LANSING ? Gov. Rick Snyder delivered a budget surprise Monday when he announced his recommendation for the 2011-12 fiscal year budget will propose no cuts to Medicaid reimbursement rates.

Snyder will unveil his budget recommendation Thursday. Snyder administration officials have said it will propose no one-time sources of funds be used to close a $1.8 billion gap between available revenues and existing spending in the general fund. Snyder also will propose a business tax overhaul that will chop another $1.5 billion out of the general fund.

Given those parameters, and the expectation for something close to $2 billion in general fund cuts, Snyder’s announcement he would protect reimbursement rates within the $11.5 billion Medicaid budget turned heads.

Snyder was speaking in Detroit where he was honored as Crain’s Detroit Business’ 2010 Newsmaker of the Year and said, according to multiple news reports, that he decided not to cut reimbursement rates because so many residents are suffering.

Snyder press secretary Sara Wurfel said Snyder made the move because further cuts would have caused more providers to stop seeing Medicaid patients. “In a tough economy when folks are struggling already,” the administration wants “to make sure we maintain those rates so people can get the care and services they need,” she said.

Sen. John Moolenaar (R-Midland), chair of the Senate Appropriations Community Health Subcommittee, said the move makes sense because increasingly health care providers struggle with whether to treat Medicaid patients because reimbursement rates already are so low.

“We want health care providers to care for Medicaid recipients,” he said. “And more and more providers are faced with financial decisions as to whether or not they will do that, and I think we want to encourage that.”

Exactly how much money Snyder’s move takes off the table from cuts was not clear. Several Medicaid experts said it would effectively leave as the only option for reductions in Medicaid the elimination of the so-called optional services such as adult dental, chiropractic, prescription drugs, podiatric and hearing and vision, among others.

Snyder officials were unable to say prior to publication whether Snyder’s remarks also protected the optional services.

How much the state spends on optional services also is a squishy number because there is not currently a general agreement on what that number is among the legislative and executive branches.

The move also means other areas of the budget are looking at that much more in cuts, that Mr. Snyder will propose even more elimination of tax exemptions than previously thought, or both.

“I recognize the wisdom of it, but from a numbers standpoint, it does present additional challenges, there’s no question about it,” Moolenaar said.

Said Wurfel of how taking reimbursement rates out of the mix affects the overall budget: “It’s not going to be easy. There are going to be tough cuts, but it’s also balancing how to preserve some of these essential services, but make the changes that need to happen to put the state on a solid financial footing.”

Colin Ford, director of state government relations for the Michigan State Medical Society, praised Snyder’s announcement, saying the state’s Medicaid system has become lean in the last decade.

“It shows me that he’s done his homework,” he said. “There’s just not a lot of excess there. It’s a credit for him for digging in and seeing that the numbers really reflect that.”

Still, Ford noted that Snyder’s announcement was only a beginning and that the Legislature still must review and pass the budget. Mr. Snyder’s announcement is not necessarily a relief, but “It’s a good place to start from,” he said.

Rep. Matt Lori (R-Constantine), chair of the House Appropriations Community Health Subcommittee, also praised the move because further reimbursement rate cuts would have made it only that much more difficult for Medicaid patients to find a provider willing to see them.

“Preliminarily, it’s good news. We’ll see if it holds up on Thursday,” he said. “The providers now are pretty much at the end of their limits as far as reimbursements go.”

BUDGET PRESENTATION: Already known was that Snyder would attend the budget presentation as well as Budget Director John Nixon. But also joining them will be Lt. Governor Brian Calley. Snyder will give an overview of his tax and budget plans with Calley offering more detail on the tax side and Nixon more detail on the budget side.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

a>>