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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

1-31-06

HB 356

SHORT TITLE Medicaid Developmental Disabilities Coverage

SB

ANALYST Collard

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$4,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB 49, SB 189/SPACS and HB 718

Relates to Appropriation in the General Appropriation Act

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

N/A

$9,651.8

$9,651.8 Recurring

HSD FFP

(Parenthesis ( ) Indicate Expenditure Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY06

FY07

FY08 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

N/A

$476.1

$476.1

$952.2 Recurring General

Fund

Total

N/A $1,115.1 $1,115.1 $2,230.2 Recurring Federal

Funds

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Human Services Department (HSD)

House Bill 356 – Page

2

SUMMARY

Synopsis of Bill

House Bill 356 appropriates $4 million from the general fund to DOH for the purpose of increas-

ing the number of people served on the developmental disabilities Medicaid waiver (DD waiver)

waiting list by 200 people.

FISCAL IMPLICATIONS

The appropriation of $4 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of FY07 shall revert to the gen-

eral fund.

DOH indicates in January 2005, there were 3,499 applicants listed on the Central Registry for

Services. Based on expenditures from the FY06 budget for DD waiver services and the number

of clients currently enrolled in the program, DOH projects that this appropriation will generate

funding for approximately 216 individuals, depending upon the age and level of care characteris-

tics of the applicants. This projection assumes that, as authorized under federal guidelines, eight

percent of the appropriation ($320 thousand) would be used for program infrastructure and par-

ticipant supports rather than for new allocations.

Using the DOH average of $16,450 from the general fund per client per year, LFC calculates the

department could increase the number of people served on the DD waiver by approximately 243

clients.

According to an HSD/MAD ad hoc report of census data for clients served on the DD waiver

that reflects claims adjudicated as of January 6, 2006, there were 3,521 preexisting DD Waiver

clients receiving services at the beginning FY06. According to DOH approximately 190 addi-

tional individuals are projected to receive DD waiver services in FY06. It is estimated that the

total number of individuals to receive DD waiver services for FY06 is approximately 3,711.

HSD indicates it is important to note that 3,711 is only an estimate of the number of individuals

to receive DD waiver in FY06. The actual number depends on the total number of individuals

who leave the waiver through attrition and the total number of crisis allocations that are made

during FY06. Generally, about 70 individuals leave the DD waiver each year due to attrition and

25 additional crisis allocations are made each year.

DOH also indicates, through the current process of matching state funds with federal Medicaid

dollars at a rate of approximately 28 percent state to 72 percent federal, the direct service portion

of the appropriation ($3,680 thousand will generate approximately $9,462.9 thousand in federal

dollars. The 8 percent set aside for program infrastructure and participant support ($320 thou-

sand) will generate an additional $320 thousand in federal matching funds, at the 50% adminis-

trative match rate. (Any changes in the federal match rate or structure will impact how much

money is generated by the appropriation.) HSD indicates the appropriation $9,651.8 thousand in

federal matching funds for a total of $13,651.8 thousand in available funds. HSD/MAD esti-

mates that the appropriation would provide services to approximately 188 additional individuals.

HSD calculations note DOH would apply an 8 percent administrative cost to the $4 million ap-

propriation. The remaining $3,860 thousand and $9,788.2 thousand from FFP would be desig-

House Bill 356 – Page

3

nated for services, for a total of $13,648.2 thousand.

HSD states the $4 million appropriation in this bill would be eligible for either Medicaid FFP or

50/50 federal administrative match according to the distribution by service and administrative

costs. HSD estimates the federal match at a total of $9,651.8. Based on the allocation and federal

match, HSD also estimates that approximately 188 additional people would be served from the

DD waiver waiting list. This bill would have a positive impact on the wait list litigation by re-

ducing both the number of persons on the central registry wait list and the length of time persons

spend on the wait list.

HSD indicates the additional individuals on the DD waiver would impact the HSD operating

budget. Each individual on the waiver becomes eligible for Medicaid state plan services. The

average cost of Medicaid State plan (non-waiver) services for individuals on the DD waiver is

$7,356 per year based on FY05 costs. If the additional 200 individuals received DD Waiver ser-

vices, additional costs to HSD in Medicaid non-waiver services would be $1,471.2 thousand

($416 thousand from the general fund and $1,055.1 from Federal Financial Participation [FFP]).

HSD indicates the appropriation would not cover these costs.

In addition to the cost of Medicaid state plan services described above, HSD would also have a

fiscal impact of $120 thousand in administrative costs ($60 thousand from the general fund and

$60 thousand from 50/50 federal administrative match), in order to implement this bill. The im-

pact includes:

HSD, Income Support Division (ISD) would have added costs for staff to conduct additional de-

terminations for initial and annual Medicaid eligibility. Each ISD full-time equivalent (FTE) can

service approximately 250 waiver recipients. An additional 0.75 FTE would be required by ISD

to provide financial eligibility determinations for the additional 200 waiver recipients. The cost

of the 0.75 FTE is $60 thousand per year. These positions are eligible for federal administrative

matching funds at 50/50 ($30 thousand from the general fund and $30 thousand per year from

federal administrative match).

The Medicaid Utilization Review (UR) contractor would have added costs to determine client

level of care and data enter Individual Service Plans. Using FY 05 base costs, the UR contractor

costs would increase by $40 thousand per year, half from the general fund and half from federal

administrative match.

HSD, Medical Assistance Division (MAD) would have added costs to provide oversight of the

program. Approximately 0.25 FTE would be needed to provide the oversight for a total cost of

$20 thousand, half from the general fund and half from federal administrative match.

The total cost to HSD to implement HB 356 including Medicaid State plan services, ISD, UR,

and HSD/MAD administrative costs is $1,591.2 ($476.085 GF and $1,115.1 Federal administra-

tive match and FFP.)

SIGNIFICANT ISSUES

HSD indicates there is a wait time of approximately five years before receiving an allocation for

the DD waiver.

House Bill 356 – Page

4

Additionally, HSD states, while this bill appropriates funds to DOH to reduce the wait list for the

DD waiver, it does not appropriate any funds to HSD to cover the costs of Medicaid state plan

services to which the new waiver recipients are entitled.

ADMINISTRATIVE IMPLICATIONS

DOH notes in FY07, additional FTE may be needed to enable the Department Developmental

Disabilities Supports Division (DDSD) and the Division of Health Improvement (DHI) to:

·

Ensure that the management standards mandated by federal law for the Central Registry and

the Medicaid processes are upheld;

·

Oversee and ensure effective service delivery;

·

Provide training/technical assistance to individuals served and community service agencies.

DHI estimates it would require an additional 10 FTE for every 300 new participants in order to

maintain current caseloads in the Incident Management Bureau (IMB) and to handle a larger

sample size for its current provider program review functions within the Quality Management

Bureau (QMB).

There would also be administrative and fiscal impacts to HSD for: 1) ISD staff to conduct addi-

tional determinations for initial and annual Medicaid eligibility; 2) the Medicaid Utilization Re-

view contractor to determine client level of care and data enter Individual Service Plans; and 3)

HSD/MAD to provide oversight of the program.

HSD/MAD has programmatic oversight of the DD waiver. The DD waiver application, to be

approved by CMS by June 2006 for implementation on July 1, 2006, would have to be amended

to accommodate the higher expenditures and recipient count. HSD/MAD would have to adjust

the Medicaid UR contractor’s budget to ensure coverage of the cost of additional reviews. Pro-

gram oversight and UR contract oversight would also be impacted. HSD/ISD would have to

complete additional financial eligibility determinations and provide other support to the addi-

tional individuals.

RELATIONSHIP

House Bill 356 relates to Senate Bill 49, which appropriates $3.15 million from the general fund

to DOH to increase the DD waiver program provider rate reimbursements; and the Senate Public

Affairs Committee substitute for Senate Bill 189 (and its duplicate, House Bill 718) which ap-

propriates $59 million from the general fund to a new fund appropriated to HSD to serve addi-

tional Medicaid waiver clients until 2010.

TECHNICAL ISSUES

HSD suggests the bill should be amended to specify that 3,711 individuals are estimated to re-

ceive DD waiver services during FY06. This number would serve as a baseline number to allow

a more accurate determination of how many additional individuals received services in FY07.

KBC/nt