span>  </span><span style="font-weight: bold">Contingency Funds. </span>The House retained while the Senate removed current year language that establishes
Federal, State-restricted, local and private contingency funds available for transfer under the legislative
transfer process. The Conference Committee concurred with the Senate. (Sec. 206)</span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif"> 2.<span>  </span><span style="font-weight: bold">CMHSP Reporting Requirements.</span> The House included language requiring the Department to establish a
work group comprised of CMHSP/specialty prepaid health plan and Departmental staff to recommend
strategies to streamline audit requirements. The Senate retained this language, however, replaced “audit
requirements” with “reporting requirements”. The Conference Committee included both “audit and reporting
requirements”. (Sec. 450)</span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif"> 3.<span>  </span><span style="font-weight: bold">Bioterrorism Preparedness.</span> The Conference Committee retained the Senate version of language originally
included by the House governing the allocation of Federal bioterrorism preparedness funds; Sec. 853
allocates up to $1,000,000, as allowed by Federal law or regulation, to a multispecies lab and necropsy facility
located in the State that is certified by the USDA animal, plant, health inspection service, with a biosafety level
2/3 certification. However, the Conference Committee did not include Senate language (Sec. 854) which
states Legislative intent that priority consideration for the allocation of bioterrorism hospital preparedness
funds be given to the State’s level one trauma centers. </span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif"> 4.<span>  </span><span style="font-weight: bold">Medicaid Dental Providers.</span> The Senate included language requiring the Michigan Dental Association
(MDA) to provide a report documenting their efforts to increase the MDA membership’s participation as
Medicaid providers. In addition, the Senate included language requiring the Department, in conjunction with
the MDA, to undertake a study to determine the level of participation by Michigan licensed dentists in the
State’s Medicaid program. The Conference Committee concurred with the Senate. (Sec. 1109, 1713)</span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif"> 5.<span>  </span><span style="font-weight: bold">Disease Management Programs.</span> The Senate included language allowing the Department, in conjunction
with pharmaceutical manufacturers, to establish pilot projects to test the efficacy of disease management and
health management programs. The Conference Committee concurred with the Senate. (Sec. 1621a)</span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif"> 6.<span>  </span><span style="font-weight: bold">Exemption from Prior Authorization.</span> The Senate included language exempting the following persons from
prior authorization requirements: individuals that become Medicaid eligible who are currently under medical
treatment and whose conditions have been stabilized under a given medication regimen (Sec. 1629a);
individuals under a court order for a particular medication (Sec. 1629b); and, recipients of the children’s
special health care services program for prescription drugs related to their qualifying condition (Sec. 1628).
The Conference Committee retained Sec. 1628, but did not include Sec. 1629a or Sec. 1629b. </span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif"> 7.<span>  </span><span style="font-weight: bold">Multi-State Drug Purchasing Compact.</span> The Senate included language allowing the Department to
continue all rebate and supplemental rebate contracts with a pharmaceutical manufacturer until a multi-state
drug purchasing compact is fully established. In addition, the Senate included language requiring the
Department, prior to implementing a multi-state drug purchasing compact, to provide a benefit-cost analysis
to document that the savings from the compact exceed the savings from the current preferred drug list
supplemental rebate programs. The Conference Committee concurred with the Senate. (Sec. 1624, 1626)</span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif"> 8.<span>  </span><span style="font-weight: bold">Atypical Antipsychotic Medications.</span> The Senate included language requiring the Department to continue
its practice of placing all atypical antipsychotic medications on the Medicaid preferred drug list. The
Conference Committee concurred with the Senate. (Sec. 1625)</span></p>
</td>
</tr>
<tr>
<td class="table2column1" width="100%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif"> 9.<span>  </span><span style="font-weight: bold">Pharmaceutical Savings.</span> The Conference Committee included language stating Legislative intent that at
least $18.9 million of GF/GP savings generated by the implementation of a Medicare pharmacy prescription
coverage program be used to fund the pharmaceutical services line. If such savings are not generated, the
Department shall request that a transfer of funds be made from the Medicaid Benefits Trust Fund to the
pharmaceutical services line item. </span></p>
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<tr>
<td class="table2column1" width="100%" style="border-left: none; border-right: none; border-top: none; border-bottom: none" valign="top"><p style="text-indent: -0.166667in; margin-left: 0.166667in"><span style="font-family: 'Arial', sans-serif">10.<span> </span><span style="font-weight: bold">Detroit Medical Center (DMC). </span> The Conference Committee included language requiring that the $50 million
hospital disproportionate share payment for DMC shall only be distributed if $7 million of local funds are
received by the State from the city of Detroit and Wayne County. (Sec. 1717)</span></p>
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</table>
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<p><span style="font-family: 'Arial', sans-serif">Date Completed: <a name="5"></a>7-15-03 - Fiscal Analysts: <a name="6"></a>John Walker</span></p>
<p> - Steve Angelotti</p>
<p> - Dana Patterson</p>
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