Today's marathon session of the House is all about the budget. Overall, the health and human services budget writers in the House were careful to use a scalpel not a hatchet when trying to address budget cuts. For example, they did not eliminate any optional services in Medicaid. They did however give them a bit of a trim.
Another example is in state funded community services, they did a 20 million dollar cut but only for one year of the two year budget. There are of course another round of inflationary freezes to Medicaid provider rates and a 2% cut to provider rates, except for physician rates.
The Education budget is a bit of a different tale. K-12 education received a 8.5% cut and the elimination of teacher assistances in grades K-3 seems to be a given. There are also deep cuts in community college and university funding. We will be watching to see what happens as the budget vote wraps up tonight in the House.
So here is a round up of the special provisions that we were most interested in:
This special provisions puts for two cuts. The fist is a 20 million dollar cut in state funds and the second is a swap of funding at LMEs. A damaging special provision that would not have permitted LME’s to use state funds for individuals who have a Medicaid card was eliminated. This specific special provision would have disproportionately affected people with developmental disabilities.
MH/DD/SAS COMMUNITY SERVICE FUNDS
SECTION 10.11.(a) The Division of Mental Health, Developmental Disabilities, and Substance Abuse Services (as used in this section "The Division") is directed to reduce the Community Service Fund by twenty million dollars ($20,000,000).
SECTION 10.11.(b) The Division is directed, through consultation with LME
representatives and stakeholders, to develop a set of standardized covered benefits for recipients of LME Service Funds that shall become the only services paid for by community service funds through LMEs. These services shall be best practices for developmental disabilities, mental illness, and substance abuse.
SECTION 10.11.(c) Effective January 1 2012, the Division shall implement a
co-payment for all mental health, developmental disabilities, and substance abuse services based upon the Medicaid co-payment rates.
SECTION 10.11.(d) The Division is directed to reduce the Community Service Fund by twenty-five million dollars ($25,000,000) for the 2011-2012 fiscal year based on available fund balance reported by the LMEs' 2010 fiscal audit. The Division is directed to allocate the reduction among LMEs based on unreserved, undesignated fund balance totals, as of June 30, 2010. The LMEs are required to backfill the reduction with fund balance availability and not further reduce services beyond the amount identified in subsection (a) of this section.
SECTION 10.11.(e) LMEs are directed to spend their unreserved, undesignated fund balance on services, commensurate with the reduction directed by the Division. Quarterly reports shall be submitted to the Division by LMEs to ensure expenditures from fund balance occurs at the level required by this law. Additionally, the Division shall review the designation of reserved or designated fund balance accounts to determine whether accounts may be moved to unreserved, undesignated, in essence increasing the unreserved, undesignated fund balance available for purchase of services. If categories of funds are moved into the unreserved/undesignated categories, the affected LMEs are encouraged to spend these funds to minimize their share of the twenty million dollars ($20,000,000) in reductions to services as required in subsection (a) of this section.
SECTION 10.11.(f) The Department of Health and Human Services shall report to the House and Senate Appropriations Subcommittees by December 12, 2011, on the status of implementing this section.
Medicaid and Mental Health, Developmental Disabilities and Substance Abuse Services Provisions:
The following two provisions detail the provider rate changes in the House budget. The first provision states that there will not be an inflationary rate increase for Medicaid provider rates. The second provision states that the rate adjustment will be 2% for this biennial. It also sets up a carve out for physicians so that they will not be impacted by the rate reductions.
NO INFLATIONARY MEDICAID PROVIDER RATE INCREASES
SECTION 10.43. Notwithstanding any other provision of law, the Secretary of the Department of Health and Human Services shall not authorize any inflationary increases to Medicaid provider rates during the 2011-2013 fiscal biennium, except that inflationary increases for healthcare providers paying provider fees may occur if the State share of the
increases can be funded with provider fees.
MEDICAID PROVIDER RATE ADJUSTMENTS
SECTION 10.46.(a) Subject to the limitations contained in Section 10.37(a)(6) a. and b. of this act, the Secretary of Health and Human Services shall reduce Medicaid provider rates for all Medicaid providers by two percent (2%) except as follows:
(1) Physician Services. – The provider rate for physicians shall not be reduced.
General Assembly Of North Carolina Session 2011
(2) Hospital Inpatient Services. – The provider rate for inpatient hospital
services shall be reduced by a percentage equal to two percent (2%) plus a
percentage sufficient to achieve the amount of savings that would have
resulted if provider rates for physicians had been reduced by two percent
(2%). The provider rate for inpatient hospital services shall be further
reduced to offset any reduction or inflationary freeze attributable to
outpatient hospital services or to critical access hospitals.
SECTION 10.46.(b) The rate reductions required by this section shall take effect in accordance with the following schedule:
(1) October 1, 2011. – The provider rate reductions required by subsection (a) of this section shall take effect no later than October 1, 2011. If effective after
July 1, 2011, the reductions shall be adjusted by a percentage sufficient to
yield savings as if the reductions had taken effect on July 1, 2011.
(2) July 1, 2012. – On July 1, 2012, the provider rate reductions required by
subsection (a) of this section shall be adjusted to the level at which they
would have been without the adjustment required by subdivision (1) of this
SECTION 10.46.(c) No other adjustments to the provider rates for hospital
outpatient or critical access hospital rates shall be made, except that hospital outpatient and critical access hospital rates may continue to be eligible for inflationary increases.
In each budget we see a provision that details the Mental Health Changes for the coming two fiscal years. This one details the issues with cash flow problems for many non-single stream LMEs and also details the funding for local inpatient psychiatric beds.
MENTAL HEALTH CHANGES
SECTION 10.8.(a) For the purpose of mitigating cash flow problems that many non-single-stream local management entities (LMEs) experience at the beginning of each fiscal year, the Department of Health and Human Services, Division of Mental Health,
Developmental Disabilities, and Substance Abuse Services, shall adjust the timing and method by which allocations of service dollars are distributed to each non-single-stream LME. To this end, the allocations shall be adjusted such that at the beginning of the fiscal year the Department shall distribute not less than one-twelfth of the LME's continuation allocation and subtract the amount of the adjusted distribution from the LME's total reimbursements for the fiscal year.
SECTION 10.8.(b) Of the funds appropriated in this act to the Department of
Health and Human Services, Division of Mental Health, Developmental Disabilities, and
Substance Abuse Services, the sum of twenty-nine million one hundred twenty-one thousand six hundred forty-four dollars ($29,121,644) for the 2011-2012 fiscal year and the sum of twenty-nine million one hundred twenty-one thousand six hundred forty-four dollars ($29,121,644) for the 2012-2013 fiscal year shall be allocated for the purchase of local inpatient psychiatric beds or bed days. In addition, at the discretion of the Secretary of Health and Human Services, existing funds allocated to LMEs for community-based mental health, developmental disabilities, and substance abuse services may be used to purchase additional local inpatient psychiatric beds or bed days. These beds or bed days shall be distributed across the State in LME catchment areas and according to need as determined by the Department. The Department shall enter into contracts with the LMEs and community hospitals for the management of these beds or bed days. The Department shall work to ensure that these contracts are awarded equitably around all regions of the State. Local inpatient psychiatric beds or bed days shall be managed and controlled by the LME, including the determination of which local or State hospital the individual should be admitted to pursuant to an involuntary commitment order. Funds shall not be allocated to LMEs but shall be held in a statewide reserve at the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to pay for services authorized by the LMEs and billed by the hospitals through the LMEs. LMEs shall remit claims for payment to the Division within 15 working days of receipt of a clean claim from the hospital and shall pay the hospital within 30 working days of receipt of payment from the Division. If the Department determines (i) that an LME is not effectively managing the beds or bed days for which it has responsibility, as evidenced by beds or bed days in the local hospital not being utilized while demand for services at the State psychiatric hospitals has not reduced, or (ii) the LME has failed to comply with the prompt payment provisions of this subsection, the Department may contract with another LME to manage the beds or bed days, or, notwithstanding any other provision of law to the contrary, may pay the hospital directly. The Department shall develop reporting requirements for LMEs regarding the utilization of the beds or bed days. Funds appropriated in this section for the purchase of local inpatient psychiatric beds or bed days shall be used to purchase additional beds or bed days not currently funded by or through LMEs and shall not be used to supplant other funds available or otherwise appropriated for the purchase of psychiatric inpatient services under contract with community hospitals, including beds or bed days being purchased through Hospital Utilization Pilot funds appropriated in S.L. 2007-323. Not later than March 1, 2012, the Department shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate, the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and the Fiscal Research Division on a uniform system for beds or bed days purchased (i) with local funds, (ii) from existing State appropriations, (iii) under the Hospital Utilization Pilot, and (iv) purchased using funds appropriated under this subsection.
SECTION 10.8.(c) Of the funds appropriated in this act to the Department of
Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for mobile crisis teams, the sum of five million seven hundred thousand dollars ($5,700,000) shall be distributed to LMEs to support 30 mobile crisis teams.
The new mobile crisis units shall be distributed over the State according to need as determined by the Department.
SECTION 10.8.(d) The Department of Health and Human Services may create a midyear process by which it can reallocate State service dollars away from LMEs that do not appear to be on track to spend the LMEs' full appropriation and toward LMEs that appear able to spend the additional funds.
The following special provision continues the transition of utilization management to LMEs.
TRANSITION OF UTILIZATION MANAGEMENT OF COMMUNITY-BASED SERVICES TO LOCAL MANAGEMENT ENTITIES
SECTION 10.13. The Department of Health and Human Services shall collaborate with LMEs to enhance their administrative capabilities to assume utilization management responsibilities for the provision of community-based mental health, developmental disabilities, and substance abuse services. The Department may, with approval of the Office of State Budget and Management, use funds available to implement this section.
This year’s budget had multiple cuts to services and funding. The following special provision details the $5 million dollar cut to nonprofit organizations receiving funding from the Department of Health and Human Services. There is a carve out for state funding to nonprofit organization to pay for direct services to individuals with developmental disabilities.
REDUCE FUNDING FOR NONPROFIT ORGANIZATIONS
SECTION 10.18. For fiscal years 2011-2012 and 2012-2013, the Department of Health and Human Services shall reduce the amount of funds allocated to nonprofit General Assembly Of North Carolina Session 2011 organizations by five million dollars ($5,000,000) on a recurring basis. In achieving the reductions required by this section, the Department (i) shall minimize reductions to funds allocated to nonprofit organizations for the provision of direct services and (ii) shall not reduce funds allocated to nonprofit organizations to pay for direct services to individuals with developmental disabilities.
The Division of HHS and Division of DMA are in the process of applying for a 1915 (i) state plan amendment to plan for the provision of services for people living in assisted living centers and receiving personal care services.
MEDICAID WAIVER FOR ASSISTED LIVING
SECTION 10.38.(a) The Department of Health and Human Services, Division of Medical Assistance (Division), shall develop and implement a home- and community-based services program under Medicaid State Plan 1915(i) authority in order to continue Medicaid funding of personal care services to individuals living in adult care homes.
SECTION 10.38.(b) The Division shall implement the program upon approval of the application by the Centers for Medicare and Medicaid Services.
SECTION 10.38.(c) On or before April 1, 2012, the Division shall provide a report on the status of approval and implementation of the program to the Joint Legislative Commission on Governmental Operations, the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.
Once again there was a special provision detailing the co-pay for the CAP MR/DD program recipients. This provision has been included in the previous two budgets.
FAMILIES PAY PART OF THE COST OF SERVICES UNDER THE CAP-MR/DD PROGRAM AND THE CAP-CHILDREN'S PROGRAM BASED ON FAMILY INCOME
SECTION 10.36.(a) Subject to approval from the Centers for Medicare and
Medicaid Services (CMS), the Department of Health and Human Services, Division of Medical Assistance, shall, in consultation with the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and Community Alternatives Program (CAP) stakeholders, develop a schedule of cost-sharing requirements for families of children with incomes above the Medicaid allowable limit to share in the costs of their child's Medicaid expenses under the CAP-MR/DD (Community Alternatives Program for Mental Retardation and Developmentally Disabled) and the CAP-C (Community Alternatives Program for General Assembly Of North Carolina Session 2011 Children). The cost-sharing amounts shall be based on a sliding scale of family income and shall take into account the impact on families with more than one child in the CAP programs.
In developing the schedule, the Department shall also take into consideration how other states have implemented cost-sharing in their CAP programs. The Division of Medical Assistance may establish monthly deductibles as a means of implementing this cost-sharing. The Department shall provide for at least one public hearing and other opportunities for individuals to comment on the imposition of cost-sharing under the CAP program schedule.
SECTION 10.36.(b) The Division of Medical Assistance shall also, in
collaboration with the Controller's Office of the Department of Health and Human Services, the Division of Information Resource Management (DIRM), and the new vendor of the replacement Medicaid Management Information System, develop business rules, program policies, and procedures and define relevant technical requirements.
SECTION 10.36.(c) Implementation of this provision shall be delayed until the implementation of the new Medicaid Management Information System.
The education budget remained fairly unchanged during the amendment process with the exception of a special provision amendment sponsored by Representative Rick Glazier (D-Cumberland) that protected funding for positive behavioral support programs in our state.
SECTION 7.19.(c) In implementing budget reductions under this act, the
Department of Public Instruction shall make no reduction in funding or positions for the Positive Behavioral Support program.
The cuts that affect K-3rd grade teaching assistants in our public schools was not changed during the amendment process.
Included in the budget is a special provision detailing funds for children with disabilities receiving services in our public schools.
FUNDS FOR CHILDREN WITH DISABILITIES
SECTION 7.2. The State Board of Education shall allocate additional funds for
children with disabilities on the basis of three thousand five hundred ninety-eight dollars and fifty-five cents ($3,598.55) per child. Each local school administrative unit shall receive funds for the lesser of (i) all children who are identified as children with disabilities or (ii) twelve and five-tenths percent (12.5%) of its 2011-2012 allocated average daily membership in the local school administrative unit. The dollar amounts allocated under this section for children with disabilities shall also adjust in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve children with disabilities.