Last week, Governor Sanford issued 107 individual line item vetoes totaling $107 million affecting most state agencies. Additionally, he entirely vetoed the $214 million extension of the anticipated FMAP increase, which the General Assembly contingently allocated to use in the budget under the assumption the funding would be realized. This money has not been officially approved by Congress, and it remains unclear when and if it will be.

Vetoing the use of the FMAP funding will have the following impacts on healthcare-related agencies:

• $170 million - Department of Health and Human Services (Medicaid Maintenance of Effort)
• $18 million - Department of Mental Health
• $14 million - Department of Health and Environmental Control

Further complicating the budget process this year, South Carolina's federal stimulus funds will end after June 2011, which is expected to cause over a $1 billion gap in next year's budget. According to Gov. Sanford, next year's shortfall will be "cataclysmic" and his most recent vetoes, if sustained, "will help alleviate the pain."

Unfortunately, in order to help lessen the current budgetary crisis and prepare for next year, Gov. Sanford has also vetoed the provider rate protection language which has prevented DHHS from lowering Medicaid provider reimbursement rates from their current levels since 2008. The removal of this language will allow the agency to reduce rates as needed in order to stabilize their budget during this expected revenue shortfall.

SCMA leadership has written letters to House Speaker Bobby Harrell, Ways & Means Committee Chairman Dan Cooper, and Senate Finance Committee Chairman Hugh Leatherman expressing our concern at the abrupt removal of this language and requesting that members override the veto, allowing more time for the possible adoption of the FMAP extension, as well as reminding legislators what further reduction in provider rates means to the patients and physicians of this state.

House Speaker Harrell has said he expects legislators to sustain many of the Governor's vetoes. It takes a two-thirds vote of those members present and voting to override a veto.

The SCMA will keep you up to date as the General Assembly continues its work this week.