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Inside the Senate’s FRA reauthorization battle


JEFFERSON CITY, Mo. — As it came time to reauthorize the state’s federal reimbursement allowance (FRA) program last week, the process ran into a bit of a roadblock over a provision that would expand it to include a “new tax.” 

In addition to extending the sunset on the current program for two years, Republican Sen. Dan Hegeman’s SB 29 expanded the FRA program to include managed care by July 2020 with the commercial rate not exceeding $1.80 per member per month.

State Sen. Dan Hegeman

“The inclusion of the managed care organization FRA will allow the state to draw down an additional $19-20 million in federal Medicaid dollars,” Hegeman said.

The FRA program isn’t new; in fact, it began more than two decades ago in 1991 before the provider tax became law in the state a year later. The Missouri Hospital Association touts the program as a “major source of revenue to the state” and a “major funding stream for MO HealthNet,” the state’s Medicaid program.

The program taxes providers under its umbrella for the state’s Medicaid program. That money, in turn, is then matched by federal dollars at a higher rate, reimbursing the providers and leaving the state with extra money.

Under the program’s purview are: ground ambulances, nursing facilities, hospitals, pharmacies, and facilities for the intellectually disabled.

“The FRA is very important because it supplies over $1 billion in Medicaid funding,” Hegeman told The Missouri Times. “The addition of the managed care FRA will help the state draw down more federal dollars to pay for the ever-increasing cost of Medicaid.”

The FRA program contributed to about 17.19 percent of the MO HealthNet’s appropriations in 2017, according to data from the Missouri Hospital Association. The general revenue accounted for 17.06 percent, federal funds 51.37 percent, other provider taxes 6.47 percent, and other funds 7.91 percent. In comparison, the general revenue accounted for 39.5 percent of the MO HealthNet’s appropriations in 1990.

Conservative Caucus tackles the ‘new tax’

Several conservatives objected to the expansion of the FRA program — as well as the failure of the Senate to adopt an amendment from Sen. Bill Eigel establishing work requirements for those involved in the MO HealthNet program. 

Eigel and Republican Sen. Bob Onder, in particular, pointed out the legislation would create a “new tax” on certain, private healthcare plans “in an era where our premiums keep going up” and would impact an estimated 70,000 Missourians.

State Sen. Cindy O’Laughlin

“At what point do you think we have to get away from raising taxes as a way to solve problems,” Eigel said, adding he didn’t object to extending the FRA program in general but didn’t agree to the addition of the new tax.

Sen. Cindy O’Laughlin said even though the additional tax would bring in about $20 million, there would be “no additional benefit to the individuals” who would have to pay the extra money.

“We have to recognize that the money coming into the state is hard-earned money, and we need to honor and respect that by doing the hard work necessary to have a full comprehension of our spending commitment and a good plan that does not render the average working Missourian poorer,” she told The Missouri Times. “We’re not looking ahead and taking everything into consideration.”

Dr. Abigail Barker, an economist and research assistant professor at Washington University in St. Louis, noted Missouri is already close to the limit in bringing in what’s allowed in terms of provider funding. And she said the federal government — meaning federal taxpayers — could still be on the hook for more in certain situations so Missouri “could get by with a smaller state budget.”

“This sounds like a good deal for the individual state, and it is, but at this point, so many states are doing the same thing, relying so heavily on provider taxes, that it has become problematic at the federal funding level,” Barker told The Missouri Times. “There seems to be some pushback and a strong possibility that in the future, provider taxes will be curtailed. In that sense, we would want to be cautious about coming to rely on this as a new revenue stream.”  

According to a 2017 study from the Kaiser Family Foundation, Missouri is one of the states that rely on provider taxes the most in the country.

Fight came amid particularly testy week

The fight over the FRA legislation came during an already contentious week for the Senate. Republican Sen. Mike Cierpiot took on the Conservative Caucus with a speech from the Senate floor lambasting the group of six for what he saw as “inconsistencies” with legislation they to advocate for. The public feud spilled onto the floor over multiple days.

The Senate also stalled on Title IX reform, sponsored by Republican Sen. Gary Romine, after an overnight filibuster led by Democrats. Then, ahead of Easter, the Senate advanced a nonbinding resolution opposing a statewide vote or legislative mandate on a potential merger of St. Louis City and County without adopting a position on the plan — despite a temporary hold-up launched by Eigel. Eigel took umbrage with Minority Floor Leader Gina Walsh’s resolution having been brought to the floor on the Thursday before the holiday and argued it deserved more time for debate.