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F I S C A L I M P A C T R E P O R T

SPONSOR Feldman

DATE TYPED 3-9-05

HB

SHORT TITLE Study Facility-Based Care Impact on Medicaid

SB SM 35

ANALYST Collard

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

Minimal

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department (HSD)

Aging and Long-Term Services Department (ALTSD)

SUMMARY

Synopsis of Bill

Senate Memorial 35 directs ALTSD to lead a study on the financial impact of long-term care on

the Medicaid budget and identify alternative models of financing long-term care services. Long-

term care includes nursing home and Disabled and Elderly (D&E) Waiver services. ALTSD is

required to report findings and recommendations of the study to the interim legislative Health

and Human Services Committee in October 2005. ALTSD is also directed to provide copies of

the report to appropriate statewide organizations representing aging and long-term care. The

memorial directs HSD to cooperate with ALTSD in the study.

The study will involve appropriate statewide organizations representing aging and long-term care

services; identify appropriate incentives to encourage self-care and the use of insurance; explore

ways to limit asset identification and asset transfers and promote maximum Medicaid estate re-

covery; and develop recommendations for the implementation of alternative mechanisms for fi-

nancing long-term care services.

ALTSD is also directed to support the efforts of a statewide organization representing the needs

of people with Alzheimer’s disease and relevant other organizations, and to hold a conference

exploring alternative models of financing long-term care services.

Senate Memorial 35 -- Page 2

Significant Issues

HSD and ALTSD note the memorial states that the cost of providing long-term care services in

New Mexico exceeds $221 million in state and federal funds. This amount includes providing

nursing home care to approximately 6,850 individuals and D&E Waiver services to approxi-

mately 2,442 individuals in FY04.

Additionally, the memorial asserts that since people find it relatively easy to qualify for institu-

tional care, there is an “entitlement mentality” regarding the financing of institutional care. HSD

determines a person’s financial eligibility for Medicaid services. Once a person is determined to

meet financial and medical eligibility criteria for institutional care in New Mexico, that person is

entitled to receive nursing home care. By regulation, D&E Waiver applicants must also meet the

financial and medical eligibility criteria for institutional care; however, D&E Waiver services are

not considered entitlement services. HSD is allowed by federal requirements to limit the number

of individuals who receive D&E Waiver services and/or the total cost of D&E Waiver services

based on a Home and Community Based Services waiver application that is approved by the

Center for Medicare and Medicaid Services (CMS).

HSD indicates financial and medical eligibility criteria for institutional care, including nursing

home and D&E Waiver services in New Mexico, are established by the state within federal pa-

rameters. Currently, institutional care income eligibility is established at a level of 300 percent of

Supplement Security Income. It is possible for New Mexico to establish income levels that are

lower than the current level, which would reduce the number of individuals who meet financial

eligibility criteria for institutional care.

Alternatives to financing long-term or institutional care in New Mexico already exist. People

who cannot afford institutional care, based on existing income and resources, are able to access

Medicaid-funded care. Within federal parameters, HSD can raise financial eligibility criteria to

further limit the income or resources a person may have in order to qualify for Medicaid benefits.

FISCAL IMPLICATIONS

There is no appropriation contained in this memorial.

Fiscal implications for HSD and ALTSD to participate and pay for staff time committed to the

study would be approximately $6.4 thousand for each agency in FY06.

There would be fiscal implications for HSD and ALTSD to implement any recommendations

made in the study. However, both departments indicate it is impossible to estimate the costs of

implementing the recommendations before the recommendations are made.

ADMINISTRATIVE IMPLICATIONS

The memorial requires HSD to participate in the ALTSD-lead study of institutional care. It is

estimated that members from HSD and dedicated staff from ALTSD would be required for ap-

proximately six months to carry out the study and referenced conference.

KBC/njw