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Senate committee considers bill extending Medicaid funding mechanism


JEFFERSON CITY, Mo. — During its first hearing of the new session, the Senate Appropriations Committee on Wednesday heard testimony for a bill extending the federal match for Medicaid payments in Missouri. 

Sen. Dan Hegeman, the Republican chair of the Appropriations Committee, sponsored SB 1, which would extend the federal match, also known as the Federal Reimbursement Allowance (FRA). The FRA has been extended every year since it was first implemented on July 1, 2005. 

“As most of you know, the FRA is how we fund over $1 billion of our state Medicaid program, and it is vitally important to our state budget,” Hegeman said as he introduced the bill to the committee. 

The bulk of the hearing was taken up by the committee’s questioning of Rob Monsees of the Missouri Hospital Association, who was there to testify in favor of the bill — kicking off an expected Medicaid-driven session. 

Sen. Bill Eigel said he was surprised the FRA is extended each year with little debate. 

“The FRA is a mechanism by which the largest government program we have sees no reform,” Eigel said, in reference to Missouri’s Medicaid program, also known as MO HealthNet. “We have thrown money at a broken program with no meaningful reform whatsoever.” 

After the exchange, the conversation diverted to one more broadly focused on the state’s Medicaid program, with legislators asking Monsees questions about the program and the challenges and changes that will come with expansion.

In August, Missouri voters approved a constitutional amendment that expanded Medicaid in Missouri despite the Republican majority in the legislature opposing expansion. Roughly 85 percent of all payments to hospitals through the state’s Medicaid program are covered by the FRA.

Sen. Mike Cierpoit asked Monsees if Medicaid expansion would have a significant impact on the FRA. 

“The increase in reimbursement will generate a substantial amount of new FRA dollars. Some of those dollars can help provide an offset to the cost of expansion,” Monsees said.

He also said should the General Assembly fail to pass SB 1, it “would radically destabilize that funding mechanism.” 

No witnesses testified in opposition to the bill, and the committee declined to immediately vote on it.