On July 29 the Pennsylvania Department of Public Welfare (DPW) issued an update on state funding for health and human services programs, warning that although the FY2010-11 state budget has been signed it includes $850 million in federal matching funds for Medical Assistance that still requires Congressional approval. DPW said that failure of the U.S. Congress to provide the funding the enhanced Federal Medical Assistance Percentage (FMAP) will have a significant impact on Pennsylvania’s budget. The reductions could include cuts to human service programs, DPW said. Meanwhile, PA Governor Ed Rendell has announced meetings with legislative leaders to discuss ways to address the possible $850 million budget shortfall if Congress does not approve the FMAP extension. PA Senate Republican leaders have said that they had sought a contingency plan before the budget had been approved and that they are still seeking a plan now. Governor Rendell says that he is only starting the process of considering options and deciding on cuts. Congressional leaders are working to respond. Meanwhile, on July 29 Senate Majority Leader Harry Reid (D-NV) sought action in the Senate on the extension of an enhanced FMAP by filing for cloture on a substitute amendment to the Federal Aviation Administration reauthorization bill that includes enhanced Federal Medical Assistance Percentages (FMAP) for states. The enhanced FMAP provision would assure states receive a 3.2 percent Medicaid funding increase for the first quarter of calendar year 2011 and 1.2 percent for the second quarter of calendar year 2011. The funding increase would cost $16.1 billion. The amount in the Senate amendment will provide Pennsylvania with approximately $595 million of the $850 million in federal Medicaid assistance money that it had anticipated. The substitute amendment being advanced by Senator Reid also requires drug manufacturers to offer greater discounts for certain types of drugs in the Medicaid program. Even if the Senate approves the substitute amendment House of Representatives will have to act on the measure, and the House is in recess until Labor Day. Governor Rendell and other governors seeking the extension of enhanced FMAP have said that if Congress fails to extend the enhanced FMAP payments beyond the December 31 expiration date of the current FMAP enhancement thousands of state employees would be laid off and social services would be cut. See related story below MA Challenges in 2011: FMAP, Hospital Assessment, Revenues and Growth in MA. FMI: See www.state.pa.us.