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Alabama legislators debated today how to use a $1 billion oil spill settlement with BP, seeking common ground on how much should go to coastal counties and how much should go to paying off state debts and to Medicaid. Senators made a key change after more than five hours of debate. The Senate removed $191 million slated for road projects in Baldwin and Mobile counties and added $300 million for the Alabama Medicaid Agency over three years. ... The House voted 100-0 not to concur with the Senate changes and to send the bill to a conference committee to try to reconcile the differences, which have staunch opposition from south Alabama lawmakers. (Cason, 9/6)

The oil wreaked havoc on the tourism and seafood industries along the coast. Studies of Baldwin County found elevated levels of depression among residents due to the spill, even three years after the Deepwater Horizon explosion. Sen. Rusty Glover, R-Semmes, said Tuesday the coastal delegation could accept an amendment sponsored by Senate General Fund budget chairman Trip Pittman, R-Montrose – a Baldwin County senator – that would take $15 million from the road money and put it directly to Medicaid. But like other coastal legislators, he said they could not move further off that. (Lyman, 9/6)

Even if Alabama lawmakers find the money to fill an $85 million gap in the state’s Medicaid budget this year, that money could vanish in the blink of an eye. Federal audits of the Alabama Medicaid Agency, released this summer, claim that the state overcharged the federal Department of Health and Human Services by more than $90 million for services delivered years ago. Federal officials could ask for some or all of that money back, creating a new hole in the troubled program’s budget. (Lockette, 9/6)

Hospitals in the Dallas-Fort Worth region were overpaid by $27 million in federal funds to provide health care for the uninsured, according to a new order from the Obama administration, which is threatening to take the money back. Federal health officials allege that Texas has allowed private hospitals to leverage donations to local governments in order to improperly draw matching federal funds. Texas officials say they will challenge the decision, which appears to contradict an earlier directive by the Obama administration. (Walters, 9/7)

The state [of Maryland] will change the way it reimburses medical providers for drug rehabilitation under Medicaid, the insurance program for low-income people, to encourage more counseling services for addicts and emphasize its importance as part of treatment. The Department of Health and Mental Hygiene announced Tuesday that it will reimburse for outpatient counseling separately from methadone treatment beginning next March, opening the door for more patients to get counseling. It also will allow the state to better track whether treatment centers are providing counseling. (McDaniels, 9/6)