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SPONSOR: |
Heaton |
DATE TYPED: |
|
HB |
479/aHAFC |
||
SHORT TITLE: |
Medicaid Payments to Rise with Inflation |
SB |
|
||||
|
ANALYST: |
Weber |
|||||
APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
|
$1,250.0 |
Recurring |
General
Fund |
(Parenthesis
( ) Indicate Expenditure Decreases)
Relates
to Appropriation in the General Appropriation Act
REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
$3,750.0 |
|
Recurring |
Federal
Funds |
(Parenthesis ( ) Indicate Revenue Decreases)
Responses Received From
Human Services Department
Department of Health
Agency on Aging
SUMMARY
Synopsis of HAFC Amendment
The House
Appropriations Finance Committee amendments make the following changes:
“B. In years when the department re-bases rates
pursuant to regulations, the department shall use the medical care component of
the consumer price index as the inflationary adjustment measure.”. It is presumed this means the “nursing home
and day care component” of the consumer price index.
Significant
Issues
The original appropriation of $2.5 million has
been eliminated. As noted in the
original analysis below there is already a mechanism to increase the Medicaid
reimbursements to licensed nursing homes and intermediate care facilities for
the mentally retarded. However, regulations do not require an annual
increase be provided. In the current
fiscal year, no increase was included in the Medicaid appropriation for these
providers. The increase was omitted in
an effort to alleviate the overall Medicaid cost to the state. By making an annual increase mandatory,
considerable flexibility is lost by both the legislature and executive in
effectively managing the Medicaid program.
Such requirements are the expenditure side equivalent of earmarking
revenues. This will guarantee additional
upward pressure on Medicaid total cost.
Fiscal
Implications
The impact shown above in the Additional Impact
and Revenue sections are consistent with the projected increases totaling $5
million based on the Centers for Medicaid and Medicare market basket index of
2.7%. This is included in the current
House Bill 2.
Synopsis
of Original Bill
House Bill 479
appropriates $2.5 million from the General Fund to the Human Services Department
for the purpose of increasing the Medicaid reimbursement rate to licensed
nursing homes and intermediate care facilities for the mentally retarded.
Significant Issues
House Bill 479 makes a change to the Medicaid
reimbursement rates and ties reimbursement rates to the growth of the medical
price index for nursing homes and intermediate care facilities. HB 479 would require the Human Services
Department (HSD) to develop an alternative appropriate index if the Department
of Labor stops producing the medical care price index component.
Currently,
nursing home per-diem rates are adjusted using two methods that revolve around
a three-year cycle. Re-basing of the
prospective per diem rate takes place every three years. The re-basing year is considered year
one. The next re-basing will be
effective
Rates
for ICF/MRs run on a three-year cycle similar to nursing facilities. Again, year one is a re-basing year. The next re-basing for these facilities will
be effective
HB
479 would require HSD to amend its regulations and State Medicaid Plan to
comply with the new reimbursement scheme.
In addition, HSD will be required to make assurances to the Centers for
Medicare and Medicaid Services (CMS) that the new reimbursement scheme complies
with, 42 CFR 447, Subpart A – Payment for
Inpatient Hospital and Long-Term Care Facility Services in order for the State Medicaid Plan amendment
to be approved and to continue to receive federal financial participation
(FFP).
FISCAL IMPLICATIONS
The appropriation of
$2,500.0 contained in this bill is a recurring expense to the General
Fund. Any unexpended or unencumbered
balance remaining at the end of Fiscal Year 2004 shall revert to the General
Fund. When combined with the federal
match of $7,500.0, the total fiscal impact is $10.0 million. This appropriation may not be necessary since
an increase for these facilities is already included in the General Appropriation
Act.
ADMINISTRATIVE
IMPLICATIONS
Changes to the State
Medicaid Plan and Medical Assistance Division (MAD) regulations is a time
consuming and costly process that may require an additional appropriation.
OTHER SUBSTANTIVE
ISSUES
As described above,
there is already a mechanism in place to allow an inflation factor for these
providers. The re-basing years allows
for a facility specific inflation factor that should produce a fairer result
for both the state and facility. This
offers a higher adjustment for those providers offering a quality product with
costs greater than an average inflation rate and alternately saves the state on
those providers not keeping pace. The
current regulations do not require the inflation factor be used every year
thereby allowing the state flexibility in controlling Medicaid costs. HB 479 will eliminate this flexibility by
making the annual increase mandatory.
MW/yr:njw