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House | June 7, 2013 | Committee Room | Appropriations

Full MP3 Audio File

The meeting will now come back to order. We’ll start a presentation of the bill. We’ll start with Susan Jacobs from the committee staff Fiscal Research Division, and the rest of the staff will follow her. Again, no questions until this afternoon. Please write them down and keep track of them. We’ll take questions and discussion and amendments at this afternoon’s meeting. Miss Jacobs. [SPEAKER CHANGES]: Mr. Chairman, members of the committee, good morning. The first document I want to review with you is a legal-size document as a summary that is two-sided. On page one is a document you saw when we reviewed the Senate budget review that basically tells you percentage-wise the changes in the divisions within HHS. So on that first page, you see that the continuation budget for Health and Human Services is approximately 4.6 billion the first year; a little over 4.6 billion in the second year; and then the second line is the current House money report spending. So the first year the spending is 5 billion dollars, the second year approximately 5.2 billion dollars. For net changes of 405 million dollars the first year; and almost 579 million dollars the second year. Comparing that spending to the base budget, you see the increase the first year is approximately 8 percent; the second year is 12.5 percent. I will call your attention to the information in the box at the top left page. What we have done in this highlighted document is back out how much money was included for the Medicaid rebates so that you can see the real impact for other agencies ?? the agency as a whole, had it not been for the funds that had to be added for the Medicaid rebates. If you deduct the 540 million dollars the first year and the 796 million dollars the second year, the net change for the department becomes approximately 135-million-dollar reduction the first year, or 2.92 percent; and the second year the reduction is 270 million dollars, or almost 5 percent. If you turn to page two, you have several columns there, starting with the continuation budget by agency. Then you have a comparison of the Governor’s budget compared to the continuation budget, and the percent change for that comparison. You also have the Senate’s spending compared to the continuation budget for both years of the ??, as well as the House budget spending compared to the base budget as well. If you look at the very last column, you see if you compare the House budget to the continuation budget, it is 8.777 percent. As I referenced earlier, the Senate spending compared to the base budget is a 7.98 percent increase. The Governor’s budget was a 3.1 percent increase. Moving to the second year, the Governor’s continuation budget increased the base budget for Health and Human Services by 7.21 percent. The Senate’s adjustments added to a little over 11 percent the second year. And the House budget includes a 12.5 percent increase for Health and Human Services the second year. Mr. Chair, we’ll move on to the money report if there are no questions on that summary document. We have reviewed the presentation on the Senate items. We’re going to highlight the significant changes based on the Senate budget. Those items that are identical we will refer to as being identical as either the Governor’s item or include it in the Senate package, and we will focus on those items that are significantly changed. Begin on Page G1, Item 1 is an identical item that was in the Governor’s and Senate budget and it eliminates six positions. You will see several items throughout the budget that are similar to the Senate budget based on historical transfers. So Staff did an analysis of historical transfers within agencies to help cover previous year’s shortfalls. Based on those transfers that were made, we did an analysis of how much could potentially be transferred on a recurring basis for the ??. For example, the first item you see, you will see several items throughout the agency based on adjustments for historical transfers. Item No. 2 in the Office of the Secretary is the same as it was in the Senate budget and it is approximately 2 million dollars. Both years of the ?? based on historical transfers. Item 3 is the same as it was in the Governor’s budget and the Senate budget funds for NC ??. The Department of Justice ?? the funds are the same as it was in the Governor’s budget and as it was in the Senate budget. The same is true for Item 5. Items 6 and 7 are new items. Item 6 was included in the Governor’s budget Medication Assistance Program. 1.7 million dollars recurring funds for

??. Item seven is also a House-only item, NC MedAssist Program. Four-hundred thousand dollars for both years in biennium. Item number eight had a similar item in the Senate budget, and in the Senate budget it was a competitive lock-grant process where historically funded non-profits would have to now have to compete for funds for the 13-14 year. In the House proposal, these non-profits are funded at approximately the same level they were funded at in the current fiscal year with a slight reduction based on availability in federal funds. And the special provision you will see shortly directs the secretary to create a competitive block grant process by the second year of the biennium. Item nine is a new item as well and it is supplemental short-term assistance for group homes in the amount of eight million dollars. And you will see in the description and see more detail in the special provision what these funds will actually pay for. State-wide Telepsychiatry Program was in the Senate budget and is included in the House budget. In the Senate budget, the funds were provided to the Division of Mental Health. In the House budget they are provided to the Division of Central Management and Support. [SPEAKER CHANGES] Mr. Chair, committee members, I'm Debra Landry with Fiscal staff. The first item under Division of Child Development is county services support, from four percent to three percent in child care allocations. That was in the Governor's budget. It is modified slightly. The first year is slightly less than the Governor proposed. This reduces general fund appropriation for local county departments and social services for their administration of child care subsidies. They will get three percent of their child care allocation for administration of child care subsidies. This is being reduced because of the SEEK system. The subsidized early education for kids system is being implemented and will reduce manual processes in the local county department of social services, which will save administrative costs. The second item, item 12, is regulatory positions shifted from state to federal funding. It is identical in the Senate and the Governor's budget. Item 13, SEEK management funding elimination is identical from the Senate to Governor's budget. Item 14, adjustments based on our historical transfers that Susan spoke about earlier is identical to the Senate budget. A new item is pre-K slots. This item provides 24.8 million dollars in lottery seats for pre-K slots. It will fund approximately 5,000 slots. Moving on to the Division of Social Services. Item 16 is SEEK management funding elimination and is identical to the Governor and the Senate. Item 17, adjustments based on historical transfers is a Senate item that's been modified. The second year of the biennium is increased. It was 1.875 million dollars like the first year, and the second year it's been increased to 3.5 million dollars. Item 18, contract administrative savings is identical to the Senate and Governor's budget. Item 19, federal funds for county child welfare services replacement is identical to the Senate and the Governor's budget. Item 20, NC REACH child welfare post-secondary education was in the Senate and Governor's budget, and this has been modified. This has been modified to provide support for 10% growth each year of the biennium. The Governor funded 200 slots, the Senate 100. And this provides funds based on a growth estimate. Item 21 is a new item to the House and it's the adoption promotion fund. It provides 1.5 million recurring each year of the biennium to support adoptions through a reimbursements to private, non-profit organizations and this is to support adoption programs and to provide financial incentives to county departments of social services who increase their adoptions above a base line. Item 22 is new to the House budget. It's the Permanency Innovation Initiative Fund provides funds to improve and support permanency outcomes for children living in foster care, improve engagement with biological relatives, and reduce associated costs with maintaining kids in foster care. And that's 1 million in the first year and 2.75 million in the second year. [SPEAKER CHANGES] I'm David Rice with Fiscal Research. Section six is Division of Vocational Rehabilitation. Item 23, independent living administration reduction is a Senate proposal and Governor's provision. Item 24, vocational rehabilitation services administration funding is a Senate provision. Item 25, state funding in the assistive technology ...[AUDIO ENDS]

Program is a Senate provision. Item 26 is circles transfers to Medicaid is also a Senate provision. Section 7 division of ageing and adult services, item number 27 the seat management is the Senate and governors provision. Item 28 is an adjustment based on several transfers is a Senate provision. Items 29 and 30 are linked this is a 500 thousand dollar reduction to the home and community care block grant that is used to fund project care and replacing expiring federal grant to provide rest and support services to families carrying for personal with dimension in the home. The Senate reduce the home and committee care block grant by 2.9 million and used to fund a state wide expansion of project care. The governor’s budget funded project care at 500 thousand dollars and to not use the grant block for funding. Item 31 long term care amassment. This is a Senate and governor’s budget proposal as well. Denies Thomas will now discuss section 8, division of public health. [SPEAKER CHANGES] Good morning. I am starting with the division of public health. Item 32 is identical to Senate's item it tries based on historical transfer in the first share enclosing four of the community. The CDS says in the 2nd year. Item 33 is modified from the Senate and governor's item. If the Senate have provided 6 million non-recurring expansion in both years and in case of some pharmacy to go short falls and adept budget but after discussions with the department and the governor's office the house is returning to the governor's position. Item 34 is a modified item from the Senate budget. The Senate budget increase the footing laagering permit fees from 75 dollars to a 120 dollars with the state keeping a now 50 the state’s share of the fines going from 25 to 50 dollars and that the part that counties keeping balance and the Senate then budget that 700 and 50 thousand dollars savings to the public health's budget by adjusting those revenues the house instead doesn't increase the fee quite as high increases the fee from 75 dollars to 95 dollars and allows the counties to restrain the full 20 dollar increase. Item 35 the autopsy fees is identical to the Senate item 36 increasing the expansion funding for the public health lab is identical to the Senate and the governor. Item 37 is modified to Senate had provided 1.4 million for the quit line. The house is going back at the governor's positron providing million dollars for the NC quit line. And there were two item in the Senate budget that the house did not adopt that was the elimination of 48 positions in the oral health section and related to that the Senate had provided savings from that elimination to the local health department to provide additional clinical staff and dental clinics. The house did not take either one of those items. Moving on to the division of inner health. The item 38 is identical to the Senate and the governor's so as item 39 of funding budgeting some of the gambling fund balance. Item 40 the NC high school elf etic association is a Senate item so as item 41 providing hospitals beds is just budgeting the money that you have provided last year. Item 42 the three way contracts is a modified version of the Senate item. It has added the language the second paragraph which is directing the department to use that 9 million dollars to increase the number of three raised beds but also to implement a two tiered payment system for the three way contracts that will allow them to pray a higher rate for patients who are assessed to have a higher equity need. Item 43 the the bright and hospital equipment is identical to the Senate item and so as item 44 providing expansion for NC child treatment program. Three of the items that were in the Senate mental health budget that has been dropped from the house is the closure of the arex the alcohol drugs and treatment centers. The additional funding for substance abuse services and also the closure of the right school. Steve Owen will now present the Medicaid items. [SPEAKER CHANGES] Will begin with health service regulation, this is a Senate modified item.

Now we includes the historical transfers to medicate in the medical systems. Item 46 is the same as the government or senate budget. Item 47 is a senate modified and governor modified, this increases the amount of retention by the state for the hospitals assessment plan to 52 million dollars, the change in the senate were in a percentage. Items 48 and 49 are the same as the senate. Item 50 is the same as the senate. Item 51 is the same as the governor and the senate. Item 52 is the same as the governor and senate. Item 53 was in the governor and the senate and modified from both versions, from the senate budget this was modified for the changes made in the hospital assessment, going from a percentage to a flat amount retention. Item 54 is a senate modified item, this is been modified in the language to reduce the withal from 4 percent to 2 percent, it also modifies the senate version to provide for the implementation of the ?? saving payback beginning by June 30th of 2014, this is also been adjusted for the change in the assessment from a percent to a flat amount. Item 55 is a senate modified item, this includes additional language to provide for the restriction of the women to barn drugs to 4 prescription per medicate recipient without prior authorization. Item 56 is the same as the senate. Item 57 is the same as the senate. Item 58 is the same as the senate. Item 59 is a senate modified, this is been modified again for the change from the assessments going from a percentage to flat amount. Item 60 is the same as the senate. Item 61 is a governor modified, but same the senate. Item 62 is the same as the governor and the senate. Item 63 is same as the governor and the senate. Item 64, same as the governor and the senate. Item 65 is a governor modified, but the same as the senate. Item 66, same as the governer and the senate. Item 67 is the same senate. There were two items that were not included in the house budget, they were included in the senate budget. Those were the health drug management, which will put those drugs on prior authorization. The exchange premium for the selected eligible were also not included in the house budget. The items in health choice will follow the same a medicate and the same changes were made. [SPEAKER CHANGES] Good morning Mr. Chair members of the committee, I am Joyce Jones, I am a staff attorney in the Bill drafting division and I will be reviewing with you, special provisions included in the house version of the budget. The first provision is 12 8.1. It's Department flexibility to achieve departmental priorities and enhanced physical oversight and accountability. This is a governor's item that appeared in the senate. It's modified, the house version now requires these real alignment in any positions to be reflected in the authorized budget. That's the only change from the senate item. 12 8.2 is Funding for non-profit organizations, established competitive grants process, this was a senate item that has been significantly modified, it differs from the senate version and that it makes direct appropriations to the designated non-profit organisations for the 13-14 fiscal year. It states the general assembly intends to establish the competitive grants process for 14-15, it directs the secretary's office to develop a plan to implement this process and list the criteria that the department must consider in developing and implementing the plan and it also gives the reporting requirements and time frames for the completion of various phases implementing this competitive grants process. We have a new item in the house provisions regarding group homes which has been covered. It is a provision which requires the secretary's office to provide temporary..

Short term monthly payments to group homes. On behalf of residence diagnosed with mental illness or developmental disabilities who became ineligible for Medicaid PCS as a result of recent changes in that program. The payments are limited to providing hands on assistants, supervision or medication management. And all those payments terminate at the end of the 13, 14 fiscal year or upon depletion of the funds appropriated for that purpose. The health information technology special provisions are identical to what appeared in the Senate. 12A.4, funds for replacement Medicaid management information system appeared in the Senate. And with the exception of removing language and the Senate version requiring the department to use the replacement MMIS for statewide uniform billing of Medicaid claims. And authorizing the department to charge contracted entities of fee to cover the operating costs for Medicaid claim adjudication performed by the MMIS. The provision is the same as it appeared in the Senate. [SPEAKER CHANGES] Ms. Jones, excuse me. Would you give the page number as you go through that please? [SPEAKER CHANGES] Sure. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Provision 12A.6 appears on page 12. This is identical to what appeared in the Senate. Liability insurance, this is boilerplate language that is identical to what appeared in the Senate and that’s found on page 13. 12A.8 appears on page 14 of your special provisions. This is an elimination of some reports at the request of the agency. We’ve modified this provision slightly. It removes the language that appeared in the Senate version excusing the department from submitting any reports that were due on or before January 6th of 13, if it hadn’t already been submitted prior to July 1 of 13. 12A.9 appears on page 15. That’s Cancer Coordination Reporting. This is identical to the Senate item. 12A.10 appears on page 16 and 17. This is meetings of the Cancer Coordination Committee. This is identical to the Senate. 12A.11, Annual Report of Laps Salary Funds, this is an item that appeared in the Senate budget. You’ll find it on page 18 of your packet. The modification is that it requires the department to provide annual instead of quarterly reports on the use of laps salary funds within each division of the department. The Senate version completely eliminated this reporting requirement. 12A.12, Prison Report, page 19. This is identical to what appeared in the Senate version. 12A.13, Modifications to the Justice 1 task force is on page 20 of your packet, this is identical to the Senate version. And now Lisa Wilks will cover the department of Child Development and Early Education. [SPEAKER CHANGES] Good morning Mr. Chair and members of the Committee. Beginning with the Division of Child Development and Early Education on pages 21 and 22 of your booklet. This first provision, 12B.1 is the NC Pre-K provision and it has been modified. Basically, it adjusts the income eligibility to 130% of the Federal Poverty Level. Removes the language regarding other risk factors. It also, towards the end of the provision, in sub sections H and I, amends current statutory law that stagger the terms of the initial new appointees to the Childcare Commission. And sets the expiration date of the existing commission members for January 1, 2014 and sets the appointment date of the new members for July 1, 2014. The Senate version maintains current eligibility criteria for the program. Moving to page 23 and 24, Childcare Subsidy Rates, this is an identical provision in the Senate. 12B.4 Childcare Allocation Formula, page 25, again, this is an identical provision in the Senate. 12B.5, page 26, Childcare Funds Matching Requirements, identical to the Senate. Page 27, 12B.6, Childcare Revolving Loan, again, this is identical in the Senate. 12B.7, Administrative Allowance for County Department of Social Services, page 28. This is a modified boilerplate provision. It differs from the Senate.

[Speaker changes.]...the Senate version allows a county department of social services to use up to 2% of the subsidy funds allocated to the county for fraud detection and investigation and that language has been removed from the House version. Pages 29 and 31, 12B.9, this is the early childhood education and development initiative enhancement, salary schedule and match requirement adjustment is the Smart Start Revision. This is identical to the Senate. Moving on to the Division of Social Services, Page 32, Item 12C.1, this is revised dates sta?????????????? implementation, this is identical to the Senate. Page 33, 12C.2, intent for family preservation services funding and performance enhancement, this is boilerplate and again it's identical to the Senate. Page 34, 12C.3, child-caring institutions, this is boilerplate and it's identical to the Senate. Page 35, 12C.4, use of foster care budget for guardianship assistance program, this is a Governor-modified but it's identical to the Senate. Page 36, 12C.5, child welfare post secondary support program, this is your NC Reach Program, this is a boilerplate that follows the money and it's been modified in that the House version authorizes 187,275 for fiscal year 2013-14 and 364,415 for fiscal year 2014-2015. The Senate version authorized 547,245 for the 2013-14 fiscal year and 610,817 for the 2014-15 fiscal year. Moving on to Page 37, 12C.8, Work First Family Assistance eligibility and payment levels. This has been modified. The Senate version codifies this language and the House does not codify this language...that's the biggest change. Page 38 and 39, this is a new item in the House, the provision is revised duties of state childcare fatality provision team, repeal task force. This provision revises the duties of the state team to allow a report to the Governor/General Assembly regarding recommendations and it repeals the child fatality task force and makes conforming statutory changes. And, lastly, Page 40, this is a new item in the House. It's entitled A Family for every Child, provision of foster care. This provision appropriates funds for the adoption promotion fund and appropriates funds for the Permanency Innovation Initiative Fund, for each year of the 2013-2015 fiscal biennium. It changes the name of the Special Children Adoption Fund under GS108A-50.2 to the Adoption/Promotion Fund, it re-codifies language under Article 1A of Chapter 131D. It creates a new part under that particular article, Chapter, excuse me. It creates a Permanency Innovation Initiative Oversight Committee to be located administratively in the General Assembly. It states the duties of the committee and directs a report by September 15 of each year and it creates the Permanency Innovation Initiative Fund to support permanency outcomes of children living in foster care. And, Mister Chair, that completes the Division of Social Services...I'll ask Joyce Jones????? to come back up. [Speaker changes.] For the Division of Aging and Adult Services, I have only one special provision and it's on Page 43 and 44. This is 12C.2, the ?????? State County Special Assistance Pilot and this is identical to the version that appeared in the Senate. That completes Aging and Adult Services, now I'll cover the Division of Public Health. That begins on Page 45, 12E.1, Permenancy increases for certain food and lodging establishment. This is a Senate item that has been modified, as discussed earlier by Denise, it increases the permit and re-assessment ?????? instead of from....

From $75 to $120. It now has the fee going from $75 to $95, effective on July 1st. It keeps a portion of the fee retained by the state at $25 but increases the amount that the local health departments retain by $20. [SPEAKER CHANGES] Next is Funds for School Nurses on page 47. This is modified boiler plate that is identical to what appeared in the senate provision. 12E.4 - Childrens Developmental Service Agencies. This follows the money in it’s identical to what appeared in the senate. 12E.5 - The AIDS Drug Assistance Program. This provision also followed the money in the senate version but this provision has been modified in the house budget. It simply does not include one of the components of the reporting requirement that appeared in the senate version. 12E.6 is modified boiler plate on page 50. Community Focus Eliminating Health Disparities Initiative. This is identical to what appeared in the senate. 12E.7, This is modified boiler plate strategies for improving women’s health on page 52. It’s identical to what appeared in the senate. 12E.8 - Increase North Carolina Medical Examiner Autopsy Fees. This is an identical increase to what appeared in the senate. Has that fee going from $1,000 to $1,250 and that completes the division of public health. Moving on to the Division of Mental Health, Developmental Disabilities and Substance Abuse Services on page 54 of your packet. 12F.1 - Establish Statewide Psychiatry Program. This provision has been modified from what appeared in the senate. It now directs the department to submit a plan a little earlier by August 15th of 2013 for a statewide telepsychiatry program which is to be administered by East Carolina Center for Telepsychiatry and Ebehavorial Health. It requires East Carolina to report annually on specific performance measures related to the program and it now appropriates money to the office of rural health and community care to be used for the contract with ECU and to purchase needed telepsychiatry equipment for the state facility under the jurisdiction of the departments that participate in the program. You recall that the senate version directed the department within the Division of Mental Health, Developmental Disabilities and Substance Abuse Services to establish and implement this program. Turning to page 57. 12F.2 - Fund for Local Inpatient Psychiatric Beds or Bed Days. This is modified boiler plate which has been changed slightly. In addition to what appears in the senate version, the house version directs the department to develop and implement a two-tiered system of payment for purchasing these local inpatient psychiatric beds or bed days based on acuity level. 12F.3, on page 59, Funds for the North Carolina Child Treatment Program. This is identical to what appeared in the senate. 12F.4 - Single String Funding for Mental Health, Developmental Disabilities and Substance Abuse Services on page 60. This identical to what appeared in the senate and it’s also modified boiler plate. On page 61, this is a new house item. Behavioral Health Clinical Integration and Performance Monitoring. This provision directs the department to require LME-MCOs to implement clinical integration activities with CCNC through its total care initiative. It also requires the LME-MCOs to submit claims data to the CCNC informatics center and in turn the informatics center will give the LME-MCOs and other eligible behavioral health providers access to clinical data and care management information. The department may expand or alter existing contracts by mutual agreement of all parties in order to implement this action and the department must also report to the oversight committee by March 1, 2014 and semiannually thereafter on their progress outcomes and savings associated with clinical integration activities with CCNC pursuant to this section. On page 62. 12F.6 – LME-MCO Funds for Substance Abuse Services. This is identical to what appeared in the senate and that completes the Division of Mental Health, Developmental Disabilities and Substance Abuse Services.

The Division of Health Service Regulation begins on page 63 and there is only one special provision. It's 12G.2. Eliminate comprehensive report on medication-related errors in nursing homes. This is an identical provision to what appeared in the Senate. This is an agency request and it's needed because federal funds available to fulfill this report have expired. And Mr. Chair, that concludes my presentation. [SPEAKER CHANGES] Mr. Chair, Co-Chairs, Members of the Committee, I am Ryan Blackledge with Bill Drafting. I'll be covering the Medicaid provisions. A quick note before we get into them -- the Senate had codified a lot of the boilerplate language. The versions here do not codify the language, but in most instances the language is the same and I'll be mentioning that as we go through. Starting on page 65, this is very similar to what the Senate had in terms of the Department giving a more detailed proposal back to the general assembly for Medicaid reform. This, however, creates a Medicaid reform advisory group to participate in that process and allow some public feedback. If you look over on page 66, starting at line 19, that's the new language that would create this advisory group and you can see that there are appointments by the Speaker of the House, present pro-tem and also appointments by the governor. Turn to page 68. This is very similar to what the Senate had, except there is an additional item. If you look at lines 21 through 22, this was a suggestion from the Department that was included. This version, however, deletes what was in position number five, which would have allowed a state-planned amendment if it was necessary to continue Federal financial participation for Medicaid. Additionally, this had some boilerplate language that was uncodified on page 69 in subsection C. Next on page 70, again this is a provision that uncodifies the boilerplate language but the language itself is the same as what was in the Senate. Turn to page 71. Again, this is very similar to language that was in the Senate, but it's uncodified rather than codified. This language, though, does include some clarifying suggestions from the Department. Page 72. Accounting sharing and fraud recovery -- identical language to what was in the Senate except that it's just not codified. Over on page 73, the actual language is identical to what was in the Senate. However, a good portion of it is no longer being codified. Page 75. It's the hundred dollar provider application [??] fee. Identical language to what was in the Senate except it's not codified. Page 76. Electronic transaction requirements for providers. This is identical language to what was in the Senate except that it's not codified. Page 77. This is identical language to what was in the Senate, except over on page 78 there's some boilerplate language that was not codified. Page 79. Medicaid eligibility. This also is identical language to what was in the Senate except it's not codified, with the exception of a subsection B that staff removed from the Senate version based on some feedback from the Department. Turning to page 81. NC Health Choice, temporary rates, Senate coverage. This is identical to what was in the Senate. Page 82 is the modifications to the existing services. Steve Owen already discussed the details but this is the special provision that follows all of those money items and adjustments within the Medicaid program. Page 84 is a new provision. This is entitled "Additional Management Drug Utilization" and you can see there are two things that DHHS and CCNC are directed to work on. One: Ensure better pharmacy management, and two: Identify Medicaid recipients who are frequent users, and then see if anything can be done to reduce the frequency in the use. Page 85 is very, very similar to the Senate provision except that there was a subsection B in the Senate provision that would have changed the burden of proof. Right now, for most cases, most admin law cases, the petitioner has the burden of proof. The Senate...There's a provision in law, though, that for the Department of Health and Human Services, they're different from everyone else and have to carry the burden of proof. The Senate repealed that difference in burden of proof. This House provision takes out that repeal. Turn to page 89.

provider performance bonds; again identical language to what was in the Senate, it is just not codified. On Page 90, this is the shared savings plan with providers, as Steve mentioned the Senate had a 4% withhold, this is a 2% withhold instead. Additionally, the Senate began payments January 1, 2015; this would direct the Department to begin payments no later than June 30, 2014. On Page 91 is the Hospital Provider Assessments, the Senate had a percentage collection of 15.6% of the assessments which was estimated to be about $50 million within the first year, this version though, House version, just has a flat amount of $95 million and you can see online ?? that is a change from the existing $43 million. 92 is some modification to rate methodologies and regional rates, that is the same as what was in the Senate. Page 93, this is very similar to what was in the Senate except if you look at subsection A, the Senate had a study being done by medical researchers, study of CC&C. In the Senate version the Department was to hire them, in this version the State Auditor is to hire those folks. Over on Page 94, this is transferring to CC&C, the management of the per member per month payments, this is identical to what was in the Senate. Page 96, this is boilerplate, identical to the Senate. Page 97, boilerplate, identical to the Senate. 98, boilerplate, identical to the Senate. Page 99, some miscellaneous Medicaid provisions that are identical to what was in the Senate. Page 100 is new, it is a directive to CC&C and the Department to continue two programs. One is A Plus Kids and two is the adult safety with anti-psychotic prescribing initiative. There is one more provision that I do want to mention over on Page 101. This is a study to tell HHS Oversight to cite the issue of whether certified nurse-midwives should be given more flexibility in the practice of midwifery. One quick note, I just wanted to mention the ones that were out, some of these were already mentioned in the money report discussion. There was the insurance premiums for pregnant women where pregnant women from 133 to 185 were taken off of Medicaid and given a premium to purchase on the exchange. This was taken out of the House version. There was the additional personal care services for qualified individuals. It was based on a House bill, it has passed the House. The Senate had included it since it passed the House and in the Senate. It has been taken out here. There was a modification to the Medicaid ?? statute that was also a House bill. The Senate had included it but it is a bill that has gone through the House so the House has taken it up here. Additionally within the miscellaneous provisions, there was a reworking of the Board of the North Carolina Institute of Medicine in Senate version. This House package does not include that provision. [SPEAKER CHANGE] Mr. Chair, Members of the Committee, it is Deborah Landry again. I'm going to talk briefly about the block grants. Most of the block grants are identical to the Senate so I am only going to talk about those that changed. On Page 103-105 is the Social Services block grant. As Susan mentioned at the beginning of the presentation in the Committee Report, the competitive block grant contains money for the non-profits. Because federal availability was reduced, the House has reduced non-profit funding by slightly less than 8%; in doing so that freed up some federal block grant money to put back into other areas that had been cut so for the Social Services Block grant $800,000 less was needed for the Competitive Block grant so those $800,000 were redistributed to the lines in the Social Services Block grant that provide direct services. So none of the admin dollars were put back in but the direct services line were allocated across those items in the Social Services Block grant. On Page 107, the Maternal Child and Health Block grant, Line 11, Health Promotion, was returned to the Governor's position, that $1.3 million in the Senate had gone to the Competitive Block grant. After discussions with the Department this was put back into the ?? Block grant at the Governor's item and it was also not included in the Competitive Block grant. Page 107, is the Maternal and Child Healthcare Block grant

Lines 45 to 47. The Carolina pregnancy care was changed from $305,000 to $205,000 and then a line was added fro the nurse family for 1.18 million and I am sorry I skipped, Health promotion was in the competitive block grand and now it's back to the governor's position at $89,000. That concludes my report. [SPEAKER CHANGES] Members of the committee, we initially said that we were discussing a question later on this afternoon however we still have about 15-20 minutes still left for committee time this morning so let's go and open up for discussion, questions and amendments would still be held till this afternoon. Representative Insko. [SPEAKER CHANGES] Thank you Mr. Chairman. Just on this last presentation the $800,000 cut that was the matching funds. Is that right? The funds required for matching federal dollars. [SPEAKER CHANGES] The $800,000 were SSVG funds and the senate budget, they use that money in the competitive block ground process.And in the house budget, we use some SSVG funds for the competitive block ground. We used 3 millions instead of 3.8. The $800,000 was redistributed through those social services block ground to items that provide direct services. So for example, the County department social services received increase over the senate budget. The child protective services, state in home services, adult protective services, everything in the social services block ground that is a direct service was provided additional funds in the house budget over what the senate put out. [SPEAKER CHANGES] Just follow up. [SPEAKER CHANGES] That was partially due to sequestration and I'm really off on that. [SPEAKER CHANGES] Representative ??, you asking about reduction in federal block ground funds? Sequestration has not been taken into consideration in most of this block grounds at this time. [SPEAKER CHANGES] Senator Lambeth. [SPEAKER CHANGES] Thank you Mr. Chairman. Two questions. I understand that Senator Hise may have changed the autopsy fee and I think when you do see it did occur not. Fee change in autopsy is that I do understand that it was changed from $1500 from $1250 so we just need to follow that up. [SPEAKER CHANGES] Someone from the staff wants to address that? [SPEAKER CHANGES] Representative, the autopsy fee remains that what it was in the senate budget at 1250. [SPEAKER CHANGES] Second question or observation. The provider assessment when that was put in here I guess, a couple of sessions ago, that was thought to be a temporary funding source to fill that gap between cost and reimbursement and you got federal approval. I do worry about the growing dependency on that by the state and then those funds being eliminated some point in the future totally. You are increasing it and becoming more dependent on it and then the feds eliminate that program then there is a big hole that you are going to have to recover at some point. I don't know if there is any updates on the assessment program feedback on feds as they balance their budget try to shrink the deficit or that might be their priorities of reduction and you may just not know anything about it at this moment. [SPEAKER CHANGES] Okay, are you making a comment or asking a question? [SPEAKER CHANGES] I guess this is a question about if you heard anything from the feds about the changes on the federal level in this assessment program. [SPEAKER CHANGES] Anyone in the staff wants to comment whether there are any updates on that? [SPEAKER CHANGES] The last information we have is what's still being contemplated is the stage reduction down to 3.5 percent, the hospitals at this point even with this change will still be below 3.5. We have heard no further, no updates. [SPEAKER CHANGES] Representative Martin. [SPEAKER CHANGES] Thank you Mr. Chair. I would like more information on provision 56 on page D10 about the prescription drugs. if someone could explain that a little bit more. [SPEAKER CHANGES] ?? [SPEAKER CHANGES] It's still ?? for research. What this reduction does is it converts current payment methodologies for

...product cost or the drug cost from using national indexes, a ? of those national indexes, and a state maximum allowable cost to an average acquisition or invoice cost, which would be determined through surveys with the pharmacies. It also introduces a new dispensing fee which would go from the current three dollars for brand drugs and then a tiered for generics to a, basically, a two dispensing fee item where on average the two would average out to $9.87 with a two-dollar incentive, if you will, for dispensing of generics and those on the preferred drug list. [SPEAKER CHANGES] Representative Insko. [SPEAKER CHANGES] Thank you. I have, I think, three questions. One is on page 100 on line eight it talks about prior authorization policy for off-label anti-psychotic and safety monitoring. How is that different from what the Senate did? It's new, but the Senate had...the Senate did prior authorization for all anti-psychotic drugs, didn't they? [SPEAKER CHANGES] The Senate did include a prior authorization for all mental health drugs. This is a replacement for that. [SPEAKER CHANGES] Okay, thank you. Second question. On the provider...the page 75, which is the provider application charging $100.00. I don't think I understand the rationale for this. I'm concerned that this will be a...will provide a disincentive for providers to enroll in Medicaid. We really want to keep our providers willing to serve Medicaid patients. I know that some of the specialties practices are Medicaid providers but they never provide services. So, if I could just get a little more information for the rationale behind that. [SPEAKER CHANGES] Mr. Chair? [SPEAKER CHANGES] Go ahead. [SPEAKER CHANGES] Just a little bit of background information. That fee was first authorized in the 2009 budget and has been charged since September 1st, 2009. [SPEAKER CHANGES] Okay. Thank you. And on page 63, eliminating the comprehensive report on medication related errors. I understand that we don't have the money to do that anymore, but what I'm concerned about is losing the information. You may not be able to get this to me today, but I'd like to have some information on the course of medication errors in nursing homes. If we can see whether that reporting... if we use that reporting to do anything. I guess it's the rate of medication errors or the number of medication errors that are coming through by year. If I could get the last three or four years, it would be a help. And I have a question about the assessments. [SPEAKER CHANGES] Did you want them to comment on that? Did you want staff to comment on that? [SPEAKER CHANGES] Yes, if they could, that'd be great. [SPEAKER CHANGES] Okay. [SPEAKER CHANGES] Representative Insko, I will say that this provision simply eliminates the requirement that the department pull this report together for through the use of a contracted entity, but it doesn't eliminate the requirement that the nursing home keep this information. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] I have a question about the assessments. We... well, there's a provision here that provides a state savings from an assessment that we did previously. So when we first did assessments, most of them, they, the assessments, were used to increase provider rates, provider reimbursement. Across the board. The state didn't take anything if I remember correctly. And so I'm wondering now if the state is sharing, if there's a sharing of all the provider rates that we do or if it's just specific ones. And tell me if I'm remembering that incorrectly. [SPEAKER CHANGES] Go ahead, Mr. Owens. [SPEAKER CHANGES] Representative Insko, when assessments were first introduced for nursing homes, and I.C.F. ??, 100% of the assessment went into the rates. When this assessment was put into place in 2011, basically what was done with the hospitals was they proposed at that time 43 million dollars would be retained by the state as retention. At the same time ... [AUDIO ENDS]

Nursing homes were also increasing their assessment up to the maximum amount. So for the last half of percent, the nursing homes, when they increased their rate from 5.5 percent to up to 6 percent of up to the cap, the state retained up to two thirds of that increase on the nursing homes. [Speaker Change} Thank you. [Speaker Change] Representative Earle. [Speaker Change] Thank you. My question is concerning the ADAP program on the money report G-6, number 33. It’s basically taking $8 million out and I know the Senate had put money in. My question is, I am looking at the write up, and it is saying, and am I understanding, that it’s going to be $5 million additional left after, overage after the $8 million, and is that going to serve all of the approximately 7000 people that are being served now. And is that at 125 percent of poverty or is it at 300 percent of poverty. I know that is a lot of questions, but if you could just give me a little bit of background. [Speaker Change] Alright, thank you. Ms. Thomas. [Speaker Change] Yes Mr. Chair. Representative Earle, even after this cut, the program will have $5 million more to spend next year than the current year, and they are currently serving everyone on the program. There is no wait list and they are serving everyone up to the 300 percent. And so, they will have adequate funding next year. In addition there are people this year who are on the inclusive health high risk insurance plan that will continue to be served through December 31. And then the expectation is that ACA will kick in on January 1, so a lot of the persons who are on the program now will be able to get coverage through the exchange. [Speaker Change] Representative Farmer-Butterfield [Speaker Change] Thank you, Mr. Chair. For purposes of transparency, I want to say that I work for a non-profit corporation and indeed that non-profit corporation contracts with Social Services. But on page 104, where the DHH gets funding for non-profits was reduced ?? at Social Services for direct services, I just want to raise the issue that it is important to know that when you do these cuts, when you cut non-profits you’re also cutting direct services as well. I think it’s important for this committee to know. [Speaker Change] Okay. Thank you. Ms. Landry did you want, does anybody want to comment on that. [Speaker Change] ?? [Speaker Change] Did you have a question at all, or just want to make a comment? [Speaker Change] ?? [Speaker Change] Okay, thank you. Representative Avila. [Speaker Change] Thank you, Mr. Chair. I think I would like to make a comment here, because when these cuts happen, we get skewered for it, and it’s not our cut. These are passed through federal dollars that we have no control over, how much or how little they send us. So the state is not being heartless, and we are not trying to put people on the street and not give them services. This requirement is coming because the cut comes before we ever get the money. Thank you. [Speaker Change] Representative Lambeth. [Speaker Change] Thank you, Mr. Chair. This may be a question for information that we could use this afternoon, because I would be interested in line 70. The rate freezes for services subject to automatic increases, page G-13. Could we get a breakdown, you know there is a dollar decrease there, that represents the freezing of the rates. I am particularly concerned within those areas for hospice, because that’s an industry that really is fragile. And if it wasn’t for the golf tournaments and the United Way contributions and some of other things, some of the hospices wouldn’t survive. I’d really be interested in knowing if we pulled that out, and we did allow an increase in hospice. How much that would add back? I guess that is my question. That’s something you could get for this afternoon. [Speaker Change] Mr. Owen, do you want to comment now? [Speaker Change] Sure. Representative, actually this reduction specifically excludes hospice, federal qualified health centers, all the mandated rates that Medicaid has to pay, as well as nursing home case mix and then your Part D, Part D premiums. [Speaker Change] Follow up. So that ?? solves that problem. Thank you. [Speaker Change] Representative Insko. [Speaker Change] Thank you. On page 41 of the budget bill, we discussed this in committee I ??...

Member of, this my question about this issue has, the fact that it's being administered, it's located administratively in the general assembly. And so, are there other programs that the general assembly administers? Isn't that a little, who's gonna do that? Who's gonna do that? [Speaker Change] Lisa Wilkes for bill draft. And Representative Insco I believe it's gonna be housed at the general assembly so that if the committee needs access to staff and things of that nature, that it will come through the legislative services commission. So it's for the purpose of being able to facilitate the administrative needs of the committee, once it's instituted. [Speaker Change] Follow-up. So this is like a study commission, only instead of being in response to a study bill, it's a permanent committee. I mean do we have anything else that's like this? We do, OK, thanks I'll get that later. [Speaker Change] Any other questions at this time? OK if not we will continue with questions, and any amendments. And if you would please get amendments to the chairs as soon as you can. We'll go into recess and reconvene 15 minutes after the house session, thank you. And also please take your documents with you, and be sure to bring them back with you. OK we call this meeting to order. We'll continue our meeting from this morning and we'll go over discussion first. Representative Avila. [Speaker Change] I'm sorry. I thought you were gonna bring me an amendment. [Speaker Change] Hold on, we'll hold on for amendments for a minute. [Speaker Change] OK. [Speaker Change] Representative Insco. [Speaker Change] Thank you Mr. Chairman I have just a couple of other questions. One has to do with the, I think its page 90. That has on line 3 there's a comment there at the beginning. The Department of Health and Human Services shall consult with providers affected by subdivision B. So what, what does that mean consult? Do you know how extensive that's gonna be? Whether it's gonna be an advise and consent? Or an inform? Or whether there's gonna be some kind of collaborative arrangement? Page 90. [Speaker Change] Hold on just a minute Representative. I think several of us were getting alarms on our cellphones that there's a flash flood in the area. So everybody keep your feet up. OK and the staff wanna answer that. [Speaker Change] ?? and answer your question that the intent here is the department would work with those providers in the development of the shared savings plans. The specifics of how it would be implemented and what the indicators and measures that would be used for the paybacks. [Speaker Change] So it's kind of a negations process? [Speaker Change] I don't think it was intended to be a negotiation. It was really work together ??. [Speaker Change] I agree. I have a couple of other questions. [Speaker Change] Kay go right ahead. [Speaker Change] On page 82 of the bill, section 12h.13.E. This has to do with the 10% rate reduction and that's associated with the assessments. And my question has to do whether or not that would require a Medicaid spa amendment. And if it does require a Medicaid spa amendment is that covered under the allowable spa amendments?

to Atlanta from the late reply by and deleted, anyone has lifted him from time to think that followed that IP the deadly aim here are a captive and time-that went through the pain that, she couldn't help but when of the corresponding year of time and again and again that I had a hand PAAAME and timing and concluded that he had a great time nine EA I's FA-90 by two that I'm Phillip and $9.5 million and time than 50 and the money for them and then the source of course, one of the corps ?? (SPEAKER CHANGES) a Pan Am jetliner of time IE 4 NP955-time that you can't get too, that had that happen again grant you that I'm more planned purchase Richmond and in the prior authorization report that will be a problem for a good many people FA metal halftime?? at hand?? a) defeated and the common usual plan for the next decade that they have too many prod day deadline and then the 10th time as a oversight(SPEAKER CHANGES) computation and that the time if and when I get the information time in more than that is, if and when play Monday and unhappy that many of the time DNA that he had accounted for talent for bringing about the only to the Miami convention and then any time of day, two and a crew of the template and a lot more planned and unplanned than the fact that many of the day at the end of the general question time he and planning for the two had nine profit declined a great time, the background AM and return one final one plan time a action in the back and I had been given the depth and talent of La Grande and it could happen in the family planning many time that happened had a good can , and the they know of no return the top of the time they thinking about time in the questions, but 15 when two of the 10-KD 8; I am very pleased time someone buying the whole Liu, detecting that undid a five-level the playing time that you did the weighted and how we admit that length of time La Paz about a lot about the competition from Lima and during the time the evening, including an advantage and you today that the event ID and they will not and comp time in eight at the NL going into the next year the government of time eight million dollar reduction to that, to the coal mine because they are being held by the I time giving everyone, they had known mainly in the time ??.....

And with the expectation and that on January 1st the ACAI will take a fact and that will remove a lot of people from the ADAC waiting list and the ADAC will at they will be able to get their coverage under the exchanges.[SPEAKER CHANGES]?? follow[SPEAKER CHANGES]??[SPEAKER CHANGES]SO there is absolutely no waiting list at all [SPEAKER CHANGES] that's correct[SPEAKER CHANGES]any other comments.Rightly move on to amendments okay .The first amendment is S4028TR-4[SPEAKER CHANGES]This is my amendment and if i get a copy of the amendment please .thank you every one of you turn to page G11 item 60. It relates to the non emergency ?? emergency .This is a clarifying amendment that the non emergency fee is a fee to the hospital, this is not anything dealing with the providers and so this amendment doesn't any money reporters just clarifying the language there in the snappy.[SPEAKER CHANGES]others any questions regarding the amendment .If not others in favor signify by saying ' I all those opposed i say it we mean this have been accepted'[SPEAKER CHANGES]those are there i would turn my amendment .So i step ?? Next amendment is S4028LU-10B3.??have a copy representative Avvlet to explain your amendment [SPEAKER CHANGES]Thank you Mr chair man this is simply to correct an oversize this is the section where the rights are set for the coming year or the biennium and i would appreciate your support and if staff has any additional comments please make them.[SPEAKER CHANGES]Any other discussion representative [SPEAKER CHANGES] i just ??approval i would do it here.I assure the rules are [SPEAKER CHANGES]Any other discussion on the amendment [SPEAKER CHANGES]All those in favor say 'I those apposed ?? the amendment has been adopted'. Next amendment is S402AMG-14V2 And representative Avvlet

Explain the amendment. [SPEAKER CHANGE] Thank you, Mr. Chairman. This amendment has been introduced at the request of Representative Blackwell. The area up in Morganton has been hit pretty hard with some closures. One of those being the Bunken Correctional Facility. Plus the fact that if we eliminate the Morganton area all the burden then would fall on the one in Bunken County and that's a fairly significant corner of the state. I would ask for your support on the amendment. [SPEAKER CHANGE] Representative ??. [SPEAKER CHANGE] There's no impact on the budget? [SPEAKER CHANGE] Mr. Chairman. No. They'll still follow the direction that they analyze for the lowest use and do the closures based on that. All the savings still should be recognized. [SPEAKER CHANGE] Any further discussion on the amendment. If not, all those in favor of the amendment say aye. Those opposed say no. The ayes have it, the amendment is adopted. Next amendment S402-LU-11V1. Does everyone have a copy? Representative Avila. [SPEAKER CHANGE] Thank you, Mr. Chairman. This is just to rearrange, reallocate some funding that was given in excess of what was actually the request. It was $375,000 for the ACU High-Risk Maternity Clinic and we're taking it down to $325,000, which will give us a $50,000 reallocation. With $5,000 of that going to the 17P program and then the balance going into the state sleep campaign. I would appreciate your support. [SPEAKER CHANGE] Any questions on the amendment? If not, all those in favor of the amendment say aye. Those opposed? The ayes have it. The amendment is adopted. The next amendment is S402-AME-29V1. [SPEAKER CHANGE] Mr. Chairman. [SPEAKER CHANGE] Wait just a minute, Representative Fulghum. Representative Fulghum. [SPEAKER CHANGE] Thank you, Mr. Chairman. This is a amendment to delay the effect of implementation of this portion of the revision of the ?? County Task Force Team language on page 38 and 39, up til July 1st, 2014. This is simply to allow us to look at this, this is purely policy without physical impact. Try to figure out if there is any problem with the organization that can be fixed by the appropriate legislation. But, this as it stands now would delete ?? County Task Force as it is and I think that we can delay that until we can examine the situation better. I move for the adoption. [SPEAKER CHANGE] Any comments on the amendment. Representative Avila. [SPEAKER CHANGE] Thank you, Mr. Chairman. I agree in the substance of the amendment. I feel like the change really needs to have some additional study and I feel like a year would give us a chance to look at the functions and objectives of the child fatality task force. Because, many of you know, most of our task force groups do end at some point in time and this is one that has become a permanent fixture

and I think it really honestly needs looking at and I think we should do that over the next year. I would appreciate your support. [NEW SPEAKER] Any other comments on the amendment. If not, all those in favor say aye. Those opposed? The ayes have it. The amendment is adopted. Next amendment is S-402-AME-26, B-4. Representative Insko is recognized. [NEW SPEAKER] Thank you, Mr. Chairman. This amendment actually will expand the Medicaid coverage under the Affordable Care Act and do it effective along with the roll out in 2014. First of all, let me say that other states are still making this decision. So it's in no way too late to make this decision and would not be for some time. So I think we have plenty of time. All the Institute of Medicine studies have been done. I think all the preparation work has been done. I know we had the audit on Medicaid and those issues have been addressed. So I think there's no reason for us not to go ahead and expand Medicaid at this time. There are several reasons why we really ought to do this. You've heard all of the ones about how it would cover 500,000 additional low income students and the federal government would pay for it. 100% for the first three years. Federal portion never falls below 90%. It would be, for the first 8 years, there would actually be an economic gain to the state. It's also a jobs bill. But there are some bad things that will happen because we're not going to do it, or because we have not done it so far. And I hope you would vote to do it now and avoid these problems. Employers and small businesses will actually probably incur penalties if we don't extend Medicaid, because many of their employees would qualify for Medicaid. If we don't extend Medicaid they'll be required to buy health insurance on the exchange, and if they don't do that they will be require to pay a fee, a fine. Many people will choose to pay that tax assessment, but it will be a penalty against our small businesses and our low income workers which we don't need right now. It'll be an impact on our hospitals. The disproportionate share money is going down. Our rural hospitals especially are really very close to the break even point. Many are losing money already. This would further put them in jeopardy. I think it's going to be very difficult for our rural hospitals if we don't expand Medicaid. Then every year that we don't expand Medicaid, our tax dollars, this is our money that we want to have come back to our state to pay for this. We're paying for this program through our tax dollars. North Carolinians ought to be getting their fair share of the tax dollars back in North Carolina and not be paying for others. Plus the first years that non-covered people come onto health insurance of any kind, but our experience with Medicaid is that when you take a new group in, the first few years, the first 18 months actually, they actually cost more than the average Medicaid patient because they're sicker than the average Medicaid patient. So the longer we delay bringing this group in, the more expensive it's going to be for the state. It would be to our advantage to do that. So the bill itself, line 4-6 just cover the change in the bill title. Line 7-10 actually are the Medicaid expansion. Then, on line 16-25

This is some of the money that we would save that we're currently now paying for out of other funds. So the first year we would actually save 14 million, the second year 28 million for our ADEP program. And then for our mental health program we would pay, we would save $8 million the first year and 16 the second year because those people would be covered with Medicaid funding. On the backside this appropriates that money into a community services for mental health patients. This is community service funds so it'll cover mental health developmental disabilities and substance abuse services. But over the past few years we have actually cut $80 million out of our state funds for this program. In 2011 we had a cut of $20 million that was non-recurring that was repeated in 2011, that didn't get replaced. So in this budget right here before us we have a $20 million cut in our community based services for our local management entities to pay for services for the people with mental illness, developmental disabilities, and substance abuse services. We are under serving that population and have been. We did it under the Democratic administration and I hope that we will not continue to do it as we go forward. Whoever is in the majority, but we really do need this money in our mental health services. So I would appreciate your positive vote on this amendment, and I move for its adoption. [Speaker Change] Mr. Blackpledge did you wanna comment on this please? [Speaker Change] Just to walk through some of the technical issues to make sure everyone can see where moneys flowing and what not. As Representative Insco explained it does expand the Medicaid up to 133%. You'll note online 11, this is contrary to session law 2013-5 when the general assembly said that the state would not expand, that's why there's the repeal of that section there, online 11. The expansion then frees up some money because some folks would then gonna be covered under Medicaid that are currently being served through other means. So if you'll look likes 16 through 23 there's some savings to the age drug assistance program. Next on lines 27, 31, and going over to the next page there's some savings to mental health. Now these savings are then used, a portion of it is put back into community services funding. This was actually an item that was a non-recurring cut from last year. And Denise can correct me if I'm incorrect. But my understanding is that it wasn't put back into the budget, and then also the money goes to pay for the administrative cost even though 100% of the service cost are gonna be paid by federal government for this. There is about 10 million in the first year, 14 million the second year admin cost with the 50/50 federal match that we have to cover. And that's the remaining funds that are taking care of lines 9 through 17 on the second page. [Speaker Change] 'Kay Thank you. Representative Avila. [Speaker Change] Thank you Mr. Chairman. Members I would ask that we not vote in favor of this and there are a number of reasons. First and foremost I think it has been the sense of the entire government through the three branches of the Governor and both branches of the legislature that it is not in the best interest of our state to begin to move in to expanding a program that we have no control over. And one of the things that we owe to the citizens of this state is stability in their services. And to say that we're gonna take three years at 100% and then we might end it is not a certainty that I am willing to put out there for them to live with for the next three years. I think the direction that we've headed in to try to spend as carefully and as critically, and targeted as we have for the needs of this state it will show people the direction that we're heading in, and it is not to expand. We have some of these effects are gonna be taken care of, we have a amount of money for the woodworking effect which is gonna take care of some people that haven't been on assistance that they were entitled to, or eligible for. As well as the fact that this proportion is shared for the hospitals is not really an issue because of the fact that we're still under that 3% where the cut is coming from 6 to 3. So I feel like it's an irrational move on our part to expand something that is putting us in the whole every year. And would ask that you vote against this amendment, thank you. [Speaker Change] Any other discussion? Representative Farmer-Butterfield. [Speaker Change] Thank you Mr. Chair. I wanna speak in favor of the amendment. I think it's a way to generate additional funding that's desperately needed in several areas.

I think that the people that are in need of health care are being penalized because of administration flaws and desk reports in the wrong places. And I think within 3 years we should certainly have a boost to our economy and have more jobs in North Carolina. [SPEAKER CHANGES] Any other discussions? Representative Lambeth? [SPEAKER CHANGES] Thank you, Mr. Chairman. I know it’s late on Friday afternoon I guess this is a good attempt to try to slide something in while we’re maybe tired and sleepy but I can’t vote for this either because we’ve already a stance and position on this and I think it would be contrary to what the General Assembly and the Governor have said at this point. [SPEAKER CHANGES] Any other comments or discussion? Ok, all those in favor of the amendment say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Those opposed. [SPEAKER CHANGES] Nay. The no’s have it. The amendment fails. Next amendment is S402-ALU-12V1. [SPEAKER CHANGES] Does everyone have a copy of the amendment? Representative Avila. [SPEAKER CHANGES] Thank you, Mr. Chairman. I believe this one would qualify as a technical report in the typing. It was simply put 4% where it should have been 3 and I ask your support of the amendment. [SPEAKER CHANGES] Representative Insko. [SPEAKER CHANGES] I want to make sure I understand this, page 28. So is there any evidence that the Departments can actually do this? That they’re not going to have to cut into, well they have to do their administration. And I understand wanting to keep the administrative costs low I agree with that. I just don’t want to put the local counties in a position where they’re going to be falling behind on the required reports. [SPEAKER CHANGES] Would staff like to respond? [SPEAKER CHANGES] Representative Insko, this actually follows the money, there’s on the Committee Report page G2 there’s a reduction in the county services report from 4% to 3% in child care allocations. And this just corrects the special provisions, special provision inadvertently had 4% instead of the 3% that would follow the money. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] So this is a cut. What is it now? What is the administrative part now? [SPEAKER CHANGES] I’m sorry, right now they get 4% of their subsidized child care allocation they can spend on administration. This would go to 3%. The money report already shows the cut in the money report, Item 11 on G2. This just corrects the special provision. [SPEAKER CHANGES] And I understand that. My question is just, I didn’t ask this question earlier because I just didn’t see this. But there’s no evidenced that this is going to create any burdens on the department’s ability to meet all their requirements? [SPEAKER CHANGES] This reduction is being taken because the Seek system is coming online and the department reports that this will reduce manual processes at the local county department of social services. [SPEAKER CHANGES] Other questions or comments on the amendment? If not, all those in favor say aye [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Those opposed? Guys have it. The amendment is adopted. The next amendment is S402-AMG-17B4. Does everyone have a copy of the amendment? Representative Martin. [SPEAKER CHANGES] Thank you, Mr. Chair. Members of the Committee, I went around and talked to some of you about vocational rehab and if I peel this back a little bit, this is a service that’s offered in our community rehabilitation programs that really include two areas. Some that fall under VR.

And some that are the adult developmental vocational program which gets its funding through the local management entities. This program is essentially providing some type of work environment for our more severely disabled adults who are typically mental, mental retardation or brain injury. I think the IQ has to be below seventy. And they come in, and they spend a full day working at these facilities, and the vocational rehab part of this community program, they learn skills for the less severely disabled citizens to actually join the work force. This is a, a highly utilized program, we have a waiting list in Wilson County and around the state for these programs and it's a very effective use of our funds because it allows for the other family members to do work during the day so it's like a place where these people can go and be productive and become more a part of society. As we are moving them more into the community, I think we need to, to push for more funding for this program, and get these folks off the waiting list. This is not, the amendment does not provide what we actually need, but it would provide for about forty more people to get off the waiting list and get into this program, and hopefully we can talk to the ?? about possibly prioritizing this. The funding for it comes from elimination of vacant positions from wherever the department chooses, so it's not cutting any services, so we're taking away vacant positions and moving this into services in our community, and I urge your support. [SPEAKER CHANGES] Any other comments or discussion from members of the committee? [SPEAKER CHANGES] Vote yes. [SPEAKER CHANGES] Representative Farmer-Butterfield? All those in favor of the amendment, say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Those opposed say no. The ayes have it. The amendment is adopted. The next amendment is S402-AME-28 V2. [SPEAKER CHANGES] Mister Chairman. [SPEAKER CHANGES] Representative Fulghum. [SPEAKER CHANGES] Thank you mister Chairman. This amendment is to delete language that changes the existing state health Medicaid plan by restricting the ability of the hospitals to use totally federal funds to supplement faculty salaries at their medical schools, these are state medical schools, in this case, East Carolina University, Brody School of Medicine and UNC School of Medicine. I've talked with all the parties here and have a better understanding of this, this upper payment limit as it is described, which it gives a supplemental amount for Medicare, Medicaid treatment to these hospital based practices in these medical schools that allow these professors who have a substantial majority of their time spent in their teaching positions. In most of these of these cases, these is based at the medical school itself, and it's exactly what the current amendment to this state plan that I'm objecting to addresses. What it doesn't address are the off premises faculty who go out into the community, in this case rural North Carolina, area health care education centers and such and carry out their functions. These would be the people be affected by this reduction, and their subsidized salaries which in most cases, actually all cases, are actually losing money anyway through the faculty benefit plans. Actually, faculty salary plans, rather. So I would move that we delete this language, in this case saving, for example UNC thirty one million dollars of federal money and ECU School of Medicine sixteen million dollars. I just think this is not the right thing to do. I advocate the support of this amendment. [SPEAKER CHANGES] Representative Avila. [SPEAKER CHANGES] Thank you mister Chairman, and while I appreciate Dr. Fulghum's argument, there is another side to this, and it's reason why I am against this amendment and would like you to vote against it as well. What this

language does if we put it back in will allow doctors, whether it’s all doctors or a special class of doctors, in any facility that is connected within the university system hospitals or ECUs hospitals to receive the full commercial reimbursement rate on Medicaid which none of your county hospital physicians can be allowed to do. In my estimation it is more a question of fairness than it is as much of anything else. These physicians in the university system teaching facilities, I think make very good salaries and then they practice as well. I think that it is a bad move to be able to give benefits to one hospital over another hospital when the times are so tight and it can’t be passed out for everybody to be able to take advantage of those types of reimbursements. If the staff would give a more technical interpretation I would appreciate it. [SPEAKER CHANGES] Steve Owen. What this prevision is intended to do is to limit that commercial base reimbursement to those physicians that are primarily in the teaching positions. We would basically remove that provision for those physicians that may become part of the practice plan which are not necessarily spending the majority of their time teaching. [SPEAKER CHANGES] Follow-up Mr. Chairman. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] The current language in the state plan and I’ll just read you a paragraph which I think we ought to comply with and they do comply with. Except for professional providers in hospital based group practices in which this case would include pathologists, emergency room physicians, and the physicians employed in the hospital like anesthesiologists to state these are totally hospital based physicians. Except for these eligible medical professional providers shall exclude any professional providers and member of group practice required or assimilated by the hospitals. In this case ECU or UNC after July 1, 2010. So this would exclude the group Representative Avila is concerned about as being non-competitive. These are not faculty teaching positions. The folks that are not in that case would not be affected by this and would not be covered by the supplemental salary situation. We’re talking about people who spend their time teaching residents and have a primary focus of their practice doing that. These are not the physicians that come into the hospital, practice and then they go back out into the private community. I would disagree that the salaries schedule most or any primarily university based in this case to be state support university or competitive with the private physicians. I just don’t think that salary data will show that. [SPEAKER CHANGES] Representative Avila. [SPEAKER CHANGES] Thank you Mr. Chairman. I guess the fact that our university hospitals receive a lot of breaks because they are university hospitals is one of the reasons that I feel they are not going to be hurting in terms of cutting their physicians’ salaries to the point that they won’t be willing to stay at the teaching hospital. It’s an advantage our university hospitals have in a number of ways both in federal breaks as well as state breaks. We’ve got rural hospitals that are hanging on by the skin of their teeth and I just feel we need to more or less level the field out there where people are having to practice their profession. [SPEAKER CHANGES] Mr. Chairman I’d like to point out we’re not talking about hospitals reimbursements. We’re talking about the differential called the upper payment limit affecting professional salaries. These are not the hospital portions of that. [SPEAKER CHANGES] Representative Martin. [SPEAKER CHANGES] I have a question for staff and then a comment. This money, this does not affect the state funds at all? This money is coming from federal dollars and is not impacting the budget. Is that correct? [SPEAKER CHANGES] Staff. [SPEAKER CHANGES] The state portion of this funding comes from inter-governmental transfer from the facility from the institution side. There is no state dollar here. [SPEAKER CHANGES] Thank you. I would like to speak in support of this amendment because I think with all the changes going on we are facing a very significant physician shortage and provider shortage and we need to make sure we are supporting our medical schools and that we are encouraging doctors to be there and train our next generation because maybe you all are going to have healthcare on paper but if you don’t have

providers coming through the system, we won't have health care. So, I would urge your adoption of the amendment. [SPEAKER CHANGES] Representative Insko? [SPEAKER CHANGES] I was mainly going to make the same point that Representative Martin made, that we're facing a lot of changes; there are a lot of unknowns, and we are--everyone projects--that we'll have a shortage in providers. And so, I would urge a yes vote for the amendment. [SPEAKER CHANGES] Representative Lambeth? [SPEAKER CHANGES] Mr. Chairman, there's always been this issue of fairness from the University, particularly UNC and the other, particularly community, hospitals. I'm not sure we'll solve that with this budget issue. I do think, though, because this is Federal money, we ought to take advantage of that. There are other ways that we probably ought to look at to deal with the fairness issue, because we do provide lots of subsidies to the UNC system. I think we ought to take advantage of the Federal money, since that money is available. [SPEAKER CHANGES] Any further discussion? Representative Brisson. [SPEAKER CHANGES] Thank you, Mr. Chairman. Dr. Fulton [??] did the question. What's the present salaries--I mean--what kind of base--salary base--are [??]folks getting in [??] [SPEAKER CHANGES] I cannot answer that accurately. I can only guess, and that's not really fair to do that. In my experience, having been in the field 35 years, faculty physicians versus private practice probably in the 50% of what the private practice people get. I would guess it [??] pretty close. [SPEAKER CHANGES] Follow-up? [SPEAKER CHANGES] I guess since, and I don't really understand--you know--the folks that we're trying to affect is--the teaching the programs; is that what--is this where you're going and is that part-time student teaching, or what is it? These [sic] full-time employees, by the universities? [SPEAKER CHANGES] Follow-up, Mr. Chairman. Yes sir. These are faculty appointments. These are full-time faculty appointments that their primary goal--their primary job--a substantial amount is what the state plan refers to teaching residents and other physicians. So, they are appointed by the medical--state supported--medical schools in this case. And, they're not part-time; they are people who have a job teaching. [SPEAKER CHANGES] Follow-up? [SPEAKER CHANGES] Follow-up, Mr. Chair. [SPEAKER CHANGES] I certainly understand that--and I know we got [sic] a lot of folks [laughter] in this state today that would love to have a pay raise. There's probably about 700,000 state employees that would love to have one. And, you know as well as I know whether we're spending the Fed's money or the state's money, it's--it's still tax dollars. I'm not sure that I can--right now I don't feel very comfortable with supporting it, unless we can--you know--[crosstalk] [??] help some of the other folks out. [SPEAKER CHANGES] Mr. Chairman, could I ask--attempt to ask--your Representative Brisson's question? [crosstalk] [SPEAKER CHANGES] Representative [??]Foushee? [SPEAKER CHANGES] I think this refers to an existing contractual situation where these people are hired based on--for example--UNC a 31 million dollar salary supplement preventing the state actually from having to pay these people. In the case of ECU, 16 million dollars. And, I've been told by both groups--I didn't have this term myself--they said it would bankrupt their faculty payment plans at both state-supported universities. And I--those are terms that I've been told by both groups. [SPEAKER CHANGES] Representative Farmer-Butterfield. [SPEAKER CHANGES] I am asking that this amendment be supported. It is critical in eastern North Carolina that we have these funds to keep people in place. [SPEAKER CHANGES] Okay. Representative Avila. [SPEAKER CHANGES] If I may--Representative Lambeth--may I ask you a question? If you're a non-university affiliated hospital, and you have a physician that has to make a decision between your non-university affiliated hospital and a university-affiliated hospital that has this increase in pay, where's he gonna [sic] go? [SPEAKER CHANGES] Yeah--there are lots of variables. And, it would depend on the specialty to some degree, it would depend on the patient load--the challenge within that patient load--so there--I'm not sure there's a simple answer to that question. Just like there's probably not a simple answer to the compensation question because it varies so much across the state, depending on the market and depending on the--the site that you're at--if it's academic or non-academic. [end of data]

Any other discussion or comments? [SPEAKER CHANGES]: Representative Brisson. [SPEAKER CHANGES]: Thank you Mr. Chair. Members of the Committee the problems I'm having throughout the budget I don't think you're gonna find any pay raises for any folks, all the other folks that we're working with with this budget and I just hate to pick out this little group and move that way. [SPEAKER CHANGES]: Representative iii. [SPEAKER CHANGES]: Thank you. I just want to point out that this is not a pay raise but this is a significant cut that puts our university system and physician training at risk. These doctors are getting this extra money because they are trainees, as well as residents alongside them and doing on-the-job training portion of the medical school, which is years of residency training and I think they're needed in that role and if we ask them to see just as many patients as a private physician, they're not going to be training our new doctors, and we're not talking about a pay raise here we're talking about taking this away and putting our university system at risk. [SPEAKER CHANGES]: Okay. All those in favor of the amendment say aye. Those opposed. It appears that the ayes have it. The amendment passes. Next amendment is S402-ANG-18V1. Representative Avila. [SPEAKER CHANGES]: Thank you Mr. Chairman. This amendment, as well as in the technical nature it refers to the tiered state county specialist assistants pilot and the adjustment here is just gonna make the timing work in such a way that everything will fall into place and the staff can give a more technical answer to my explanation. [SPEAKER CHANGES]: Representative Avila, the change really deals with how the pilot is to operate and we've added language which directs the department to insure that it operates in a manner that complies with any agreements that are in place with the federal government. [SPEAKER CHANGES]: Any other comments on the amendment? Not. Those in favor of the amendment say aye. Those opposed say no. The ayes have it. The amendment is adopted. Any further comments? Questions? Representative Insko. [SPEAKER CHANGES]: Well, I'd like to make a comment on, we don't have a motion but I really do appreciate the improvements that have been made in this Bill. There is significant improvements over what we had in the Senate but we have still some omissions that I think are critical to the health and welfare of our citizens. I'll find my notes here I'll...Let me just comment on the ones I can remember easily. I'm very concerned that we're not paying attention to the needs of our vulnerable citizens with mental health and developmental disabilities and substance addiction disease, and also with our traumatic brain injury patients, the veterans that come back. We have been under-funding those programs for many years and to make additional cuts in those programs I think really is not acceptable. We have got to make that

[xx] priority i think that theres a provision in here that freezes our physician rates, I think thats ill advised as we grow into the affordable care act. One of the things about North Carolina that makes it very special is that we have most of our primary care doctors and many of our specilty doctors seeing medicaid patients, that is unlike most other states. During my first session here in 1997 we paid providers 103% of medicare, so thats one way, when we go to other states and we tell other states how many of our primary care physicians are in our medicade program, they are amazed, they want to know how we do it, and since then every year our payment rate has fallen. I think now we are somewhere between 83% and 95% of medicare based on the specialty, and if we continue to freeze our increases to our providers, especially during the time when the affordable care act is going on, we're going to continue top lose physicians and that will destroy, really undermine a really critical program we have. There are other examples I think through here, some other cuts that will effect our low income patients. Over the past 30 years, we've seen a constant eroding of the buying power of our working class families, sometimes we talk about our government programs like food stamps and medicare, medicaid, as if we are making our citizens dependent, and that their weak, and if we would just get rid of those programs somehow they would get stronger, but our public policies are one of the reasons their poor, so I think that there are some provisions in here that will continue the undermining of our low income families, and for that reason I'll be a no vote on this issue. [speaker changes] any other comments, representative lambeth [speaker changes] I would just say the leadership of this community has done a remarkable job, for what ya'll done and how much time you've put in, and I'm very proud to be part of this [speaker changes] I second that, thank you very much [speaker changes] representative alver [speaker changes] thank you Mr chairman, this time I'd like to move that the house appropriations subcommittee on health and human services adopt the appropriations subcommittee report as amended, and further move that the staff be authorized to make technical corrections and conforming changes, related to reconciling the various amendments that we've adopted and the appropriate totals be adjusted accordingly [speaker changes] any discussion on the motion, all those in favor say aye [speaker changes] aye [speaker changes] those opposed [speaker changes] no [speaker changes] the ayes have it and the motion passes, i would like to take the opportunity to thankt he sargeant at arms for helping the committee today, and I thank the committee for your attention, you input, and your amendments, and I also wanted to express my appreciation to the staff who has helped us tirelessly throughout this. no further business the meeting is ajorned