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

SPONSOR Sandoval

ORIGINAL DATE

LAST UPDATED

1-30-06

2-7-06 HB 353/aHCPAC

SHORT TITLE Money Follows the Person in NM Act

SB

ANALYST Collard

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$0.1

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB 371

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY06

FY07

FY08 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

N/A

$80.0

$80.0

$160.0 Recurring General Fund

Total

N/A

$80.0

$80.0

$160.0 Recurring Title XIX

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Aging and Long-Term Services Department (ALTSD)

Department of Health (DOH)

Human Services Department (HSD)

Developmental Disabilities Planning Council (DDPC)

SUMMARY

Synopsis of HCPAC Amendment

The House Consumer and Public Affairs Committee amendment to House Bill 353 requires fed-

eral approval from the Centers for Medicare and Medicaid Services (CMS) of any waiver sub-

mitted before mandating that the act be followed and requires ALTSD to provide information to

only Medicaid-eligible individuals residing in nursing homes.

House Bill 353/aHCPAC – Page

2

HSD indicates this amendment clarifies the intent of the legislation.

Synopsis of Original Bill

House Bill 353 creates the Money Follows the Person in New Mexico Act, which requires

ALTSD to obtain federal funds and use medical assistance funds to enable the elderly or disabled

who are eligible for community-based living to choose, from available options, the type of ser-

vice that best meets the individual’s needs. The bill also requires ALTSD to develop and im-

plement a quality improvement system to evaluate the level and effectiveness of participation of

individuals who are eligible for community-based services and to ensure that the services and

support an individual receives are adequate.

FISCAL IMPLICATIONS

Although the bill does not contain an appropriation, ALTSD indicates it administers the Disabled

and Elderly Medicaid Waiver program (D&E waiver) and currently allows individuals to move

from a nursing facility to the community and receive home and community-based services and

supports through a community reintegration allocation. This bill would not change this process.

Additionally, in development is a new self-directed waiver, called Mi Via, scheduled for imple-

mentation in early FY07. Mi Via would provide an avenue for individuals allocated to the D&E

waiver or other existing Medicaid Home and Community Based Waivers (HCBS) to use their

waiver funds to purchase services and supports within a wide range of options identified in Mi

Via.

SIGNIFICANT ISSUES

ALTSD indicates the bill implies that federal approval, presumably a waiver that ALTSD is to

obtain, is for a self-directed waiver. ALTSD, HSD and DOH, along with stakeholders, have de-

veloped a self-directed waiver, Mi Via, for implementation early FY07. ALTSD states there are

significant differences between the proposed legislation and what the Centers for Medicare and

Medicaid Services (CMS) will allow as a HCBS waiver.

Self-directed HCBS waivers are currently being developed, and have been approved, in other

states. The Mi Via waiver application would allow persons eligible to receive waiver services

through an existing HCBS waiver, such as the D&E waiver, to utilize the allotted waiver service

funds in a manner which they choose and to enable the person to live in their community instead

of an institution such as a nursing facility.

The Mi Via waiver, however, would not allow a person access to all Medicaid funds available to

them for any service, as indicated on page 1, line 25 of this bill. Participants in self-directed

waivers do have access to funds used to provide Medicaid health care; access is not limited to

waiver service funds.

In addition, ALTSD is not authorized to apply for a federal Medicaid waiver. The designated

single state agency, HSD, Medical Assistance Division, is the only agency that can submit a

waiver application to CMS.

The bill directs ALTSD to allow individuals who reside in a long-term care facility the opportu-

House Bill 353/aHCPAC – Page

3

nity to receive community-based services and supports pursuant to the Money Follows the Per-

son in New Mexico Act. Individuals currently residing in a nursing facility would be able to

move to the community and receive services and supports to allow him or her to remain in the

community. The home and community-based services would be paid by the Medicaid funds cur-

rently used to pay for the nursing facility care.

The D&E waiver is managed by the ALTSD, and currently allows eligible individuals who re-

side in a nursing facility to transition from the nursing facility to D&E waiver services through a

community-reintegration allocation. The ALTSD D&E waiver program budget currently resides

in the HSD/MAD budget. The money spent for nursing facility services essentially follows the

person to D&E waiver home and community-based services. CMS requires that the cost of D&E

waiver services, in the aggregate, be less than the cost of nursing facility services. Therefore, the

total cost of nursing facility services does not “follow the person” to their D&E waiver services.

ALTSD also notes only the portion of their nursing facility costs that are needed for D&E waiver

services become available for waiver services.

Many of the quality improvement activities required by the bill would be completed by ALTSD

or HSD/MAD as part of Mi Via. Many of the quality improvement activities are currently com-

pleted by ALTSD or HSD as part of the D&E waiver. As a result, there may be some duplica-

tion of service.

DOH notes the bill does not explicitly include persons with developmental disabilities although

it clearly could impact persons with developmental disabilities residing in nursing homes and the

federal program includes persons living in Intermediate Care Facility (ICF-MR). Section (3) of

the bill identifies the target population as “elderly or disabled individuals” that could be con-

strued to limit participation to individuals who meet nursing level of care under the state’s D&E

waiver.

The bill mirrors a federal “Money Follows the Person” initiative that would allow persons who

are institutionalized in a nursing home or an intermediate care facility for the mentally disabled

to have a choice to live in the community and have the money being expended on their institu-

tional care follow them to provide for their community- based care.

The D&E waiver and the Developmental Disabilities Medicaid Waiver (DD waiver) programs

already allow individuals to move from nursing facilities and ICF-MR facilities to the commu-

nity and receive home and community-based services and supports. Funding for these conver-

sions to community-based living do not, however, “follow the person’ from the institutional set-

ting to the community setting but must be funded through state appropriations to these waiver

programs. If individuals with developmental disabilities are included in the scope of the legisla-

tion and funding was to “follow the individual”, Medicaid funding currently used to support in-

dividuals in nursing and ICF-MR facilities would need to be transferred to DOH so these indi-

viduals could be included in the DD or Medically Fragile waivers. A similar “transfer” of funds

will need to occur for disabled or elderly individuals who wish to convert from nursing facilities

to the D&E waiver administered by ALTSD.

DOH indicates, without additional federal support, the only way to maintain cost neutrality under

such a process would be to reduce the number of “beds” maintained at nursing and ICF-MR fa-

cilities as individuals convert services from institutional care to community-based care.

House Bill 353/aHCPAC – Page

4

Approximately 110 individuals with developmental disabilities currently receive services in

nursing homes and have been evaluated by DOH program in regards to their residential ser-

vice/support needs. For persons who are inappropriately placed a community transition plan is

initiated. Therefore, it is anticipated that relatively few of those individuals, currently served,

would transition, even if the intent of the legislation included persons with developmental dis-

abilities.

PERFORMANCE IMPLICATIONS

ALTSD states the bill has no specific performance implications as written. However, it implies

support for the Mi Via waiver application through Section 3 - COMMUNITY-BASED LIVING –

CHOICE OF OPTIONS. Implementation of the Mi Via Waiver is an activity identified in the

HSD Strategic Plan, under Goal 2: Assure New Mexicans can easily access the health and hu-

man services they need, and improve health status outcomes. Specifically, the activity states:

“Develop and implement self-directed waiver (SDW) program for Developmentally Disabled,

Disabled and Elderly, HIV/AIDS, individuals with brain injuries and Medically Fragile Chil-

dren.”

ADMINISTRATIVE IMPLICATIONS

HSD indicates if the bill is enacted in the absence of the Mi Via Waiver, HSD/MAD would have

additional costs to implement. It is anticipated that approximately 2 FTE, for a cost of $160

thousand, of which half is from the general fund and half is from a 50/50 federal administrative

match, would be necessary to implement the quality improvement activities.

DUPLICATION

House Bill 353 duplicates Senate Bill 371.

TECHNICAL ISSUES

ALTSD suggests the following amendments: page 1, line 18 and 19 – delete “department” and

insert Human Services Department” and page 1, line 25 – after “assistance” insert “allowed

home and community based waiver”.

DOH indicates the bill does not explicitly include persons with developmental disabilities resid-

ing in nursing homes or ICF-MR facilities. The federal program associated with this initiative

(“Money Follows the Person – Rebalancing Initiative”) does include persons with developmental

disabilities.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

DPPC notes the money follow the person is a system of flexible financing for long-term services

and supports that enables available Medicaid funds to move with an individual from an institu-

tional setting such as a nursing facility or other institution to a home or community–based resi-

dence. The Money Follows the Person has been successfully implemented in several other

states.

KBC/mt:yr