Legislative Update May 25, 2010

Senate OKs its Version of 2010-2011 Budget; House Budget Writers Already at Work

The NC Senate finished its work on the 2010-2011 Budget on May 20. The near-$19 billion spending plan was $570 million less than the 2009-2010 budget and almost $160 million below the plan Gov Perdue proposed in April. The budget was developed with few public meetings.

Immediately upon passage of the Senate’s version of the budget, House Budget Subcommittees met publicly to review the Senate’s action. They also began to understand their charge to make 5% in additional cuts below those made by the Senate, about another $216 million.

House Health and Human Services Appropriations Subcommittee members reviewed the Senate’s spending plan and flagged numerous items for additional information and review. Among the items flagged is the NCALA-supported $5 million appropriation for development of a Medicaid 1915(c) waiver to address low-income residents with acuity that would otherwise place them in skilled nursing facilities. While this amount is less than the $9 million recommended by Gov Perdue, it would draw down about $12.5 million in federal funds to begin to address the long-underfunded services provided to low-income seniors in adult care homes. Also flagged is the proposal to reduce State/County Special Assistance by almost $3.4 million due to the rate changes imposed last year.

House budget writers are aggressively attacking the budget task, planning to conclude their work and vote on the bill by June 4.

Budget items of interest to NCALA can be viewed at the following link: http://bit.ly/9CeDoj

Legislative Update May 18, 2010

Lawmakers Return to Convene "Short Session" May 12

The North Carolina state House and Senate gaveled in the 2010 session of the General Assembly at noon on May 12. Both Senate President Pro Tempore Marc Basnight (D-Dare) and House Speaker Joe Hackney (D-Chatham) emphasized the need to get to the true reason for the short session---making necessary adjustments to the budget. The economy's somber tone and the likelihood of the fiscal mess to fester into 2011 clearly weighed heavily on lawmakers, as was evident in recent press availability by the Senate leadership in the following link, courtesy of The Greensboro News and Record: http://www.news-record.com/blog/53964/entry/89903.

Roll Out of Senate Budget Plan Due Week of May 17

The Senate's plan to have its version of the budget reviewed, approved, and moved over to the House of Representatives by May 20 appeared on track May 14. Most Senate Appropriations Subcommittees---including the Subcommittee on Health and Human Services---met on May 14 to review the spending portions of what will become the Senate's adjustments to the 2009-2011 budget. The language directing substantive changes to the budget is not yet released.

Among the items of interest to NCALA members is a $5 million appropriation for development of a Medicaid 1915(c) waiver to address low-income residents with acuity that would otherwise place them in skilled nursing facilities. While this amount is less than the $9 million recommended by Gov Perdue, it would draw down about $12.5 million in federal funds to begin to address the long-underfunded services provided to low-income seniors in adult care homes. NCALA supports and advocated for this support.

Items of interest to NCALA Members in the draft report include:

42 Pharmacy Program Improvements ($5,566,096) R

Generates savings by implementing various pharmacy program improvements, including collecting drug rebates on certain prescription drug claims ($3.6 million); stopping reimbursement for lost prescriptions ($252,000); requiring prior approval on brand drugs when 'medically necessary' is written on the prescription ($938,700) ; creating a specialty drug network for dispensers of certain high cost drugs ($316,040); requiring prior approval on all requests for the drug Synagis ($376,253); and eliminating the ineffective FORM pharmacy program ($83,103).

43 Prescription Vitamins ($777,138) R

Eliminates Medicaid coverage of prescriptions for vitamins and minerals that are available over-the-counter, while continuing to reimburse for multi-vitamin prescriptions for pregnant women.

44 Narcotic Prescriptions ($603,000) R

Reduces General Fund appropriations for Medicaid pharmacy by locking Medicaid enrollees with a narcotic prescription (e.g., Vicodin, Benzodiazipine) into a single pharmacy and single doctor to prevent pharmacy and doctor shopping and narcotics abuse.

49 In-Home Personal Care Services ($59,805,207) R

Reforms the In-Home Personal Care Services program to provide care to those individuals at greatest risk of needing institutional care. Reform includes the elimination of in-home PCS services for adults and the creation of a new program for adults with the most intense needs---those needing assistance with three or more activities of daily living (ADLs).

55 Program Integrity Savings ($36,188,013) R

Generates savings through new Program Integrity initiatives, including Medicaid SWAT teams for on-site investigations, strengthening Medicaid fraud laws, innovative technology to detect fraud and abuse, and prepayment reviews for questionable providers.

58 ARRA Federal Enhanced Matching Funds Extension ($486,360,602) NR

Reduces General Fund appropriations anticipating that Congress will pass a law extending by six months the enhanced federal matching funds provided under the American Recovery and Reinvestment Act (ARRA) through June 2011.

59 ARRA Medicare Part D Clawback Savings ($79,419,834) NR

Reduces General Fund appropriations based on savings from enhanced federal matching funds provided by the American Recovery and Reinvestment Act (ARRA). The enhanced federal funds offset state funding for Medicaid paid to cover a portion of prescription drug costs paid by Medicare Part D for dually eligible (Medicaid/Medicare) individuals. Savings also anticipate that Congress will pass legislation extending the enhanced rate for six months, through June 2011.

60 Medicaid Rebase $430,564,713 R

Increases General Fund appropriations to the FY 2010-11 Medicaid budget to account for 5.6% growth in eligibles above current levels ($5,054,765); consumption ($121,867,913); inflation for cost-settled providers ($5,568,149); new services and mix of services ($16,094,752); anticipated cost of flu ($7,985,000); reductions not achieved in the previous fiscal year ($225,537,633); and increased appropriations due to the change in the Federal Medical Assistance Percentage (FMAP) ($48,456,502).

61 Adult Care Home Funds $5,000,000 R

Increases funding for adult care homes based on acuity levels for the personal care services provided in adult care homes. Funding will assist in the development of a 1915(c) Medicaid Assisted Living waiver for individuals that reside in adult care homes that meet skilled nursing level of care and currently receive State County Special Assistance (SA).

64 Medicaid Funding for Home Care Licensure and Certification ($104,739) R

Generates savings by collecting federal Medicaid receipts to support licensure and certification activities for home care agencies. Since home care agencies are Medicaid providers, this will allow DHSR to collect federal Medicaid receipts.

65 Fee for Adult Care Home Medication Aide Testing ($110,575) R

Establishes a $25 fee for the testing and materials provided to adult care home medication aides to help defray the costs of administering the tests.

66 Fees for Adult Care Home Administrator Testing and Certificates ($35,240) R

Establishes a $50 adult care home administrator test fee and a $30 adult care home administrator certificate renewal fee. Certificate renewals occur every two years.

68 Adult Care Home Case Management ($150,000) R

Reduces over-budgeted funds for adult care home case management services, per historical reversions.

77 State-County Special Assistance ($3,388,044) R

Reduces funding in accordance with projected FY 2010-11 assistance levels. Counties obligations are likewise reduced, due to equal financial participation for State-County Special Assistance. These additional projected savings are the result of the Special Assistance rate reduction that took effect October 1, 2009.

To read the Subcommittee's Draft Report as of May 14, please visit: http://alturl.com/r8km.

Legislative Update April 27, 2010

Governor Perdue Unveils Budget – Proposes HHS Cuts

Staff for Governor Bev Perdue met with General Assembly members on April 21 to review recommended changes in the 2010 budget. The proposal anticipates a $1.2-billion shortfall from revenues projected in 2009 and proposes managing that through $950 million in spending cuts and use of $550 million of federal Medicaid funds. Interestingly, the anticipated Medicaid funding is still under consideration in Congress.

Gov Perdue's proposed changes include significant changes in the Department of Health and Human Services. The proposal includes a major rebasing of the Medicaid program, which will require almost $431 million in state funds. At the same time, the proposal banks on Congressional approval of an enhanced FMAP for Medicaid for six more months, which would see an infusion of almost $500 million in North Carolina's Medicaid program until June of 2011. Gov Perdue's budget proposes to cut $3.25 million in state funding for State/County Special Assistance (SA), but also proposes to infuse $9 million in state funds to implement a Medicaid waiver to address underfunding of the Adult Care Home Personal Care Services Program.

Budget details of interest to NCALA members include:

Division of Aging and Adult Services (p. 120)

1. Senior Services - Expand Project CARE (Caregiver Alternatives to Running on Empty)
Project CARE is a nationally recognized respite care program for caregivers of people with dementia. The program targets rural, elderly, and minority families and is a cost-effective alternative to institutional care. These funds will expand the program to approximately 20 counties and provide consultation, referral, and respite care for more than 500 additional families.
Requirements $1,111,111
Receipts $111,111
Appropriation $1,000,000

Division of Social Services (p. 129 and p. 131)

1. Change State Participation in State Adult Care Home Specialist Fund
Monies in the State Adult Care Home Specialist Fund are allocated to counties based on the number of licensed adult care homes in order to support monitoring and inspection efforts performed by local departments of social services staff. The non-federal share is split between the state and counties, 40% and 10% respectively. The proposal would evenly distribute the non-federal share at 25%.
Requirements –
Receipts $525,000
Appropriation ($525,000)

10. State/County Special Assistance (SA) Program
The State/County Special Assistance Program assists older and disabled adults with the cost of living in licensed adult care homes. Currently, there are two divisions with Special Assistance Programs: Social Services and Services for the Blind. It is recommended that Special Assistance-Blind be absorbed by the larger Social Services Program and the program be reduced to the anticipated level of expenditure for SFY 2011. (See Divisions of Services for the Blind, Deaf and Hard of Hearing #2 for a companion reduction.)
Requirements ($6,650,000)
Receipts ($3,325,000)
Appropriation ($3,325,000)

Medicaid

9. Durable Medical Equipment (DME) Program Improvements (p. 138)
The recommended budget includes two improvements for DME. First, the Division of Medical Assistance is seeking through a competitive bidding process to select one provider of incontinence supplies, resulting in savings through bulk purchasing ($1,654,714). Second, it is recommended that Medicaid no longer cover high-tech adult orthotics and prosthetics when lower-tech alternatives exist or when medical necessity does not demand the higher-tech device ($204,716).
Requirements ($6,198,100)
Receipts ($4,338,670)
Appropriation ($1,859,430)

Medicaid Policy Changes (p. 139)

1. Improved Utilization Management for Optional Services
Various optional service changes are recommended. They include maintaining adult podiatry services for individuals with diabetes or vascular disease only ($535,436); eliminating adult optical 'refraction only' services to be consistent with Medicare reimbursement ($121,677); reducing the maximum number of visits for adult speech therapy (ST), physical therapy (PT), occupational therapy (OT), and respiratory therapy (RT) to three visits/year ($1,507,110); and no longer allowing reimbursement of ST, PT, OT, and RT services when provided at the same time as other home care Medicaid services ($112,500). In addition, the division shall develop a plan that includes limits and prior approval on outpatient optional services for improved utilization management ($2,065,647).
Requirements ($14,474,567)
Receipts ($10,132,197)
Appropriation ($4,342,370)

2. Reform In-Home Personal Care Services (PCS)
This recommendation reforms the in-home PCS program in order to provide care for individuals who are at risk of needing institutional care. Reform includes the elimination of in-home PCS services for adults and the creation of a new program for adults with the most intense needs. Some of these individuals are currently enrolled in the PCS Plus program (those requiring extensive assistance with three or more ADLs). A portion of the individuals in regular in-home PCS that have the highest need for in-home support will also be included. The expansion of the PCS Plus into a new program will ensure those individuals that do not qualify for nursing home care and have the greatest need will receive appropriate service in their homes.
Requirements ($199,350,690)
Receipts ($139,545,483)
Appropriation ($59,805,207)

5. Coverage for Emergency Adult Dental Care
This recommendation limits adult dental coverage to emergency care only. With this policy change, covered services will include emergency exams; diagnostic x-rays; urgent care extractions; biopsies; excision of tumors; repair of soft tissue wounds; treatment of fractures; and a portion of adjunctive services, such as general anesthesia and IV sedation, hospital calls, and therapeutic drug administration.
Requirements ($38,829,870)
Receipts ($27,180,909)
Appropriation ($11,648,961)

Medicaid Expansion (p. 141)

1. Adult Care Home Funds
Funds are recommended to develop and implement a 1915(c) Medicaid Assisted Living waiver for individuals that reside in adult care homes that meet skilled nursing level of care and currently receive State County Special Assistance (SCSA). The waiver will allow for a targeted reimbursement based on acuity levels for the personal care services provided in adult care homes.
Requirements $30,000,000
Receipts $21,000,000
Appropriation $9,000,000

Division of Health Services Regulation (p. 152 and 153)

1. Replace Nursing Home Licensure and Certification Section Appropriation with Receipts
It's recommended to replace appropriation with federal receipts in the Nursing Home Licensure and Certification Section on a nonrecurring basis. The receipts come from civil monetary penalties assessed against nursing homes.
Requirements - Nonrecurring -
Receipts - Nonrecurring $1,741,551
Appropriation - Nonrecurring ($1,741,551)

3. Collect Medicaid Receipts in the Home Care Licensure and Certification Section
Medicaid providers, Medicaid receipts are an allowable source of funds to support licensure and certification activities. Therefore, it is recommended that the division collect federal Medicaid receipts in the Home Care Licensure and Certification Section, offsetting state appropriation.
Requirements -
Receipts $104,739
Appropriation ($104,739)

4. Establish Fee for Adult Care Home Medication Aide Testing
It is recommended that a $25 fee be established for the testing of adult care home medication aides to help defray the cost of administering the tests.
Requirements -
Receipts $110,575
Appropriation ($110,575)

5. Establish Fees for Adult Care Home Administrator Testing and Certificate Renewals
It is recommended that fees be established for adult care home administrator testing and certificate renewals. The fees will be $50 for the adult care home administrator test and $30 for the renewal of adult care home administrator certificates. Certificate renewals occur every two years.
Requirements -
Receipts $35,240
Appropriation ($35,240)

To read the budget, please visit: http://bit.ly/bk7L7e

Legislative Update April 20, 2010

Subcommittees Begin to Consider 2010 Budget Adjustments

Following a directive from senior chairpersons of the Senate and House Appropriations Committees, budget subcommittees met to consider how to cut from $785 million to $1.2 billion from the North Carolina budget. Legislative economists determined that the state's revenues are coming in lower than estimated, currently at a deficit rate of $900 million. These cuts would be imposed in addition to last year's cuts and on top of the 5% holdback ordered by Gov Perdue last summer, when her staff sought to create a reserve for use in case of inaccurate budget projections.

In the Health and Human Services Appropriations Subcommittee, co-chairpersons sought recommendations at culling spending by the Department of Health and Human Services. At a meeting on April 12, DHHS staff presented a litany of possible cuts, emphasizing optional program cuts or, in some cases, elimination. While department staff was directed to list possible cuts in the range of 3%, 5% and 7%, the response was listed in the range of possibility each line item could bear. Of concern to NCALA members who serve low-income elderly are the recommendations listed below:

Reduce the state match from 40% to 25% for support of adult care home specialist fund, saving $525,000. If counties choose to keep current level of funding, they would have to increase their match by 15%.
Reduce funding for State/County Special Assistance (SA) by $3.325 million, which would mean a total reduction in funding of $6.650 million. Projections indicate a surplus in the SA program, arguably due to last year's cuts, that made qualifying new low-income residents more difficult. The proposal acknowledges that if projections are incorrect, funding will be needed to make up the difference, because SA is an entitlement program.
Elimination of dental services for Medicaid-eligible adults, saving more than $27 million.
Elimination of optical supplies and services for Medicaid-eligible adults, saving more than $3 million.
Reduction of Personal Care Services provided in-home by about 52%, generating a savings of more than $55 million.
Impose a $25 fee for medication aide testing, generating $110,575 in savings.
Establish fees for Adult Care Administrator Testing and Renewals; a $50 fee would be imposed on persons taking the Adult Care Administrator examination, generating savings of $35,240.

Governor Bev Perdue’s staff is slated to brief lawmakers on her 2010 budget proposal on April 21. Whether her recommendations will recognize the damaging cuts already imposed on adult care homes remains to be seen. At the same time, a DHHS Task Force has been working on remedies to the underfunded ACH PCS program and is likely to report to Gov Perdue, lending even more weight to the argument that adult care homes have been hit disproportionately in efforts to balance the state’s budget. NCALA has participated in the Task Force’s deliberations.

For more information about the North Carolina General Assembly, or to identify your legislators, please visit www.ncleg.net. For more information on these and other legislative issues, please contact NCALA, or Evelyn Hawthorne by e-mail: evelynhawthorne@nc.rr.com or by phone at (919) 523-9096.

In this Issue:

Legislative Update March 3, 2010

Legislative Update March 3, 2010

Sen Swindell Meets with NCALA Members

State Senator AB Swindell (D-Nash) met with more than 20 assisted living providers at NCALA offices February 23. His candid comments gave the audience a clearer perspective of the challenges lawmakers face as they address their constituents' and communities' needs.

Sen Swindell shared that his service in a variety of public service and personal roles gave him a special appreciation for the work done by NCALA members. Sen Swindell is currently a co-chairperson of the Aging Study Commission and of the Senate Appropriations Committee. He has been a caretaker of several family members for many years. Sen Swindell commented that he has great respect for assisted living providers because he knows "that you all have the tough job of 'taking care of mama.' We all know that no one can take care of mama like we would take care of mama. In reality, you all do more than any family member knows or appreciates."

Audience members shared their perspectives of the challenges they face in "caring for mama," complying with overly burdensome inspections, regulations and inadequate payment. Sen Swindell commented that he believed that government plays a role in protecting the public, but can be a part of the problem; that government should not get in the way of providers doing a good job.

NCALA thanks Sen Swindell for sharing his thoughts with members and for his service on behalf of all North Carolinians.

Forecast Stalls Bleak Revenue System over North Carolina

General Fund Report and Economic Outlook February, 2010 was released by the Legislative Fiscal Division and forecasts a prolonged recession-like environment throughout the current fiscal year. The General Assembly's Chief Economist, Barry Boardman, PhD, indicated that Revenues through January are $35 million short of forecast and that estimated payments are down about 5%. He acknowledged that one-time payments from corporate taxpayers are keeping revenues artificially close to projections. Consumer confidence continues to be low, due to climbing unemployment rates and the chronically unstable job market. North Carolina's economic recovery struggles to take root. Lawmakers will face mounting budget pressures because prolonged economic weaknesses will affect revenue collections for the remainder of the fiscal year. To see the complete report, please visit: http://bit.ly/d4gd2d.

At the same time, 2010 is an election year. Lawmakers will resist any changes to the tax code that could be spun as tax increases. Without adequate budget revenues coming in, lawmakers will look to keep to the constitutional mandate to maintain a balanced budget through program cuts. Many of those cuts will impact programs that serve those who need assistance due to unemployment or underemployment. Lawmakers typically look to cut the most expensive programs first and many of those reside in the Department of Health and Human Services.

NCALA members should look for every opportunity to meet with legislators to ask them to do everything possible to spare further cuts to adult care homes who serve low-income seniors. Such adult care homes receive state reimbursement to cover less than 65% of their costs. Despite that, adult care homes suffered Medicaid cuts along with other providers, but the impact of those cuts affected adult care homes disproportionately because the Medicaid ACH PCS program was underfunded for so long.

Aging Study Commission Meets

The North Carolina Study Commission on Aging met February 4 and February 25. Links to the information referenced here and presented at both meetings are posted below:

http://bit.ly/bADnOr
http://bit.ly/9VrEA7

Meeting Summaries

Committee members spent much of the February 4 meeting considering the In-home Personal Care Services program, which has been under scrutiny by DHHS, CMS, legislators, and the news media. Industry representatives have filed lawsuits against DHHS, enjoining the department from implementing cuts approved during the 2009 legislative session. The committee also heard presentations on the sustainability of North Carolina's Adult Day Care program and on hearing loss issues as they affect older adults.

At the February 25 meeting, Committee members spent most of the meeting considering the training, regulation and scope of practice of Nurse Aides in the variety of health care settings in which they serve. Presentations from the Health Care Personnel Registry, the Board of Nursing, and the Direct Care Workers' Association covered issues that explain where Nurse Aides work, how they are trained and regulated. Friends of Residents in Long Term Care presented testimony about what members of that association perceive as shortcomings in the profession. Following those presentations, Committee members considered how older drivers' fitness for driving is assessed and whether North Carolina's older drivers' assessments should be changed.

The next meeting of the North Carolina Study Commission on Aging is scheduled for March 4 at 10 am in Room 544 of the Legislative Office Building, located in Raleigh on the corner of Lane and Salisbury Streets. All meetings are open to the public.

In this Issue:

Legislative Update February 2, 2010

Legislative Update February 2, 2010

Interim Study Commissions Meet

January 2010 began a new year and with it came a flurry of legislative interim commission meetings.

Aging Study Commission

The North Carolina Study Commission on Aging is pursing an aggressive schedule with meetings being held twice a month. The first meeting, January 7, featured reflections on last session’s activities on legislation of interest to seniors and updated statistics on the state of seniors at present and in the future. The materials presented during the January 7 meeting can be viewed online at: http://bit.ly/aKvF1d.

At the next meeting, January 21, Commission members heard from Dennis Streets, Chief of the Division of Aging and Adult Services, who offered an extensive presentation on the state of services for seniors, trends and opportunities for public and private programs. Commission members also heard an update on the state’s star rating system for adult care homes. They also heard a report from Jeff Horton, Interim Chief of the Division of Health Services Regulations, on the prospect of expanding the star rating program into other programs that affect seniors. The materials from the January 21 meeting can be viewed online at: http://bit.ly/aDEGN3.

The next meeting of the North Carolina Study Commission on Aging is scheduled for February 4 at 10:00 AM in Room 544 of the Legislative Office Building, located in Raleigh on the corner of Lane and Salisbury Streets. All meetings are open to the public.

Joint Legislative Commission on Governmental Operations

On January 20, DHHS Secretary Lanier Cansler explained to legislators that the department is unable to achieve the targets set in the 2009–2011 budget, and that the shortfall would be at least $400 million. That amount could grow as unemployment continues to rise. The Department’s efforts to implement changes have been stymied by the federal government’s inability to approve the numerous plans submitted not only by North Carolina, but all other jurisdictions in the United States that are facing the same economic problems that are driving the need to provide Medicaid services more cheaply and efficiently. A copy of the letter he sent to legislators regarding this issue is available here: January 2010 Cansler letter.

The General Assembly’s Chief Economist, Dr Barry Boardman, presented his latest economic outlook to the Joint Legislative Committee on Governmental Operations on January 19. The complete report can be viewed at: http://bit.ly/94geyO.

Dr Boardman states that, while economists continue to believe that North Carolina’s path out of the economic doldrums will outpace the nation’s, the nation will likely spend a longer time there than first expected. Full recovery is not anticipated until sometime in 2012. Dr Boardman states that the short session’s budget discussions will commence with lower-than-budget revenue collections, despite the 1¢ sales tax increase. In addition, strains on assistance programs---such as Medicaid---will continue as job losses push North Carolinians into poverty. North Carolina’s joblessness rate skyrocketed to an all-time high of 11.2%. Consider that 31,000 North Carolinians lost their jobs in December of 2009. A complete listing of the information presented at the January 20 meeting can be seen at: http://bit.ly/aDmXgt.

Legislative Retirements/Resignations Continue

As the February beginning of the filing period for state races draws nearer, more and more legislators are announcing that they will not seek reelection. At the same time, a number of resignations already occurred since adjournment, the most prominent of whom is former Senate Majority Leader Tony Rand (D-Cumberland). Cumberland County Democrats selected State Representative Margaret Dickson (D-Cumberland) to serve out the rest of the term. She will run for his seat. Other recent retirements include the following legislators:

Sen RC Soles (D-Columbus)
Sen Jim Jacumin (R-Burke)
Sen David Hoyle (D-Gaston)
Sen Julia Boseman (D-New Hanover)
Sen Eddie Goodall (R-Mecklenburg)
Rep Curtis Blackwood (R-Union)
Rep Melanie Goodwin (D-Richmond)
Rep Robert Grady (R-Onslow)
Rep Jim Gulley (R-Mecklenburg)
Rep Sarah Spaulding Hughes (D-New Hanover)
Rep Carolyn Justus (R-Henderson)
Rep Wil Neuman (R-Gaston) running for Sen David Hoyle's seat
Rep Ray Warren (D-Alexander)
Rep Laura Wiley (R- Guilford)

For more information about the North Carolina General Assembly, or to identify your legislators, please visit www.ncleg.net. For more information on these and other legislative issues, please contact Peggy Smith, or Evelyn Hawthorne by e-mail: evelynhawthorne@nc.rr.com or by phone at (919) 523-9096.

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