NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

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* See fiscal impact discussion.

Duplicates/Relates to Appropriation in The General Appropriation Act

SOURCES OF INFORMATION

Human Services Department

Health Policy Commission

SUMMARY

Synopsis of Bill

Senate Bill 812 makes several changes to the Medicaid managed care program as it relates to Native Americans including:

• Medicaid eligible Native Americans are excluded from the departments automatic enrollment in managed care; Native Americans would be included in managed care only if they so choose.
• Native Americans enrolled in managed care would be allowed to disenroll at any time; rules limiting when a person can opt out of a managed care organization would not apply to Native Americans.
• Native Americans who choose to be part of the managed care system but who have not selected a specific managed care organization would automatically be enrolled in a Native American managed care organization should such an organization becomes a managed care provider.
• HSD is authorized to enter into joint powers agreement with a managed care organization that is developed and controlled by either the Navajo Nation or a consortium of tribal governments.








FISCAL IMPLICATIONS





The Human Services Department reports that the bill would increase costs to the Medicaid program. However, they provide no rationale for the claim and make no attempt to quantify the supposed increased costs.





Given that any new Native American managed care organization's capitated rates would be determined on an actuarial basis, it should make little difference which organization they choose to enroll with. Furthermore, it seem that the Native American managed care organization would have to meet the upper payment test that other managed care organizations face. Thus, it is difficult to understand why costs should increase. (The upper payment limit test is a key part of the medicaid managed care waiver; it essentially requires that managed care organizations show that they are cost effective relative to cost on a fee-for-service basis). Again, if the department has some evidence or reasoning that can explain their assertion that the bill will increase costs, they should quantify and explain them.





ADMINISTRATIVE IMPLICATIONS





HSD reports that the bill would require revisions to their managed care policies, changes to capitated rates and possible amendments to HSD contracts with the Medicaid managed care organizations.





BT/njw