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

SPONSOR Lujan, A.

DATE TYPED 2/10/05

HB 489

SHORT TITLE Disabled and Elderly Medicaid Waiver Program

SB

ANALYST Collard

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$3,000.0

Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

$7,000.0

Recurring

Federal

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Aging and Long-Term Services Department (ALTSD)

Human Services Department (HSD)

Developmental Disabilities Planning Council (DDPC)

SUMMARY

Synopsis of Bill

House Bill 489 appropriates $3 million from the general fund to ALTSD for the purpose of pro-

viding 450 additional slots for disabled and elderly Medicaid waiver clients.

Significant Issues

HSD notes, in December 2004, approximately 7,300 registrants were listed on the Disabled and

Elderly (D&E) Waiver Central Registry awaiting waiver services. The current average length of

House Bill 489 -- Page 2

wait for D&E Waiver services is 41 months. By allowing more elderly or disabled persons to

receive waiver services, the bill will have a positive impact on the Lewis lawsuit judgment by

reducing both the number of persons on the central registry wait list and the length of time per-

sons spend on the wait list.

The bill allocates funds to provide waiver services to 450 persons who are disabled or elderly.

HSD’s Medical Assistance Division estimates that 400 persons may be served through the ap-

propriation. ALTSD estimates that 350 persons may be served through this appropriation based

on a full 12 month enrollment in the program. The actual number of persons who can be served

depends on the cost of services provided to the persons on the central registry, based on their

specific needs.

ALTSD indicates the annual average individual care plan cost for waiver services is approxi-

mately $24 thousand per year. In addition to that amount, the annual average of non-waiver

Medicaid cost is $5,250 per year for a total cost to the Medicaid program of $29,250 for each

individual added to the waiver program.

With the federal match of over $7 million, the state general fund appropriation could provide

services, based on the information above, to 350 clients, as stated by ALTSD.

FISCAL IMPLICATIONS

The appropriation of $3 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of FY06 shall revert to the gen-

eral fund.

HSD notes the appropriation of $3 million would be eligible for either Medicaid federal financial

participation (FFP) at approximately 72 percent or 50 percent federal administrative match de-

pending on the distribution of the appropriation by direct services and administrative costs. Such

a match would be approximately $7 million.

Of the approximately $10 million total, HSD and ALTSD estimate additional financial implica-

tions of approximately $600 thousand ($300 thousand state general fund match at 50 percent)

would apply to HSD and ALTSD for FY06. The estimated impact of serving additional persons

includes the following increased costs:

.

$54 thousand, including $27 thousand state general fund match at 50 percent, for HSD’s In-

come Support Division to conduct determinations of initial Medicaid eligibility;

.

Using FY04 base costs, $106 thousand, including $53 thousand state general fund match at

50 percent, for the New Mexico Medicaid Utilization Review contractor to review persons’

levels of care and individualized service plans and data enter persons’ budgets;

.

$414 thousand, including $207 thousand state general fund match at 50 percent, for HSD’s

Medical Assistance Division to provide customer support and Medicaid oversight of the

waiver including staffing for program, billing, and compliance monitoring responsibilities in-

cluding 3.25 FTE;

.

$90 thousand, including $45 thousand state general fund match at 50 percent, for ALTSD to

fund necessary additional staffing in the department’s resource center including 2 FTE;

.

$160 thousand, including $80 thousand state general fund match at 50 percent, for ALTSD to

staff program, billing, and compliance monitoring responsibilities including 3 FTE.

.

$50 thousand, including $25 thousand state general fund, for ALTSD non-personnel costs

House Bill 489 -- Page 3

such as increased postage, printing and supplies associated with serving an additional 350

persons on the D&E waiver.

Although HSD and ALTSD indicate only $600 thousand is needed, the above totals to $768

thousand, $384 thousand of which would be general fund under this formula.

HSD and ALTSD note the funding contained in the bill would be a recurring cost to the state.

As each individual is added to the waiver, full budget funding for that person, as well as adminis-

trative support, must be included in subsequent year budgets to cover their continued service.

ADMINISTRATIVE IMPLICATIONS

HSD indicates significant administrative implications associated with this bill. HSD’s Income

Support Division would need additional staff to conduct Medicaid eligibility determinations for

the additional waiver applicants and HSD’s Medical Assistance Division would need additional

staff to provide Medicaid oversight of the waiver including staffing for program, billing, and

compliance monitoring responsibilities. Since HSD’s Medical Assistance Division would have

additional costs to provide Medicaid non-waiver, state plan services to additional waiver recipi-

ents, HSD’s Medical Assistance Division staff that manage non-waiver, state plan Medicaid ser-

vice programs would also have increased responsibilities.

Since most waiver recipients would continue to receive waiver services in subsequent years, the

administrative impact specified in the paragraph able would continue in future years.

The new FTE would reduce the exposure to HSD with respect to existing and potential other

lawsuits brought with regard to federal Medicaid management standards and the obligation to

monitor the risks and services provided to clients receiving services through Medicaid funding.

HSD’s Medical Assistance Division will have to make changes necessary in the utilization re-

view contract budget to assure coverage of the cost of additional reviews for new waiver recipi-

ents. Program oversight and utilization review contract oversight would also be impacted to the

extent that additional consumers entail a proportionate increase in problem-resolution incidents.

HSD’s Medical Assistance Division programmatic oversight of the D&E waiver may entail

amending the waiver approved by the Centers for Medicare and Medicaid Services (CMS) to ac-

commodate the higher expenditures and recipient count.

TECHNICAL ISSUES

The appropriation in the bill is made to ALTSD; however, ALTSD only administers the D&E

waiver program. The service budget for the D&E waiver program is included in the HSD’s

Medical Assistance Division budget. The appropriation should be made to HSD.

OTHER SUBSTANTIVE ISSUES

HSD notes, based on the D&E waiver application approved by CMS for FY06, the D&E waiver

is authorized to serve up to 3,200 unduplicated individuals or the number of individuals allowed

by legislative appropriation, whichever number is less. The appropriation contained in this bill

may result in a higher number of unduplicated individuals served. Implementation of this bill

House Bill 489 -- Page 4

may require approval from CMS for an amendment to the application to increase the number of

unduplicated recipients. The number that can be served depends on the cost of services provided

to the persons on the central registry, based on their specific needs.

HSD, the Department of Health and ALTSD are pursuing “Mi Via”, a self-directed approach to

care. This initiative will include services to individuals who are disabled and elderly. HSD indi-

cates the bill could conflict with the self-directed initiative by specifying that funds must be

spent on a particular waiver rather than for a particular population.

KBC/sb/njw