Welcome to HHS everybody, good morning. First of all let's start by introducing everybody our sergant at arms today on the hose side are Young Bay, Bill Morris, Jim Moran. From the senate side Jim Hamilton and Anderson Medows. We also have some pages today and from the house side we have Abbie Martin from Wilson representative Susan Martin. Brianna Moore who's sponsor is Mike Hagar and Kiera Newsome from Mcklenberg Kelly Alexander. From the Senate side the pages are Regan Weights Senator Chad Barefoot is sponsor and Racheal Bass senator John Alexander. Today we're going to be talking about the budget as you all know and I'd like to go ahead and introduce Pam Copatrick of the office of state budget and management for presentation. Thank you. [SPEAKER CHANGES] Good morning to the chairs and to the members of this committee. Do I have to hold the button the whole time? There. We thank you for having the state budget office here this morning to present to you some highlights from governor Mccrory's recommended 2015, 2017 state budget for the department of Health and Human Services. We have about twenty five slides and I don't plan to spend the whole time talking I want to be sure we leave plenty of time to answer questions that the committee members may have. We've got our team from the state budget office here on this row with me and we also coordinated with the department of Health and Human Services to be sure that key representatives are here should your questions go further into the details of agency specific activities and operations. So again thank you for having us and I'll go ahead and get started. So the total recommended budget for the department of Health and Human Services is close to nineteen billion dollars in the current year from total spending from all sources. The departments budget is heavily federally and other receipts supported and in the current year has a net appropriation of five point one billion dollars. The recommended budget is presented in the two right hand columns of the slide that we're looking at and the percent change that you see is a calculation of change as compared to the current authorized budget. Spending over the biennium grows to more than twenty billion dollars by 2017 and the total investment over the two year period is then point eight billion dollars. So focusing on the state appropriation investment in DHHS again first year funding is recommended at five point three billion dollars and it grows to five point five billion dollars in 2016-17. Seventy three percent of the appropriations that are enacted for DHHS go to Medicaid and health choice, mental health mental disabilities and substance abuse services represent about seven hundred and fifty I'm sorry seven hundred and ten million dollars and then the balance of everything DHHS does which includes public health, public health infrastructure, social services, services to the ageing, the blind, the deaf, the hard of hearing, the disabled, and vocational rehabilitation comes out of that remaining portion of the states investment in DHHS. Overall DHHS is just under twenty four and a half of the total state budget of twenty one point five billion dollars. Investments in the budget represent administration priorities. The governor's budget makes investments in mental health, community mental health initiatives, state facility needs and makes further investments in the DOJ settlement so that people with mental illness can live safely in their community. The governor's budget also addresses chronic shortfalls in the state operated facilities. The governor is recommending major investments in public health infrastructure through the medical examiners system, vital records, and also funding a shortfall in the public health lab. The governor's budget contains
Continues an appropriation enacted by this body in the current year from nonrecurring funds to continue slots in the pre-K program. By way of explanation when we approached developing the recommended budget rather than looking just at division by division, and we know that the legislature enacts distinct appropriations for each of the divisions of the Department of Health and Human Services, but as we looked at prioritizing funding for the department our first cut of priorities was on things where there is a mandate on state law where we address funding requirements and the state law requires in the governor’s budget there is an inclusion for changes in enrollment in education and in entitlement programs, so that would include the Medicaid program as well as foster care and adoption assistance. The second prioritization that we made was to look across the funding requests that were presented to the governor and ask where is it that the state is already in progress of making a commitment and are those commitments already fully funded, so that type of budget recommendation would include absent policy shift, that we operate state facilities, we need to fully fund them, continuing in investing in the department’s information technology structure to support services, the DOJ settlement, another requirement, and then third, the third cut of looking at funding requests and options was to look at priorities and thus you see recommendations again for community mental health services, to continue to build that system, to continue pre-K slots for more than 26,000 children and to make some other investments that you see recommended in the budget. In our presentation today we won’t go over every item that’s in the book. The book was released last week and the Health and Human Services section includes and itemizes every recommendation that the governor is making to this body for consideration. We won’t go over them all but we’re happy to answer questions about any of them. So, again, how we put together this $5.3 billion budget and $5.5 billion budget that you see, in state law we start by developing a baseline budget and it’s a fairly prescribed process. We take the enacted budget that the General Assembly has appropriated, we distribute any statewide reserves and that represents the current year authorized budget and then in terms of making adjustments from that authorized budget, we are required to go in and make certain adjustments which are itemized in the next couple of slides, but essentially it’s limited to a very few number of changes. Overall, the DHHS budget was adjusted downward by $125 million. So what are the changes that we made in this budget? The three changes that affect the appropriations and tie out to the $128 million change is taking appropriations made in the last section and annualizing the impact of them if the General Assembly enacted new positions for less than a year or significantly in the case of Medicaid where savings measures were provided for in the budget, some of those were less than a full year so we go back and we annualize the impact of those. Across the department annualizing programs and/or new positions authorize represents just under $18 million in the state’s DHHS budget. Removing non-recurring decreases, and a lot of those are where we identify leveraged Federal funds or other receipts subject to reevaluating them annually, so those are nonrecurring appropriations, we restore the appropriations in the budget because they were enacted as nonrecurring and then to remove nonrecuring increases, that’s the largest share of what has affect appropriations in the recommended base budget, and I’ve itemized there in general statute in the state budget act those items that are allowed to be changed in the base, so effectively the baseline budget becomes a fairly neutralized starting point to begin the discussion for major change, for reduction or expansion, all of which are itemized in the governor’s recommended budget document. So I won’t read the items on the slide here. I really included this in the presentation
There's 30 items that are related to General Fund appropriations that were adjusted from the baseline budget. Again, Medicaid represents the largest share of those, and you'll see, particularly item is annualising unnecessary expansion that the General Assembly appropriated for Child Protective Services. The next items, 2 through 9 are taking out, either in 2 through 8, further annualising savings. So, if a first year's savings, for example, the Mental Health Drug Management was enacted at the six month mark of the current state fiscal year so it should be effective January 1st. It was a $6 million reduction in the current year, it has to be doubled, so that's what you see in these items spelled out here. So, this page is all of the items that were annualising one time, either non-recurring expansions, I'm sorry, annualising appropriations either for expansion or for savings measures in the budget. The next slide, the remaining 13 through 30, are all the items where there was a non-recurring appropriation. Say, for example, Senior Center Capital Funding item 16, that was one time appropriation, so we take it out of base budget. The swap out of block grants to lessen the demand on state funds, for example the Tannis Swap for pre-K, that budgeted receipt save appropriations this year, because it's non-recurring we build back , $128,491,661. So, moving into some of the priorities for funding that the Governor is recommending to the General Assembly for the biennium is an investment in a comprehensive array of prevention, intervention, and treatment services at the community level. There's funding in the second year of the biennium to increase 3-way psychiatric beds, this would increase the capacity by 30, and bring to a total 195 3-way psychiatric beds. Behavior Urgent Care and Facility Crisis services, again, and appropriation of $2 million for outpatient residential services for children and adult. The Governor's budget recommends funding a fourth Start Team, and extending coverage for NC-Start services to children and adolescents, that's recommended from state appropriations in the second year in the biennium. In the recommended budget there is reference that if there is funding available from proceeds of the sale of the Dicks property, then it would be recommended that those proceeds be used and that these initiatives could start sooner rather than later. TASK is funded in both years of this request $1.9 million in the first year and the second year recurring to reduce case load and accommodate for increases in referrals. An item not reflected in the slide, but another investment in community mental health is continued investment of about $7.8 million annually, increasing each year to continue funding the DOJ settlement for people with mental illness to live safely in their communities. All of those items in mental health build on an enacted base line budget of just under $1.4 billion. On the facility side of mental health, the Governor's budget recommends a one-time non-recurring appropriation in the first year of the biennium of $16.6 million to bring online the new Broughton Hospital. If you'll recall, those funds were enacted in the biennium we're in now, but because of construction delays and timing, the General Assembly was able to take back that funding in the current year and we're requesting that it be re-appropriated to bring the facility online this year. Chronic budget shortfall in the state facilities, there's special provision language in the current year budget bill requiring a report, looking more closely at the state facilities, what's driving the shortfall, the history of shortfalls, this has gone on for the immediate past five years or so. And what the Governor's budget is recommending is an
Million dollar recurring appropriation and this appropriation is what is considered, what is assessed to be adequate after DHHS implements the measures that were brought before the committee that would bring down of their own accord $9.2 million in savings that the department is committing to deliver to balance the facility’s budgets through a number of measures that were outlined in the report. The next slide is further discussion on the facility shortfall, some of the factors that have contributed to this. Over time, delayed transition of patients and staff to Central Regional Hospital when it opened several years ago, increased expenses due to the patient acuity and increasing cost in providing for the food and medical care of the patients being served and finally patient mix and the variation in Medicare recoveries, third party and other sources. I’ve included a current year outlook, so we know that at June 30th of last year that the mental health budget ended with outstanding liabilities of about $13 million. Those liabilities were brought into the current state fiscal year so they have to be addressed and in addition in a report as late as last night the department is currently estimating that their anticipated gap in this year will be $20 million. That’s greater than what was provided in the oversight report to joint legislative oversight during the interim, so when you look at that combined with outstanding liabilities being brought forward and the current year estimate of the gap between spending, receipts and appropriations to support it, the liabilities at June 30, 2015 would be approximately $33 million. Historically there’s not a non-recurring appropriation recommended in the governor’s budget. It has historically been that at year end the department has reversion or appropriation out of their $5 billion budget that we have in the past been able under executive authority to carry forward, the process of carrying forward unspent cash into the subsequent year to liquidate unfunded, unpaid liabilities at June 30th. Other investments in core public health include further funding building on investments this body made last session and has made in the last couple of years, tremendous investments in the office of the chief medical examiner. The governor’s budget would add $335,000 in the first year of the biannum, $4.2 million in the second year. The recommendations that you see here were certainly informed by a legislative oversight report earlier this year in the fall. We were not able to fund everything. I think what you see here is an investment in the medical/legal death investigators to add to what the medical examiners are doing to improve the medical examinations taking place. The governor’s budget funds two forensic pathology fellowships. It adds funding so that all medical examiners would go through required medical examiner training and it supports costs associated with becoming nationally accredited and further there is funding to bring, I think the goal of the department in requesting funding for the medical examination fees and autopsy fees is to, in the case of the autopsies, fund them at closer to what the cost is actually being incurred, something around $2,800 per autopsy. Electronic death record system. This is also referenced in the NC Gear report. This recommendation would provide funding to develop an electronic death record system. It would eventually replace the state’s paper-based system. The vital records agency handles about 83,000 death records per year and we know there’s delays in people being able to receive those records and we expect that this appropriation would improve this turnaround, increase the security of data and also help with public health data and analytics
In terms of supporting families and children in the current year the, for the past last year and this year the foster care program unfortunately is experiencing caseload growth. The program is projecting that the caseload growth will be 6% in the first year of the bianuum and 3% in the second year of the bianuum and the governor’s budget recommends the funding that’s needed to make payments on behalf of these children to the families and facilities where they are fostered and also makes a recommendation for adoption assistance. The trends are not showing the increases in the first year. We’re looking for growth in the number of children finding permanent places in the second year of the bianuum and this recommendation is to fund that. For clarity it does not increase the amount of the payments being made, it covers the volume in caseload being projected. In the current year the General Assembly funded additional slots in the NC Pre-K program for high quality preschool services to at-risk 4 year olds. That was funded from non-recurring appropriations. The governor’s budget recommends maintaining those slots, continuing those on a permanent basis and funds them from a combination of increased lottery proceeds, about $2.7 million and $2.3 on a recurring basis here. Continuing to invest in information technology supporting the development and operations and maintenance of NC Fast and NC Tracks. We know NC Fast is families accessing services through technology. That’s replacing multiple legacy systems and is the main system being used for our citizens to become enrolled and access social services and, of course, NC Tracks replacing the Medicaid Management Information System and paying our providers for services rendered through multiple medical programs, primarily Medicaid HealthChoice but also through the mental health system and other safety net healthcare purchase, medical care programs in the department. So funding here the governor’s recommending for the IT development and implementation, NC Fast $5.8 million and $13 million in the second year of the bianuum. It continues rolling out modules and functionality for NC Tracks and NC Fast, and NC Tracks, this funding here, $2.3 million is for ICD10 compliance by October 2015 and then in terms of operations and maintenance the recommendation is that the NC Fast project receives an increased appropriation, itemized in the recommended budget, but this is funded through block grant receipts which is why the total reflected here is 0 in terms of state funded appropriations, and NC Tracks, $400,000 to augment the funding that already exists in the department’s budget to support the ongoing staff at DHHS and operations for NC Tracks. We’ve also included in this budget savings from information technology. The governor’s budget is proposing savings of $4.7 million from the transition from the old NMMIS contract to the current one. This is in addition to incremental savings that have been identified in previous appropriations bills but I included those here for your reference. Medicaid, the first slide is really just to introduce the concept of Medicaid spending and what Medicaid spending looks like over a period of time. Medicaid is funded with federal dollars matched with state appropriations and other revenues. Federal dollars make up about 2/3 of the total spending and a not insignificant state investment of the balance. To, I think what I hope to demonstrate by the slide is not just that Medicaid spending in 2014
is just over 8 billion in total requirements and in excess of 13 billion by the end of 2014. But also how the non-federal portion of Medicaid gets provided. The bottom darker blue is the state appropriation and then the next piece, the middle bar, demonstrates how this program relies very heavily on other receipts that act as state match in the Medicaid budget. That's provider assessments, drug rebates if you look at the year of 2012 a big jump up in total spending, implementing retroactively provider assessments, budget shortfalls. Other receipts in that category would be the transfers that had to be made from other state agencies to act as the match for the Medicaid program. So it's in this context that we'd like to talk about the Medicaid rebase recommendation here. And certainly hope that this body would acknowledge and consider the governor's recommendation for a Medicaid risk reserve outside of the Medicaid agency. It's recommended in the governor's budget as recurring and non-reverting, so that it could create a reserve outside of Medicaid to help mitigate against the impact of fluctuations, both in how this occurs and both in how it is managed. So in developing the Medicaid rebase, the first step is always the Medicaid rebase necessarily builds on an estimate of where Medicaid is for the current state fiscal year. So I thought we'd put in a slide to give you a snapshot of where things stand in Medicaid through the financial reports as of February. So the authorized budget in the current year is the $13.7 billion receipts of ten, and enacted authorized appropriation of $3.688 billion. So as Medicaid closed the books for February, the actual expenditures are reflected in the middle column, and then the percent of budget that has been expended is what's reflected on the far righthand side. This is total Medicaid spending, I would point out. So it's payments for all activities of Medicaid, not just provider payments, but supplemental hospital, current year, prior year adjustments. It includes the salaries, the payroll, the contractor cost, and the receipts you see reflect the matching federal funds, drug rebates to date, and all other collections. So folks that follow Medicaid often look at Medicaid checkwrites. And checkwrites refer to those payments that get made out of NCTracks to providers. It includes LMEMCO, capitated payments, fee for service payments. It excludes, obviously there's none of the salaries or contractual obligations for administrative support of the agency. So I wanted to give you a look-see at where Medicaid is as of March 3rd on their checkwrite budget. The checkwrite budget is just under $10.9 billion. Checkwrites reported by Medicaid through March 3rd, $7.488 billion. So the share of the checkwrite budget that's been expended is about 68.9%. We wanted to take a look at, because obviously at this point we're still trying to estimate the remaining months of the state fiscal year. We looked back at four previous years and said, Well, in the first week in March, what percentage of total expenditure through June 30 was the first week of March? So the average, the four year average percent of budget expended through the first week of March is 68.8%. And there was about 3/4 of a percent variance from the low to the high. And of course we do our back of the envelope. If this, depending on what percentage we are at this point in the year, this would put us either slightly over budget or under budget. I will tell you that the Medicaid agency right now is estimating to end 2015 with a positive cash balance. I say that because it's not just a function of what happens
With the claims and the check writes but also a function of all of their other accounting adjustments. Any repayments of federal funds that have been received and owed back, any overcollection of receipts that would help contribute to the bottom line of cash that remains in June 30th. Moving into the rebase, so to transition from the last slide, for the rebase DHHS, the scenario that was provided and that was used for the governor’s recommended budget projected that the current year Medicaid budget would come in $124 million under budget. I will tell you that I think as these, the model is updated with more current year to date expenditure activity and revenue activity that that amount will come down. That it will not be as high as $124 million under budget. This is the first year that DHHS has prepared a Medicaid forecast using their new model. Their model is a collaboration between the department and Alvarez and Marcel. They have used it to help them with forecasting the 2015 expenditures and to develop the 2015-17 forecast. The model incorporates historical data, expected program changes resulting from legislation or policy and incorporates that they have made every effort to externally validate the model. Their objective, of course, is to provide a forecast that has the best assumptions and informations that’s currently available. In terms of outputs, so far state budget, we have received 2 iterations of the model that are produced by DHHS, one using actual expenditure data through October 31st and a second using actual data through December 31st. The model’s heavily influenced by enrollment scenarios and incorporates SASS forecasting. It looks historically, it looks at economic considerations fueled by IHS Global Insights to help inform what they think will happen around economic conditions and then, of course, looks at what the model refers to as shocks. Those are things that have happened that are extraordinary within the Medicaid budget and attempts to try to smooth for those and forecast forward. An example of that would be the movement of 70,000 plus children from HealthChoice into Medicaid. So the variables here, of course, are what assumptions are being made about the trends, the current trends and where we’ll go on enrollment, services consumed, which ones and the cost of services. The Medicaid experts are here to talk in detail if you’d like to about how we’ve arrived at the recommended rebase that you see here. I will tell you that the methodology is essentially looking at every program aid category whether that’s Medicaid Infants and Children, AFDC population or newly eligible, all of the categories, then it is looked at each category of expenditure across medicaid and made a forecast about enrollment, what services, consumption and mix. So they are prepared to talk further on that. The governor is recommending a rebase of $287.5 million in the first year of the biannum and $460.6 million in the second year of the biannum. I think we would again say that this is an early estimate. We have to go early in the process and we’re basing this on 6 months, actually there’s 30 months worth of forecasting in this, 6 months of this year and 24 months of the biannum going forward, so we fully expect a robust conversation about assumptions updating for the current year and further refining the rebase estimate. The next slide provides a greater amount of detail on the rebase. It gives us
Removed the one time appropriation of $136 million and annualized for savings that are meant to be achieved at the direction of the General Assembly. The major assumptions around enrollment growth are listed on this slide as you can see. For the biannum, 4.6% growth in the first year, 3.6%, that’s down quite a bit from what’s being experienced in the first year. We’re over 106,000 new recipients have been added again. What’s driving that? ACA process changes, North Carolina process changes. HHS can help us talk in greater detail about what’s driving that. How when the rebase was received in the Office of State Budget and Management the approach was to work within, there were multiple outputs and options to choose within the Medicaid forecast. We, the governor’s budget incorporates the scenario that has the highest degree of confidence within the Medicaid agency and then underwent just a couple of changes when it got to the State Budget Office and those changes were, we had been given a proposal for savings, to itemize savings in Medicaid from a policy change that’s being implemented in the current year so we asked that that be incorporated in the model. It was a utilization issue and didn’t require an action of the General Assembly, so that’s been adjusted in this $287 and $460 million that you see respectively. In addition, the model looks at every expenditure in Medicaid and we don’t rebate state appropriated salaries and we don’t rebate priorly earned revenue so we adjusted for those effects and finally for the first time Medicaid built in to their model forecast a 1% risk reserve based on 1% of the claims budget. The governor is recommending not to fund that in the Medicaid budget, but to set aside the $50 million and $125 million in a reserve outside of the Medicaid agency. Medicaid reform, the governor is recommending that the administration be authorized to proceed with Medicaid reform that is patient-centered, provider led with the goal of improving the healthcare for citizens and to contain healthcare costs. To facilitate that there is a recommendation of $1.1 million in appropriations in each year of the biannum and that would fund staffing to get the department staffed up to proceed with reform and the funds that are necessary to hire the actuaries to establish the benchmarks and to do more of the heavy lift on Medicaid reform is assumed to be funded within the Medicaid budget from their substantial existing contract budget. Finally, HealthChoice. Again, less detail here on HealthChoice, but again, same process, same model was used. Also heavily enrollment centric. This slide represents the detail of the governor’s recommendation at this point in time for the Medicaid rebase prior your actual expenditures reflected. The forecast for the current year, DMA is estimating that the, that the HealthChoice budget will come in actually overbudget this year with the current estimate that it would require about $750,000 in state funds to keep the HealthChoice payments through June 30th. Recommended rebase of $5.5 million in the first year of the biannum, $6.4 million in the second year of the biannum and the same adjustments were made to this budget as were made to the Medicaid budget and that is implement policies into the rebase rather than itemize them as change and remove the effect of the model for funds like salaries and contracts that don’t get an automatic increase or decrease in the rebase process. Again, we very much appreciate the opportunity to be here
Today to share with you recommendations from Governor McCrory in the 2015-17 budget. We’re pleased to report these investments in access to healthcare, mental health, public health infrastructure, support for families and children and we look forward to working with you I hope not just today but through this process, working to update and provide information as needed to this committee. Thank you. [SPEAKER CHANGES] Thank you Miss Kilpatrick. We’re gonna move on to the committee discussion starting with Senator Hise’s questions. [SPEAKER CHANGES] Thank you, Mr. Chairman and thank you Miss Kilpatrick for your presentation and I do hope we continue to work together quite a bit and I suspect that we will. We’ve got quite a long way to go kind from this purpose forward. The first question that I wanted to ask, on page 7 from your presentation looking at continuations from the previous year, and I have, I have a similar question about several of these coming through, but specifically looking at number 5, the single base rate, we have projected for a 6 month period a $10.8 million savings. We expected that to continue on but as the spa was actually submitted to the feds it actually became a $1 million increase each year, so if we’re gonna continue that $10.8 million is it the recommendation of the governor’s budget that we actually resubmit the spa as originally intended and originally calculated so that we only have a single base rate and didn’t have multiple base rates for other facilities? [SPEAKER CHANGES] Thank you, Senator Hise. Certainly the base rate, implementation of the base rate has been an item of discussion between the department and the legislature and acknowledging that the way it has been implemented has not achieved the savings that was envisioned by the General Assembly but instead has actually resulted in a net increase in the budget. I think from, I’d like to take a state budget perspective for a moment. The savings have been removed from the budget. The forecast that meant that Medicaid has provided would indicate that they are seeing a trend of achieving savings. In terms, I know that this body has suggested helping the department with additional language on how to achieve the base rate savings the way that they were enacted and envisioned and I think that that will continue to be a point of discussion in this committee. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Follow up. Next thing I wanted to ask and I’ll get some other things on that in a moment. Looking at NC Fast and NC Tracks, we’re given some cost here for the development and implementation as well as the operations and maintenance. Is the assumption for the development and implementation, the numbers we show here as state dollars or are we actually continuing to receive a 90% match for development on those, so if we’re talking about a $13 million, it’s really $130 million investment, state and federal funds? [SPEAKER CHANGES] Senator, we are continuing to receive 90% federal funding on the Tracks system. Would you allow me to defer to my staff for more detail on that, Joe White with the Office of State Budget and Management. [SPEAKER CHANGES] Joe White with OSBM. NC Fast, there are some projects that we assume will qualify for 90/10 which is the project 3. The project 4 which is the social services projects will not qualify for 90/10 so we will not make that assumption, so you can’t assume that all that will be matched 90/10. So it’s a little bit of a mixture and we can get the detail to your staff so that they can take a look. [SPEAKER CHANGES] Appreciate it. One final follow up? [SPEAKER CHANGES] Let’s make it quick. Thank you. [SPEAKER CHANGES] Thank you. The last one I wanna ask is on the risk reserve where we have a $50 million added into the risk reserve. This current year we have $186 million risk reserve, so are we adding 50 to that or are we taking the full
hundred and eighty six away and replacing it with a fifty dollar risk reserve without the triggers. [SPEAKER CHANGES] Senator it's the later the governors recommended budget is adding the hundred and eighty six million dollar recurring risk reserve making the proposal that the hundred eighty six million dollar risk reserve be added back to availability and then be appropriated in the form of fifty million in the first year one hundred and twenty five ongoing. I think the bigger difference is the one hundred eighty million dollars is earmarked and appropriated but reserved for Medicaid risk and the governors recommendation would make the risk reserve accessible to the executive branch outside of Medicaid but accessible if necessary with reporting and accountability back. And also to start accumulating a balance which would be similar under either well actually it's slightly different than the legislative since it's not appropriated. But it is not in addition to it is in place of. [SPEAKER CHANGES] Very good thank you. Senator Barringer. [SPEAKER CHANGES] Thank you Mr. Chair and thank your very much for your report. I'd like to call your attention to slide number fourteen probably no surprise that I'll be asking questions about that. First of all I thank the executive and the governor for paying attention to our extreme need on foster care and adoption. I wanna make sure I understand this adoption assistance zero. Does that mean there will be no funding for adoption assistance or no increase in funding? [SPEAKER CHANGES] Senator it's the latter there is no increase recommended in the first year but there is an increase to account for growing case load in the second year. [SPEAKER CHANGES] Follow up sir [SPEAKER CHANGES] Go ahead. [SPEAKER CHANGES] It's really more of a comment than a question. Adoption assistance is very important and in some regards it will actually drive adoptions and the increase in adoptions and it's not that people adopt children to get the money it's that many of these children have severe needs that are being covered by Medicaid and other services in foster care supplements and assistance. And the decision to actually adopt you have to be able to parent a child and if you don't have enough resources to be able to parent the child then your not going to adopt it would not make sense to adopt. And so I would like for us to take a look at that zero dollars increase because I think it will have a chilling effect on adoption I think it will be a part of what will hold adoption steady and it is far more efficient both long term and short term to get these children in permanent homes and I'm sure we all agree so I'd like for us to continue looking at that. Thank you. [SPEAKER CHANGES] Your welcome. Chairman Avila. [SPEAKER CHANGES] Thank you Mr. Chairman I have a couple of questions. I to would like to move to slide fifteen regarding the investments in information technology and just for my information the modules you refer to in rolling out an NC fast could you enumerate a little more clearly the specific projects contributing to the cost over the biennium? [SPEAKER CHANGES] Sure I'll be glad to Joe ?? again. There are going to be three different projects associated with this project. One is project seven which is the federal change in operability and their closing that out. Project three will be a new project that deals with subsidized child care, low income energy assistance, and the crises intervention program. And there will be third project known as project four which deals with social services case management. So what we're looking at is ninety ten funding for project seven and project three but not the ninety ten for project four. [SPEAKER CHANGES] Thank you and follow up if I could. [SPEAKER CHANGES] yes. [SPEAKER CHANGES] On project four not for discussion here but I'd like a little more detail about what that's encompassing if you don't mind. And also in terms of the certification for NC tracks what is our current status on that? [SPEAKER CHANGES] What I know is I might need to defer to the department for the specifics I think it was initiated in the last couple of months I might defer to them to give you a fuller update. [SPEAKER CHANGES] Representative Avila, Joe Cooper CIOE ?? the SEMS certification team arrived the week of January twenty sixth and their commitment was to get back a written
Recommendation on certification at the end of March and so we’re still on schedule for end of March to hear back from them. [SPEAKER CHANGES] Okay, great, and one last follow up. On slide 20 we talk about that fairly significant jump in the rebase. Could you go back over and maybe enumerate a little more about what types of assumptions are driving that. I know you were talking about we’ve got a significant bump in enrollment just recently because ACA changes. What other factors specifically are attributed to that increase? [SPEAKER CHANGES] Yes, ma’am. Mr. Chairman, can we have staff try to provide a little more in depth as well as potentially try to have the department help on some of the more specific. [SPEAKER CHANGES] Can somebody answer this question? [SPEAKER CHANGES] Sarah Grimsby, OSBM, with respect to the large jumps in enrollment that we’re seeing specific to this fiscal year and in the previous 6 months, the Affordable Care Act policy changes as well as NC specific policy changes are driving the spike in enrollment that you see. With respect to the federal changes that were made, the, I apologize. My apologies, I just wanted to make sure I was looking at the right page. The Affordable Care Act as enacted eliminated asset and resource eligibility determinations for the program 8 categories that are magi program 8 categories. They increased the income eligibility limits as well as excluding certain assets in that eligibility determination. As a result and by example, in the AFDC program 8 categories we were seeing that significant jump because individuals who would otherwise be ineligible because their income or they possess certain assets making them ineligible were now eligible for Medicaid. If you, with respect to the net impact for enrollees for just that program 8 category, the net impact was you have 33,000 more enrollees in AFDC alone. These effects of the Affordable Care Act changes trickled down to the other program 8 categories as well, but the AFDC is where we’ve seen the most significant jump as far as detailed analysis on each program 8 category I can certainly follow up with your office and give you a more itemized list of how those changes impacted each program 8 category. With respect to the North Carolina policy changes, as a result of changes to, well, the policy changes that were enacted and I apologize, an individual having to come in and bring in their documents for a renewal of Medicaid eligibility. We no longer, we have the capacity now to do exparte renewals where an individual no longer comes in. We’re able to mine data so to speak to pull that information out of our data system so that they are automatically renewed and I think that that explains a lot of it with respect to the AFDC growth and, like I said, I can follow up with your office and the rest of the committee with more specifics on the other program 8 categories. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] All right, before you go any further I wanna make a point that we’ve got to be out of here before 10. We’ve got a lot of questions, we’re going slowly, so I’m gonna ask that we keep our follow ups to a minimum or at least that the questions be expeditious and short. Next question, Chairman Tucker. [SPEAKER CHANGES] Thank you, Mr.
Not that we’re going slow, it’s just you come from a place where you talk fast. Quickly here, Miss Kilpatrick, you mentioned that there’d be a $33 million shortfall, is that correct? [SPEAKER CHANGES] I’m sorry, senator, how much? [SPEAKER CHANGES] $33 million. [SPEAKER CHANGES] Yes. [SPEAKER CHANGES] [??] [SPEAKER CHANGES] Well, typically we see reversions in DHHS across all of the budget codes. It varies from year to year, yet last year we saw about $100 million and excluding Medicaid, about half of it, $60 million was Medicaid. The priority for funding critical needs in DHHS from OSBM’s perspective, we would see sufficient reversions to support a mental health shortfall. The department will also tell you they look at other unfunded liabilities across the department. So the question is that historically there’s been more than $33 million in reversions across DHHS. Our priority for addressing those would be to carry forward for the mental health liabilities. [SPEAKER CHANGES] Follow up? So that would be a yes I think. Based on the 106,000 enrollees in January and February, what’s the annualized rate and what would we expect that to cost if it were to trend out throughout the year. [SPEAKER CHANGES] So I think the answer to that is that the annual enrollment growth is 10.2%. I don’t have a calculation that extends enrollment at that level. Right, right. We can get that for you, senator. We can ask in this new model that can be input with different scenarios to run a model that would take a 10% plus enrollment growth and extend it over the bianuum and report that back. [SPEAKER CHANGES] One last question, Mr. Chairman. [SPEAKER CHANGES] Go ahead. [SPEAKER CHANGES] Yeah we need to look at that cause that’s real, that’s a smoking gun. We all need to look at that. Let me punt this over to Joe Cooper. Mr. Cooper, a question if I may, Mr. Chairman. The LMEMCO payments that were in arrears, have they all been cleared? All of them are cleared and paid through the 3rd of March? [SPEAKER CHANGES] Senator Tucker, about 80% was paid in the last capitation payment in February and the remaining 25% will be paid in the April capitation payment. [SPEAKER CHANGES] Representative Pendleton. [SPEAKER CHANGES] Yes, ma’am. Mr. Chair, can I address Miss Kilpatrick? [SPEAKER CHANGES] You go right ahead. [SPEAKER CHANGES] Alright. I have, as most of the committee knows, I have, my business is installing corporate health and non-profit health insurance plans and managing them. You’re recommending the ACO model and I like the ACO model. PPO model’s been around about 25 years and we’ve had double digit increases on the average every year, but it, there are not enough networks established now to be able to do that in the state of North Carolina. I mean, it’s really tough even in Wake County on the networks, so they have to be developed, but I was in favor of that cause I’m leading my clients there as the networks become available. But I heard a presentation from the state of Florida, and I just wanna ask you are you familiar with the Florida model because it gives a cafeteria approach, you can be in a PPO, you can be in an ACO, you can even be on Medicaid if you want to and for me that has a lot of appeal. Have you looked at Florida’s approach? [SPEAKER CHANGES] Thank you for the question. In terms of the state budget office’s involvement, we’ve certainly tried to follow what other states are doing in terms of Medicaid reform and reform options. Leading the way in the North Carolina recommendations on Medicaid reform is the Department of Health and Human Services and if I may I am certain that Dr. Robin Cummings, the Director of Medical Assistance could address that question more specifically about if they have looked at that particular model and could inform this if I may. [SPEAKER CHANGES] Can you get that for Representative Pendleton off book a little bit later on in email or something like that or visit with him? [SPEAKER CHANGES] We will follow up, yes, sir, with all measures. [SPEAKER CHANGES] Thank you. You’ve got a follow up? [SPEAKER CHANGES] One follow up. [SPEAKER CHANGES] Alright. [SPEAKER CHANGES] May I address Senator Hise? [SPEAKER CHANGES] Go right ahead. [SPEAKER CHANGES] Representative Dollar tells me you’re the in house expert
General Assembly on Medicaid and I feel like I’ve been left in the dark on this. What are we moving towards on Medicaid? What’s the game plan to do something about it? [SPEAKER CHANGES] I guess I’m kind of on the spot on that one. It’s coming through. [SPEAKER CHANGES] Let’s make this quick. [SPEAKER CHANGES] I would say that you would see that the Florida model that you spoke about is very similar to the Senate proposal that came across last year and is part of a lot of discussions that are going on, but we are meeting with individuals in the House and others and would love to come to a conclusion on this, but I think your support for that type of mixed use model, you have a lot of colleagues in the House that need to hear that. [SPEAKER CHANGES] Representative Farmer-Butterfield, you’re up. [SPEAKER CHANGES] Thank you, Mr. Chair. My question is about [sliding in?] and it’s kind of programatic and fiscal in terms of the treatment alternatives for safer communities. You’re reducing the caseloads and you’re accommodating increased referrals, I think that’s wonderful. Can you give me a specific way that people will be impacted because of this $1.9 million? Is it gonna be case management or what? Is it for people with psychiatric concerns or just who are they? [SPEAKER CHANGES] Dave Richard with DHHS, thank you, sir. [SPEAKER CHANGES] Representative Farmer-Butterfield, back over here. Thank you. The task program is a program that supports people that are leaving our jails and prisons who have mental health, who have substance use disorders and often co-occurring mental health needs and the reason for our reduction in the caseloads in that in these individuals, what we know is that if we can provide this intensive work with our probation and parole officers along with these task counselors we can keep people from going back to prison and jail and it is a good thing for both public safety and for the mental health system and frankly for the state. So that’s the goal of it. [SPEAKER CHANGES] Thank you for that response cause that’s an excellent thing to do in my opinion and I’m very familiar with people who are coming out of prison and do not have any benefits and actually do not have a place to live, so hopefully this will help with that as well, directly and indirectly. My second question, Mr. Chair. [SPEAKER CHANGES] Go right ahead. [SPEAKER CHANGES] Is on the expanded staff, 22 full time equivalent positions and I believe that was for the Medicaid program for transitioning. What is the total cost for those positions in terms of the Medicaid budget or the percentage. The 22 full time equivalent positions. [SPEAKER CHANGES] So the total that’s recommended in the governor’s budget is the grand total for all the staffing and that recommendation of $1.16 million is their salaries, their fringe benefits and associated operational expense. In terms of a percentage, 1% of the total Medicaid budget, 1% of $5.3, $1 million as a percent of $5.3 billion, and we’re gonna get the total that they spend on salaries already. If we can have just a minute, we can follow up and hand that to you before we walk out of this room. [SPEAKER CHANGES] Senator McKissick isn’t here. Senator Robinson, would you like to ask your question. [SPEAKER CHANGES] Thank you, Mr. Chair. Just a couple. Some of my questions have been answered, but if we look at slide, the HealthChoice rebate page and that’s next to the last one I believe and can you tell me for the rebates for both years what the estimated number of children entering HealthChoice, what is the estimated number based on that increase in the rebates? [SPEAKER CHANGES] Yes, ma’am. [SPEAKER CHANGES] Thank you, Senator Robinson. Sarah Grimsby from OSBM. When we’re talking about the number of children in the HealthChoice program, the average monthly enrollment for the first fiscal year of the bianuum
Is 125,284 and for the second year of the biannum it’s $163,856. [SPEAKER CHANGES] Follow up, Mr. Chair. [SPEAKER CHANGES] Go right ahead. [SPEAKER CHANGES] So are any children transitioning? You know, I know that before we transition a lot of children into HealthChoice we finish with that process I’m assuming, so is that just new children entering who are not in any healthcare system or where are they coming from? [SPEAKER CHANGES] Those are the new enrollees to the HealthChoice program. [SPEAKER CHANGES] Just one other follow up, Mr. Chair. [SPEAKER CHANGES] Go right ahead. [SPEAKER CHANGES] And if we flip back to the Medicaid rebase I heard what you said to Representative Avila but I still don’t understand the increase from the $287 million to the $460 million in the second part of the biannum. That’s a tremendous increase in rebase amount, so I don’t understand how 33,000 new enrollees could, you know, could calculate up to that amount of money. [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] Go right ahead. [SPEAKER CHANGES] Senator, so the Medicaid rebase in the second year combines the total of the first year and builds and adds for the second year so that’s why the number looks like that. [SPEAKER CHANGES] You good? [SPEAKER CHANGES] Mr. Chairman could I answer the question that I didn’t follow up with which is the total amount of the administrative budget if I may? [SPEAKER CHANGES] Go right ahead. [SPEAKER CHANGES] So the total salary budget for the Division of Medical Assistance is $27.3 million, so we have a $1.1 million increase. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Representative Insko. [SPEAKER CHANGES] Thank you, Mr. Chairman. I actually don’t have any questions I just want to get some additional information and one is I’d like to request, I don’t know if anybody else wants this or not, but if other people have requested information I would like to receive that too. I’m especially interested in the request that Representative Avila made. I would like to know the cuts to any mental health services, either state funds or Medicaid, over the past 10 years. You can, I think you can provide that, cuts to Medicaid services, and I would also like the average per patient cost in the Medicaid patients for the last 10 years, average cost per year per Medicaid patient. Thank you. [SPEAKER CHANGES] Yes, ma’am. We’ll follow up and provide that and share it with the committee as well. [SPEAKER CHANGES] I don’t see Senator McKissick. We still have a little bit of time left. Does anybody else have any questions? Representative Pendleton, seeing as we’ve got a little extra time you had a question I suggested we talk about off-book, but I think we certainly have the time to have that answered here now. I was a little worried about time but we’re moving along. [SPEAKER CHANGES] [??] [SPEAKER CHANGES] Beg your pardon? [SPEAKER CHANGES] [??] Okay, yes, Dr. Cummings if you could answer. Or if you want to restate the question, Representative Pendleton? [SPEAKER CHANGES] I’ll try cause I lost my train of thought. Thank you. Doc, would you please tell me if you all have looked at the Florida model versus just recommending an ACO because it allows people choices. They can be on either an ACO or they can be on a PPO or they can be on plain old Medicaid. They can make their choice, so have you all looked at the Florida model? [SPEAKER CHANGES] Over the last few months, and that’s a good question, Representative. Of the last several months the department really has looked at a lot of states. We’ve looked at Colorado, we’ve looked at Oregon, we’ve looked at Minnesota, but Florida is a state that we have, we’ve looked at. Our model is a provider-led ACO model and that’s the model that we proposed back in March of last year and it’s the one that we feel that we have the strongest support by our providers and that we can implement and we believe that it will give us the sustainability and predictability in our budget that the General Assembly is looking for and again, we feel like it’s the one that our providers can support. It’s very patient-centric, provider-oriented so that’s the model that we’re proposing. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Yeah, I realize, I know that the North Carolina Medical Society and the North Carolina Hospital Association are in favor of that
but if you were here when I made the remarks that the problem is, you've got to build the network, and the Medical Society told me it would take about four years to build an ACL network in North Carolina. And from being in that line of work, by the way I partnered with your good friend George Little, so he can answer these things, too. But I just think being able to get choices would be a good, to give people choices, it would be a good way to go after it, so I wish you would look at it. [SPEAKER CHANGES] Thank you. All right, one last time, any questions? All right, well it looks like we're done. Thank you very much, this meeting is adjourned.