JEFFERSON CITY, Mo. – Besides the budget, Missouri lawmakers are tasked with renewing an important multi-billion tax this year that funds the state’s Medicaid program for more than one million people.
The Federal Reimbursement Allowance (FRA) program is a tax collected from medical providers like hospitals to support Medicaid, bringing in more than $4 billion. The last time the General Assembly was charged with renewing this crucial tax, lawmakers came back for a special session because they missed the May deadline.
“There’s no use in wasting any more tax dollars than we have to,” Gov. Mike Parson said. “I just say get in there, get it done, and move on.”
It’s a key piece of funding for Missouri’s Medicaid program. If it’s not renewed, it could put the state’s budget in jeopardy.
“The FRA is an interesting conversation because nobody outside the building has any clue what it is relative to how big of a deal it is to our budget,” Senate President Pro Tem Caleb Rowden (R-Columbia) said. “I think it will look similar to how it looked two years ago. We’ll get it done.”
The tax is worth nearly $4.5 billion, and it’s collected from health care providers, which then allows the state to bring in double that from the federal government.
“If we didn’t pass it, I don’t even want to think about what would happen in terms of the Missouri budget, and if we don’t pass it, we know the federal government won’t renew it for us,” House Majority Leader Jon Patterson (R-Lee’s Summit) said.
The last time that tax was renewed in 2021, not only did the governor have to call the General Assembly back, but he threatened to make budget cuts because lawmakers couldn’t get it done.
“I don’t want bad actors to ruin it for a lot of people up here trying to do the right thing because I do think there’s a lot of people up here doing good things, but there’s no question about it, if they use the FRA to make a statement, they’ll end up in the same place they were two or three years ago, Parson said. “We’ll call them in for a special session because that has to be done.”
With it being an election year and the constant infighting between Republicans, the legislation could be dicey.
“If you’re a shameless person who doesn’t care about people, who doesn’t care about hospitals, who doesn’t care about hospitals closing in rural Missouri, you can use it [the FRA] for a leverage point,” Senate Minority Leader John Rizzo (D-Independence) said. “If we don’t pass an FRA, the health care system in the state of Missouri is in dire straits.”
Both House and Senate leadership say lawmakers plan to start working on legislation to renew the FRA within the coming weeks. Despite previous years, some want the legislation to pass more expediently this year.
“I’m looking at not politicizing the FRA,” House Speaker Dean Plocher (R-Des Peres) said. “I think Missouri’s interests need to be put first before certain drama. The FRA bill is essential in many ways of keeping Missouri functioning and making sure our citizens are protected as well.”
Multiple bills have been filed to renew the FRA. Two versions in the Senate remove the sunset so lawmakers don’t have to continue renewing the tax.
“When we have a conversation about the FRA, it’s not just about making our Medicaid program solvent; it’s about making sure we’re funding all of the things necessary,” House Minority Leader Crystal Quade (D-Springfield) said.
Back in 2021, a big problem in passing the legislation was finding a compromise on whether or not to allow Medicaid to cover contraceptives. In the final version of the bill, the General Assembly passed what some call a “clean FRA” with no language regarding contraceptives.
