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

SPONSOR Jennings

ORIGINAL DATE

LAST UPDATED

2-6-06

HB

SHORT TITLE Developmental Disabilities Mental Services

SB 576

ANALYST Collard

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$13,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB 189, SB 15, SB 137, HB 356

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

$23,729.5

$23,729.5 Recurring

FFP

(Parenthesis ( ) Indicate Expenditure Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY

06

FY07 FY08 3 Year

Total Cost

Recurring

or Non-

Rec

Fund

Affected

Total

$4,528.2* $4,528.2* $9,056.4*

Recurring General Fund

and FFP

(Parenthesis ( ) Indicate Expenditure Decreases) *See fiscal and administrative implications.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Human Services Department (HSD)

Senate Bill 576– Page

2

SUMMARY

Synopsis of Bill

Senate Bill 576 appropriates $3 million from the general fund to DOH for the purpose of provid-

ing mental health services statewide and $10 million from the general fund to DOH for the pur-

pose of shortening the developmental disabilities Medicaid waiver (DD waiver) waiting list.

FISCAL IMPLICATIONS

The appropriation of $13 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.

HSD indicates the appropriation to DOH of $10 million would qualify for $23,729.5 thousand in

federal matching funds, according to the distribution by service and administrative costs, for a

total of $33,329.5 in available funds. After DOH applies an 8 percent administrative share, the

remaining total is $32,529.5 thousand ($9.2 million from the general fund and $23,329.5 from

Federal Financial Participation [FFP]) designated for services. HSD estimates that the appro-

priation would provide services to approximately 540 additional individuals.

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

$7.3 per year based on FY05 costs. If the additional 540 individuals received DD waiver ser-

vices, additional costs to HSD in Medicaid non-waiver services would be $3,972.2 thousand

($1,123.4 thousand from the general fund and $2,848.8 thousand in FFP). HSD notes the appro-

priation would not cover these costs.

SIGNIFICANT ISSUES

DOH indicates as of January 2005, there were 3,499 applicants listed on the DD waiver waiting

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

clients currently enrolled in the program, DOH projects that the appropriation will generate fund-

ing for approximately 540 individuals. This depends on the age and level of care characteristics

of the applicants. This projection assumes a FY07 federal Medicaid blended match rate of ap-

proximately 28 percent and that, as authorized under federal guidelines, eight percent of the ap-

propriation ($800 thousand) would be used for program infrastructure and participant supports

rather than for new allocations.

The current length of wait for services through the DD Waiver is approximately four years, al-

though this varies by region.

If the bill is enacted, DOH indicates aggressive recruitment and training initiatives will be

needed to qualify providers, support entry of persons into the system, provide required services

and supports and ensure participant health and safety. Historically, the provider system (case

management and direct service providers) has been able to address growth at a maximum of 300

to 400 individuals entering into service within any fiscal year.

Senate Bill 576– Page

3

The $10 million appropriation included in this bill would be recurring, as it will be used to allo-

cate additional individuals to the DD waiver. 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. Developmental disability is a lifelong condition and once allocated,

individuals typically continue to meet level of care criteria and remain in services. There is

minimal attrition in the program and any funding linked to vacated positions is used to address

the need for individual crisis allocations to the DD waiver.

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 while the bill also appropriates $3 million from the general fund for mental health

services, it is silent to the populations to be served.

Beginning in July 2005, all public behavioral health services in the state are coordinated through

a contracted statewide entity, ValueOptions which presumably would also coordinate the mental

health portion of this appropriation. Additionally, HSD notes the local behavioral health col-

laboratives should be part of the decision-making process regarding the need for specific mental

health services in their geographic areas.

HSD indicates some of the individuals who would benefit from mental health services could po-

tentially be Medicaid eligible and those services would therefore be eligible for a federal Medi-

caid match. Since the target population is not identified, it is not possible identify the number of

individuals who would benefit, who are Medicaid eligible. Therefore, it is not possible to calcu-

late any federal Medicaid match for the appropriation.

ADMINISTRATIVE IMPLICATIONS

DOH states, if the bill passes, additional FTE will be needed to enable the Developmental Dis-

abilities 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.

With this appropriation for FY07, the DHI estimates it would require an additional 18 FTE in

order to maintain current caseloads in the Incident Management Bureau and to handle a larger

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

Bureau.

In addition to the cost of Medicaid State plan services described above, HSD indicates it would

also have a fiscal impact of $556 thousand in administrative costs ($278 thousand from the gen-

eral fund and $278 thousand from 50/50 federal administrative match), in order to implement the

bill. The impact includes:

Senate Bill 576– Page

4

HSD would have added costs for staff to conduct additional determinations for initial and annual

Medicaid eligibility. Each ISD FTE can service approximately 250 waiver recipients. An addi-

tional 2.20 FTE would be required by ISD to provide financial eligibility determinations for the

additional 540 waiver recipients. The cost of the 2.20 FTE is $176 thousand per year ($88 thou-

sand per year from the general fund and from federal administrative match).

Additionally, the Medicaid Utilization Review (UR) contractor would have added costs to de-

termine client level of care and data enter Individual Service Plans. Using FY05 base costs, the

UR contractor costs would increase by $340 thousand per year from the general fund and federal

administrative match.

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

program. Approximately 0.50 FTE would be needed to provide the oversight for a total cost of

$40 from general fund and federal administrative match.

The total cost to HSD to implement SB 576 including Medicaid State plan services, ISD, UR,

and HSD/MAD administrative costs is $4,528.2 ($1,401.4 GF and $3,126.8 Federal administra-

tive match and FFP.)

RELATIONSHIP

Senate Bill 576 relates to Senate Bill 189, which appropriates $59 million from the general fund

to DOH to eliminate the DD waiver waiting list for services; Senate Bill 15, which appropriates

$3.3 million from the general fund to DOH in FY07 – $2.5 million for inpatient assessment and

treatment of individuals who are under protective custody or are under 30-day involuntary civil

commitment, $400 thousand to establish and operate mobile crisis teams to work with law en-

forcement to respond to life threatening situations, and $400 thousand for residential and non-

residential transitional treatment or temporary bed days for court-ordered jail diversion; Senate

Bill 137, which appropriates $2 million to DOH to leverage resources and provide 1) mobile cri-

sis and 2) assertive community and residential treatment services in Dona Ana County and

southern New Mexico for persons with serious mental illness; and House Bill 356, which appro-

priates $4 million from the general fund to DOH and anticipates the allocation of approximately

200 applicants to developmental disabilities services through the DD waiver.

TECHNICAL ISSUES

HSD suggests modifying the bill to identify the population to be served with the mental health

appropriation and specifying that 3,711 individuals are estimated to receive DD waiver services

during FY06. This number would serve as a baseline number to allow a more accurate determi-

nation of how many additional individuals received services in FY07.

KBC/nt