Presentation to Virginia Network of Private Providers

Susan Massart, House Appropriations CommitteeMike Tweedy, Senate Finance Committee

October 15, 2015

Health & Human Resources2015 Session

How Did We Begin the 2015 Session? What Changed in the 2015 Session?

Spring Revenue ChangesImpact of Revenue Changes and Adoption of HB 1400Looking toward the 2016 Session

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How Did We Begin the 2015 Regular Session?

At the beginning of the 2015 Regular Session, the Governor’s proposed biennial budget (HB 1400) included a net spending increase of $87.2 million for the FY 2014-16 bienniumHB 1400 amended the 2014-16 budget passed in the 2014 Special

Session I.Assumed $94.8 million in additional resourcesIncluded $51.7 million in year-end balances and $272 million in

savings strategiesContained an unappropriated balance of $7.6 million GFAssumed growth rates in revenue (no change from prior budget):

FY 2015: 2.7% FY 2016: 2.9%

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HB 1400 included a net decrease of $193.5 million GF over the biennium for HHR, with 69% of new funding driven by mandated programs Additional spending of $85.6 million offset by $279.1 million in declining expenditure

forecasts and savings strategies Net decrease of $267.7 million GF for Medicaid and FAMIS forecasts Medicaid forecast savings would have been greater except for inclusion of $116.9 for

the Governor’s “A Healthy Virginia” initiatives Mandatory spending was mainly related to lower revenue for the Health Care Fund,

expected loss of Medicaid revenue at Piedmont Geriatric and Catawba Hospitals, delay in individuals transitioning from training centers, increase in involuntary mental commitment costs, offset loss of child support enforcement revenue, and backfill loss of Medicare incentive payments.

Discretionary spending included costs to redesign the Day Support Waiver along with rent subsidies ($1.9 million GF).

Included savings of: $194.7 million GF in Medicaid forecast savings $51.4 million by using a cash balance in the Health Care Fund $21.6 million GF in FAMIS forecast savings

How Did We Begin the 2015 Session?Health & Human Resources (HHR)

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Governor’s Access Program (GAP) for the Seriously Mentally Ill

Foster Care to 21ID/DD Waiver Redesign Provider RatesMental Health ServicesOther Medicaid Provider RatesSafety Net Programs for the UninsuredFee Increases in the Governor’s Budget

HHR Issues for 2015 Session

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Major Spending Actions House SenateBehavioral Health Services $6.1 $7.9

ID / DD Waivers (Primarily Rates) $0 $8.5

Medicaid Provider Rates $0.2 $9.3

Health Safety Net Services $6.3 $2.0

Services to People with Disabilities (VR, Brain Injury, LTESS) $2.3 $0.5

Other HHR $2.6 $1.6

Total: $17.5 $29.8

Central Accounts (Restoration of Budget Cuts and Fees) $5.0 $7.2

HB 1400: Major Differences BetweenHouse and Senate HHR Budgets (GF $ in millions)

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HB 1400: Major Differences BetweenHouse and Senate HHR Budgets

Behavioral Health (biennial amounts)House: Modified Income Eligibility for GAP Program from 100 to

60% and eliminated a waiting list for servicesHouse: Therapeutic Drop-Off Centers ($1.6 million GF)House: Child Crisis Psychiatry and Crisis Services ($2.5 million

GF)Senate: Permanent Supportive Housing ($4.3 million GF)

ID/DD Waivers (biennial amounts)Senate: Increased rates per consultant rate study ($8.2 GF) –

included a one percent rate increase for group homesHouse: Delayed Day Support waiver redesign (-$1.9 million GF) 7

HB 1400: Major Differences Between

House and Senate HHR BudgetsMedicaid Provider Rates

Senate: Increased personal care rates by two percent ($5.5 million GF)

Senate: Eliminated ER fee reduction for non-ER claims ($2.2 million GF)

Senate: Increased Medicaid supplemental payments to Children’s Hospital of the King’s Daughters ($1.4 million GF)

Health Safety Net ServicesHouse: Expanded Services at Free Clinics ($3.1 million GF)House: Expanded Services at Community Health Centers ($2.5

million GF)House: Funded additional Medication Assistance ($0.5 million

GF)

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HB 1400: Major Differences Between

House and Senate HHR BudgetsServices for People with DisabilitiesHouse: Increased funding for Vocational Rehabilitation

Program ($1.0 million GF)House: Increased funding for Brain Injury Program ($750,000

GF)House: Increased support for Public Guardianship ($500,000

GF)

Other HHRHouse: Eliminated Foster Care to 21 Program (-$3.2 million

GF)Senate: Included language directing development of a

Medicaid Provider Assessment for Hospitals 9

2015 Session: ConferenceThe House and Senate Budget Conferees found common ground on

most of the major differences in each Chamber’s budget in late February

During Conference, an update to the revenue forecast occurred, resulting in additional GF resources available Additional money helped resolve many differences in Conference Forecast of 4.7% in FY 2015 and 3.3% in FY 2016

The Final Conference Report reflected an adjustment to the biennial revenue forecast of $532.2 million which was primarily used for: High-Need Capital Outlay ($141.4 million GF) Rainy Day Fund deposit ($129.5 million GF) Compensation Increase ($113.9 million GF) VRS Rates ($32.3 million GF)

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Adopted New Program for the Seriously Mentally Ill ($96.5 million GF)Provides targeted mental health and medical services to individuals with serious

mental illnessIncome eligibility up to 60 percent of the poverty levelAllows nearly 22,000 individuals access to needed care, eliminates waiting list

Provided $42.1 million GF of additional funding in HHR Community Behavioral Health Services ($8.9 million GF)

$3.0 million GF for 3 additional PACT teams $1.8 million GF for 6 additional therapeutic drop-off centers $2.0 million GF to expand children’s psychiatry and crisis services $2.1 million GF to provide stable, supportive housing for 150 individuals with serious

mental illnessSafety Net Services ($27.6 million GF)

$23.0 million GF to enroll 35,000 children in Medicaid and FAMIS, allow state employees to enroll their children in FAMIS, and provide dental coverage to 45,000 pregnant women enrolled in Medicaid for FAMIS MOMS

$3.1 million GF for Free Clinics $1.0 million GF for Community Health Centers $500,000 for medication assistance counselors

HHR Conference Actions

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Medicaid Provider Rates ($15.4 million GF) $8.2 million GF and $8.2 million NGF in FY 2016 to increase Medicaid Intellectual and

Development Disability waiver rates Includes a 2% increase for congregate care rates, 5.5% for in-home residential supports, 2% for

day support and prevocational services, 10% for therapeutic consultations and 15.7% for skilled nursing services

$3.5 million GF and $3.5 million NGF in FY 2016 to increase Medicaid personal care rates by 2%

$2.2 million GF and $2.2 million NGF to eliminate the practice of pending and reducing Medicaid payments for emergency room triage services

$1.4 million GF and $1.4 million NGF in FY 2016 to increase supplemental physician payments at Children’s Hospital of The King’s Daughters

Services for Individuals with Disabilities ($4.2 million GF) $1.0 million GF for the vocational rehabilitation program to address the waiting list $864,943 GF to restore and expand funding for long-term employment support services $750,000 GF to restore and expand funding for community-based brain injury services $600,000 to restore funding for personal care services for disabled individuals who are not

eligible for Medicaid $580,800 GF to restore funding reductions for the Centers for Independent Living $400,000 to restore funding for Didlake $605,000 GF in FY 2016 for Part C early intervention services for infants and toddlers $500,000 for public guardianship services

HHR Conference Actions

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Elimination of Fee Increases $3.7 million GF in FY 2016 to rollback the proposed restaurant inspection fee from $285 to

$40 $947,000 GF in FY 2016 to eliminate the proposed licensing fee for providers of adult

behavioral health and developmental services $221,568 GF in FY 2016 to eliminate a proposed increase in the tobacco stamp tax $117,000 GF to eliminate proposed fees for Community Services Boards and private providers

in order to use on-line training courses offered by the Dept. of Behavioral Health and Developmental Services

Key Budget Language Directs the Secretary of Health and Human Resources to conduct an analysis of provider

assessments and present a plan with options for consideration by the 2016 General Assembly Requires the Secretary to convene a workgroup on the Certificate of Public Need (COPN)

process and report back to the General Assembly prior to the 2016 Session Directs the Department of Medical Assistance Services and the Department of Behavioral

Health and Developmental Services (DBHDS) to develop a comprehensive plan for the redesign of the Medicaid Intellectual and Developmental Disability waiver programs

Directs DBHDS to review Piedmont Geriatric and Catawba hospitals and examine alternate options for care

Continues a joint subcommittee of the House Appropriations and Senate Finance Committees to monitor training center closures, options for transitioning individuals into the community, and plans for redesigning Medicaid waivers

HHR Conference Actions

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Virginia’s General Fund Budget82% of the GF Budget goes to Education,

Health and Human Resources, and Public Safety

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30% of the general fund budget is comprised of HHR funding

Medicaid and Children’s Health Insurance makes up 71% of the HHR general fund budget at $7.8 billion

DBHDS’ budget is the next largest at almost $1.4 billion comprising only 12.3% of the HHR general fund budget

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Budget Development RealityThe Governor and the General Assembly largely operate on

the margin when it comes to the budgetMany decisions are driven by federal mandates, state law,

and previous “high-priority” commitments that often require funding changes related to enrollment and/or population growth

Discretionary spending proposed by Delegates and Senators compete with new spending proposed by the Governor

While general fund revenues are improving, growth will not be sufficient to satisfy agency budget requests

Where Are We Now?Surplus - What Surplus?

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Major Sources/Uses of FY 2015 General Fund SurplusSources Amount ($ in

millions)Revenue collections above official forecast $549.6Transfers to the General Fund (actual vs. forecast)

(11.1)

Withdrawal from Rainy Day Fund (actual vs. forecast)

(2.3)

Natural Disaster Reserve $1.8Total Major Revenue Sources $538.0

UsesAddition to reserve for deposit to Rainy Day Fund in FY 2017 above amount already budgeted ($605.6 million required deposit less $129 million in budget)

$476.1

Reserve for Water Quality Improvement Fund 61.7Total Major Uses $537.8

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First time in several years that state agencies have not been asked to submit budget reduction proposals

State agencies have just completed the first round of budget requests to the Department of Planning and Budget

Requests reflect “have to do” or mandatory programs and other agency priorities

Requests for the current year total $77.5 million Requests for the 2016-18 biennium total $2.1 billion

Increasing costs of mandatory programs appear to be significantK-12 Standards of Quality Rebenchmarking Per diem payments to local and regional jailsInmate medical costsAid to local police departments

Where Are We in the Budget Process?

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For Health and Human Resources a number of big issues will drive budget decisionsMedicaid and Children’s Health Insurance Program forecastMedicaid provider ratesU.S. Department of Justice Settlement AgreementRedesign of the Medicaid waivers for individuals with intellectual

and developmental disabilitiesBehavioral health and substance use disorder treatment services,

including psycho-geriatric system of careChildren’s Services Act (formerly Comprehensive Services Act or

CSA)Foster Care and Adoption Subsidy caseloadsInformation technology needs

HHR Budget Drivers

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Forecasts for HHR “mandatory” programs are still being developed Medicaid and Children’s Health Insurance Program forecastFoster Care and Adoption Subsidies

Budget requests for other mandatory and high priority programs indicate growing costs, for example:Medicaid provider rate increases total $95.4 million GF over the 2016-18

biennium Children’s Services Act (formerly Comprehensive Services Act) caseload and

utilization $16.4 million in FY 2016 $32.8 million over the 2016-18 biennium

Medicaid decertification of Hancock Geriatric Treatment Center at Eastern State Hospital will require up to $4.7 million in FY 2016 and up to $20.3 million over the 2016-18 biennium, depending on policy decisions

Agency information technology requests total $38.6 million GF over the 2016-18 biennium

HHR Budget Drivers

U.S. Dept. of Justice (DOJ) Settlement AgreementAgency budget requests to comply with DOJ Settlement Agreement (not including

waiver redesign) $7.3 million GF in FY 2016 $49.2 million GF over the 2016-18 biennium

October 23, 2015 status conference between parties in open court could influence funding decisions DOJ filed a Statement of Issues and Motion for a Court-Ordered Schedule regarding the

implementation of the Settlement Agreement DOJ cites a number of issues that necessitates a court-ordered schedule for compliance

Failure to develop community services and integrated setting Crisis services do not meet the needs of the ID/DD population Failure to provide integrated living settings Continued reliance on segregated housing and inappropriate placements Failure to provide more integrated settings for children in nursing facilities and large

institutions Failure to provide skilled nursing services for medically complex individuals Failure to provide integrated day opportunities Failure to ensure quality and risk management 20

ID/DD Waiver RedesignDBHDS proposal has been submitted to Department of

Planning and Budget for fiscal reviewPreliminary costs for the ID/DD waiver redesign

$24.8 million GF over the 2016-18 biennium for rate increases $7.8 million GF over the biennium for new services

Costs will be refined during the fiscal review processHouse Appropriations and Senate Finance Subcommittees on

Health and Human Resources had preliminary briefings on the waiver redesign but several policy decisions and fiscal decisions had not been finalized

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Caution will continue to be the guiding principle in any funding decisions going forward

Revenue growth will not meet programmatic requests, so difficult decisions will have to be madeMedicaid forecast will be key in any decision-making due to the magnitude

of the programTenor and substance of court-ordered changes to the DOJ Settlement

Agreement will impact budget decisionsFiscal and operational uncertainties related to the state’s delivery system

for psycho-geriatric treatment will be an issueHealth care safety net will continue to be an issueWork of the Joint Subcommittee to Study Mental Health Services in the 21st

Century may influence budgetary decision-making during the 2016 SessionElection results may play a role in defining key issues for Session

The Road Ahead

House Appropriations Committee Websitehttp://hac.virginia.gov/

Senate Finance Committee Website http://sfc.virginia.gov/

Department of Planning and Budget http://www.dpb.virginia.gov/Commonwealth Datapoint (APA)

http://datapoint.apa.virginia.gov/Virginia Performs

http://vaperforms.virginia.gov/

Sources of Budget Information

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