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

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ORIGINAL DATE

LAST UPDATED

02/02/07

HB HM 4

SHORT TITLE Medicaid Quality-Control Procedures

SB

ANALYST Weber

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

None

(Parenthesis ( ) Indicate Expenditure Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$31.6

$31.6

$63.2 Recurring General

Fund

$31.6

$31.6

$63.2 Recurring Federal

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department (HSD)

SUMMARY

Synopsis of Bill

House Memorial 4 asks that the Human Services Department be encouraged to track the number

of terminated Medicaid cases on a monthly basis and to institute an audit process to determine

the percentage of terminated cases and whether those cases are later reinstated. In addition; HSD

should track a representative sample of cases terminated by automatic closure and review the

sample before actually terminating clients. HSD should then weigh whether the sample cases

were accurately assigned for termination. A determination should then be made as to whether a

terminated child who should be penalized for a parent's failure to recertify and whether the

House Memorial 4 – Page

2

disruption caused by a wrongful termination was justified by the administrative cost savings of

an automatic closure.

Copies of this memorial should be transmitted to the governor and to the secretary of HSD.

The memorial indicates these procedures are necessary since the department implemented a new

program to close Medicaid cases automatically without review if clients have not properly

recertified. It further states that over one hundred twenty thousand Medicaid cases have been

automatically closed and that an estimated seventy-five percent were reinstated without an

adequate explanation of why such a high percentage of cases were reinstated. Further, there is

no process in place for auditing whether cases are appropriately closed.

FISCAL IMPLICATIONS

HSD estimates annual operating costs of $63.2 thousand for an additional FTE to collect and

report the data required by this House Memorial.

SIGNIFICANT ISSUES

HSD reports federal regulations require that states re-determine the eligibility of Medicaid

recipients at least every 12 months. The cases are certified for a twelve month period. Each case

is scheduled for a re-determination in the twelfth month and a notice is mailed to the head of

household of each case. If no application is received so that a determination of eligibility can be

made in accordance with federal regulations, the case is closed. There is nothing additional in

the case record to review before actually terminating clients if a reapplication has not been made.

The Department cannot be certain why those who were closed later returned. A variety of

reasons may be given. Tracking the number that closed and later again became eligible would

only tell us, with certainty, that they were eligible at the time they submitted their application.

While children cannot ensure that their parents properly recertify or reapply for them, it remains

the responsibility of those parents. And federal regulations do not allow for exceptions to the

twelve month re-determination requirement for children.

Cases are not “assigned for termination", but rather, as stated above, scheduled for re-

determination. The termination occurs when the proper application is not forwarded to the

Department.

OTHER SUBSTANTIVE ISSUES

A recent case was filed in United State District Court for the District of New Mexico regarding

the apparent same issues related to the HSD Medicaid re-certification process. On September

29, 2006 the case against HSD was dismissed in its entirety and left existing re-certification

procedures, including automatic closure, intact.

MW/csd