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

SPONSOR Heaton

ORIGINAL DATE

LAST UPDATED

2/10/07

HB 604

SHORT TITLE Medicaid Waiver Cost of Living Adjustments

SB

ANALYST Weber

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$2,850.0 $3,130.0 $5,980.0 Recurring General

Fund

$7,150.0 $7,485.0 $14,635.0 Recurring Federal

Medicaid

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB 651

Relates to Appropriation in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department (HSD)

Department of Health (DOH)

Health Policy Commission

SUMMARY

Synopsis of Bill

House Bill 604 requires the Human Services Department (HSD), Aging and Long Term Services

Department (ALTSD) and the Department of Health (DOH) to include a cost of living increase

for all Medicaid waiver programs in their annual budget requests. The cost of living adjustment

would be based on the Centers for Medicare and Medicaid Services (CMS) Market Basket Index

(MBI) inflation factor. HB 604 proposes that the cost of living adjustment would improve staff

recruitment and retention and promote quality services.

FISCAL IMPLICATIONS

Although the bill does not include an appropriation the additional cost would be significant.

HSD reports the CMS MBI increase for July 1, 2007 is 3.1 percent.

House Bill 604 – Page

2

For FY08 the HSD projection indicates the following estimated expenditure for waiver

programs.

Developmental Disability including Medically Fragile $255 million

D&E Waiver $ 58 million

Self-Directed $ 7 million

Total $320 million

A 3.1 percent increase totals just under $10 million. Using an approximate federal matching rate

of 71.5 percent, the general fund cost would be $2.85 million and the federal $7.15 million.

These additional funds would be distributed primarily between HSD and DOH with ALTSD

receiving a lesser amount.

The FY09 numbers for additional operating costs are based on an overall 7 percent program

increase and a repeat of the 3.1 percent market basket increase and an FMAP decrease of .75

percent.

SIGNIFICANT ISSUES

HSD notes.

The bill would increase reimbursement rates for all Medicaid waiver programs. While many

Medicaid programs are operated on waivers from CMS, it is presumed that the bill1 is

referencing HCBS Waivers. Currently, New Mexico operates five HCBS Waivers: the AIDS,

DD, D&E, MF and Mi Via Waiver programs. DOH, Developmental Disabilities Supports

Division is responsible for administering the DD and MF Waivers and part of the Mi Via

Waiver. DOH, Public Health Division is responsible for administering the AIDS Waiver.

ALTSD is responsible for administering the D&E Waiver and part of the Mi Via Waiver

including services to individuals with BI.

Mi Via is the State’s new self-directed waiver program that is currently in the initial stages of

implementation. All but 200 of Mi Via’s participants will transfer from existing HCBS waiver

programs, so the cost of living increase would be included in the cost calculations for the other

four waiver programs. The 200 Mi Via recipients that do not transition from existing HCBS

waiver programs are individuals with BI that do not currently receive traditional waiver services.

The bill indicates that the cost of living increase would be used to improve staff recruitment and

retention, and to meet increased programmatic and operational costs of quality services. It would

be difficult for DOH and ALTSD ensure that the rate increase for services was used for this

purpose by all waiver provider agencies.

MW/csd