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

SPONSOR Balderas

ORIGINAL DATE

LAST UPDATED

2-6-06

HB 718

SHORT TITLE Medicaid Waiver Waiting List Services

SB

ANALYST Collard

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$59,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB189/SPACS

Relates to HB 356

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

NFI

$33,028.8

$35,380.3 Recurring Federal match

(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 $14,000.0 $15,000.0 $29,000.0 Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Aging and Long-Term Services Department (ALTSD)

Human Services Department (HSD)

House Bill 718 – Page

2

SUMMARY

Synopsis of Bill

House Bill 718 creates the Medicaid Waiver Services Fund in the state treasury and appropriates

$59 million to that fund for use by HSD in FY07 and three subsequent fiscal years, ending in

FY10 to allocate additional individuals to the Developmental Disabilities Medicaid Waiver (DD

waiver) and the Disabled and Elderly Medicaid Waiver (D&E waiver) as follows:

FY07

FY08

FY09

FY10

DD Waiver $10.5 million $11 million $11 million 65 percent of remaining funds

D&E Waiver $3.5 million $4 million $4 million 35 percent of remaining funds

Pursuant to Section 3 of the substituted bill, the Medicaid Waiver Serivces Fund will not exist

after FY10.

FISCAL IMPLICATIONS

The appropriation of $59 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of FY10 shall not revert to the

general fund.

DOH indicates the bill does not specify that once an individual is allocated, funds that support

the allocation must recur in the administering agencies’ budgets on an ongoing basis. When an

applicant is allocated to the DD waiver, they are entitled to continue to participate in the program

as long as they continue to meet federal level of care requirements.

Each fiscal year, the recurring costs for the year will increase by the amount distributed to reduce

the waiting list in the preceding year so that at the end of FY10, these programs will cost an addi-

tional $59 million (at minimum) annually. This being the case, putting the money in a fund for

this purpose requires a corresponding annual recurring commitment regardless of the overall

revenue picture for that fiscal year. This could, in effect, create an unfunded mandate.

This bill creates a new fund and provides for continuing appropriations. The LFC has concerns

with including continuing appropriation language in the statutory provisions for newly created

funds, as earmarking reduces the ability of the legislature to establish spending priorities.

HSD notes the appropriation of $59 million would qualify for federal matching funds, based on

the actual distribution of Federal Financial Participation (FFP) and Federal administrative 50

percent match. As shown in the attached matrix, the $59 thousand would be eligible for a total

match of $139.1 million from federal Medicaid matching funds. This information was provided

by HSD and breaks out funding by administrative costs, state non-waiver plans and direct ser-

vices for DOH, HSD and ALTSD.

A few stipulations should be noted when looking at the attached matrix: 1) the FY10 scenario is

based on each department fully exhausting prior year funds and 2) the administrative percent-

ages, as shown in the footnote, are negotiated with the federal government. It should be noted

approximately $45.5 million of the total appropriation will go toward direct services under the

attached matrix.

House Bill 718 – Page

3

SIGNIFICANT ISSUES

DOH indicates an appropriation of $10.5 million in FY07 will support services to approximately

550 additional individuals, depending upon the age and level of care characteristics of the appli-

cants. This projection assumes a FY07 federal Medicaid blended match rate of approximately 28

percent. The appropriation would be operationalized as follows: approximately $9.66 million for

direct services and Medicaid state non-waiver plans, and up to $840 thousand (8 percent) to as-

sure adequate program infrastructure and participant support.

The distributions from the fund of $11 million in FY08, FY09 could add approximately 580 in-

dividuals in each of those fiscal years, depending upon the age and level of care characteristics of

the applicants and the federal match rate for Medicaid services in those fiscal years.

In January 2005, there were 3,499 applicants listed on the waiting list. The current length of wait

for services through the DD waiver is approximately five years, although this varies by region.

DOH indicates the bill could help reduce the length of time individuals wait to enter the DD

waiver program.

HSD notes, 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

additional 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.

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.

According to ALTSD, in January 2006, there were approximately 7,285 registrants wait listed on

the D&E waiver waiting list. Registrants generally wait approximately forty-one months (or 3.5

years) before receiving an allocation for the D&E waiver.

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

that reflects claims adjudicated as of January 6, 2006, there were 1,936 preexisting D&E waiver

clients receiving services at the beginning FY06. According to HSD/MAD approximately 846

additional individuals are projected to receive D&E waiver services in FY06. It is estimated that

the total number of individuals to receive D&E waiver services for FY06 is approximately 2,782.

It is important to note that 2,782 is only an estimate of the number of individuals to receive D&E

waiver in FY 06. The actual number depends on the total number of individuals who leave the

waiver through attrition and the total number of emergency crisis allocations that are made dur-

ing FY06.

Based on the appropriation and federal match, (excluding an additional money contributed to the

fund) HSD estimates that approximately 3,545 (1,820 DD waiver and 1,725 D&E waiver) addi-

tional people would be served. HSD indicates the bill would have a positive impact on the wait

list litigation by reducing both the number of persons on the DD waiver and D&E waiver central

registries wait list and the length of time persons spend on the wait list.

House Bill 718 – Page

4

ALTSD indicates there are currently 7,285 registrants on the D&E waiver waiting list. The cur-

rent average length of wait for D&E waiver services is approximately 34 months. ALTSD indi-

cates this bill allocates funds to provide waiver services to 612 persons who are disabled or eld-

erly in FY07, 741 in FY08 and an additional 741 in FY09, and 764 additional persons in FY10.

ALTSD estimates that 2,858 persons may be served through this appropriation based on a full

12-month enrollment in the program.

ADMINISTRATIVE IMPLICATIONS

DOH indicates additional program infrastructure would be needed over the four-year period to

continue to effectively operate the DD waiver program. This bill does not address the additional

FTE or other program costs related to serving the additional individuals. As allowed under fed-

eral guidelines up to 8 percent of the appropriation would need to be used by DOH for program

infrastructure and participant support services.

In FY07 through FY10 additional FTE will be needed to enable DOH to ensure that the man-

agement standards mandated by federal law for the waiting list and the Medicaid processes are

upheld and to assure continued compliance with the new stipulated agreement in the Jackson liti-

gation. These FTE will provide training/technical assistance to individuals served and commu-

nity service agencies.

With this appropriation in FY07, the Division of Health Improvement estimates it would require

additional 10 FTE for every 300 allocations in order to maintain current caseloads in Incident

Management Bureau and functions within the Quality Management Bureau. The Division of

Health Improvement would require the additional FTE to handle a larger sample size for its cur-

rent provider program audits and to address the increase in the number of providers.

HSD states the department has programmatic oversight of the D&E and DD waivers. The DD

and D&E waiver applications, to be approved by the Centers for Medicaid and Medicare Ser-

vices (CMS) by June 2006 for implementation on July 1, 2006, would have to be amended to

accommodate the higher expenditures and recipient count. The number of unduplicated recipi-

ents approved in the waiver cannot be exceeded without prior approval of CMS. HSD would

have to adjust the Medicaid utilization review (UR) contractor’s budget to ensure coverage of the

cost of additional reviews. Program oversight and UR contract oversight would also be impacted.

HSD would have to manage and oversee the distribution of money from the fund. HSD would

have to complete additional financial eligibility determinations and provide other support to the

additional individuals.

HSD indicates an additional impact of $29 million from the general fund for this bill; however,

the department does not provide a breakout of that need.

As this funding will more than double the size of the D&E waiver program, ALTSD will need

six (6) additional FTE as follows:

•

3 direct D&E waiver program operational staff

•

2 additional resource center support staff

•

1 additional administrative services division support staff

House Bill 718 – Page

5

ALTSD notes, since additional persons will receive waiver services, there will be additional fi-

nancial implications on the administration of the program. Additional positions will be needed

to administer the program expansion. It is estimated that $337 thousand for the above positions

will be needed by ALTSD for FY07. It seems the administrative cost allowed for in the matrix

covers these costs for ALTSD.

DUPLICATION, RELATIONSHIP

House Bill 718 duplicates the Senate Public Affairs Committee substitute for Senate Bill 189.

Additionally, House Bill 718 relates to House Bill 356, which appropriates $4 million to reduce

the DD waiver waiting list by 200.

TECHNICAL ISSUES

DOH states funds appropriated under this bill will need to be managed on an ongoing basis by

DOH and ALTSD, therefore, the distribution of funds through HSD could be eliminated and

funds could be directly distributed from the fund into the administering agencies’ base budgets.

Using HSD to access the funds adds an unnecessary administrative step to the budget process,

with no apparent benefit to the state or persons served.

It should be noted the direct services portion of funding for the D&E waiver resides at HSD.

Therefore, sidestepping HSD would only be applicable to DOH.

The intended use of this funding requires that it not be a one time only distribution. Funds equal

to the amount of each year’s distribution must be recurring to DOH and ALTSD in years subse-

quent to the initial distribution. For example the $10.5 million distributed in FY07 will be added

in FY08 and subsequent fiscal years, on a recurring basis, to the DOH base budget in order to

provide ongoing services to person allocated in FY07.

OTHER SUBSTANTIVE ISSUES

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

waiver is authorized to serve up to 3,000 unduplicated individuals or the number of individuals

allowed by legislative appropriation, whichever number is less. The CMS unduplicated indi-

viduals approved for FY07 is yet to be determined. The appropriation contained in this bill will

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

require approval from CMS for an additional amendment to the application to increase the num-

ber of unduplicated recipients.

KBC/mt

Attachment