The House and the Senate Appropriations Committee Retain Special Rural Hospital Obstetrical Payment

Both the House and the Senate Appropriations Committee have rejected the governor’s proposal to eliminate the special hospital obstetrical payment and voted to retain it at its current level in their recommendations for the 2016 budget for the Department of Community Health (now the Department of Health and Human Services).

This special hospital OB payment, a legislative initiative, was included for the first time in the current budget year. An increased obstetrical payment to physicians also was implemented in the current budget year.

For the budget year that begins on Oct. 1, 2015, the governor recommended the elimination of the special hospital OB payment, saving $11 million in total funds, but saving only $3.8 million in state funds. The increased obstetrical payment to physicians was continued in the Executive Budget recommendation.

The Problem

Over the last few years, a number of Michigan hospitals have closed OB units due to low Medicaid reimbursement. When hospital OB units close, it impacts the entire community, not just those enrolled in Medicaid. There currently are 18 contiguous counties in northern and mid-Michigan with no hospital OB units. To stop the erosion of obstetrical services in Michigan hospitals, the Legislature created a special payment for qualifying rural hospitals in the current budget year.

Testimony has been provided year after year on the importance of access to delivery and emergency OB services for pregnant women and their babies within a reasonable geographic area. While the special hospital obstetrical payment will not remove any of the red X’s on the map, it is intended to prevent more counties from closing their OB units.

With around 50% of Michigan births paid by the Medicaid program, it is important to recognize the impact of reduced hospital OB availability on low-income women and their families. Many may face significant transportation issues. Requiring longer travel to reach needed care and delivery services puts women and their babies in jeopardy.

Retaining the special rural hospital obstetrical payment is critically important to low-income pregnant women and their babies, as well as to the communities where they live.