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F I S C A L I M P A C T R E P O R T
SPONSOR Chasey
ORIGINAL DATE
LAST UPDATED
02/10/07
02/19/07 HB 691/aHCPAC
SHORT TITLE Medicaid Waiver Cost of Living Adjustment
SB
ANALYST Geisler
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
$3,135.0
Recurring
General
(Parenthesis ( ) Indicate Expenditure Decreases)
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
FY09
$7,773.1
$7,773.1 Recurring HSD-Title XIX
Medicaid
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates: SB 678
Relates to: HB 604/SB 651
SOURCES OF INFORMATION
LFC Files
Responses Received From
Human Services Department (HSD)
Department of Health (DOH)
Aging and Long-Term Services (ALTSD)
SUMMARY
Synopsis of HCPAC Amendments
The House Consumer and Public Affairs Committee amendments to HB 691 reduce the amount
to be appropriated from $11,005,000 to $3,135,000. The original $9,240,000 to DOH is reduced
to $2,625,000 and original funding of $1,765,000 to HSD is reduced to $510,000. HSD notes
that the appropriation would be matched with federal dollars at the rate of 71.26% based on the
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House Bill 691/aHCPAC – Page
2
Federal Medical Assistance Percentage (FMAP) for FY08. The total FMAP for the $3,135,000
in general fund would be $7,773,142 in federal funds for a total of $10,908,142 in available
funds for a cost of living increase. HSD notes that this would increase waiver provider rates by
less than 4% and would require the additional funding included for providers in subsequent
years.
Synopsis of Original Bill
House Bill 691, for the Legislative Health and Human Services Committee, would appropriate
$11,005,000 to the Human Services Department (HSD) and the Department of Health (DOH) to
provide for a cost of living increase for Medicaid waiver programs. HB 691 would appropriate
$9,240,000 of the total to DOH (developmental disabilities, HIV-AIDS and medically fragile
children waivers) and the remaining $1,765,000 to HSD (disabled and elderly waiver program
managed by the Aging and Long-Term Services Department).
FISCAL IMPLICATIONS
HSD notes that the appropriation would be matched with federal dollars at the rate of 71.26%,
the Federal Medical Assistance Percentage (FMAP) for FY08. The total FMAP for the
$11,005,000 general fund would be $27,286,580 for a total $38,291,580 in available funds. This
would increase waiver provider rates by about 3.3%.
Based on Centers for Medicare and Medicaid Services (CMS) 372 Reports for FY 06, the
general fund appropriation in HB 691 and the additional FMAP would result in an average cost
of living increase of more than 12% across all home and community based services (HCBS)
waiver providers.
For this analysis, the percentage of the cost of living average for each HCBS Waiver program
was slightly adjusted in order to utilize the entire appropriation. For the developmental
disabilities (DD) waiver, the cost of living adjustment would be more than 12%, for a total of
$31,410,856. For the medically fragile waiver, the cost of living adjustment would be more than
12% for a total of $707,307. For the AIDS waiver, the cost of living adjustment would be more
than 10% for a total of $32,150 for FY 07. For the D&E waiver, the increase would be more
than 13% or $6,141,267 for FY 07.
HB 691 does not specify whether the cost of living increase would be recurring for future fiscal
years. This analysis presumes that the HCBS waiver rates for future years would continue to
include the original cost of living adjustment rather than reverting to the FY 06 reimbursement
rates. An increase of general fund from $11 million in FY08 to $12.3 million in FY09 would be
needed to sustain the cost of living increase; the Medicaid match would increase from $27.2
million to $29 million.
SIGNIFICANT ISSUES
HSD notes they have taken a thoughtful approach to increasing provider rates, using the
following criteria in its decision-making process:
Historical increases;
Promoting preventive care;
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House Bill 691/aHCPAC – Page
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Establishing parity among rates paid for similar services;
Provider costs;
Providers’ dependence on Medicaid as a funding stream;
Rates relative value compared to Medicare.
ADMINISTRATIVE IMPLICATIONS
HSD notes HB 691 would pose additional administrative burden to HSD in that approximately
500 hours of staff time would be required to adjust the rate tables to reflect the cost of living
increase. The increase in reimbursement rates for waiver services that would be effectuated by
HB 691 may require the submission of amendments to each waiver application. Waiver
amendments must be approved by the Centers for Medicare and Medicaid Services (CMS).
Implementation of HB 691 would be contingent upon CMS’s approval of the waiver
amendments, if necessary.
DUPLICATION AND RELATIONSHIP
HB 691 is duplicated by SB 678. HB 691 relates to HB 604/SB 651, which would require that
agency Medicaid waiver program budget requests include a cost of living increase annually.
TECHNICAL ISSUES
HB 691 does not appropriate any general fund to cover the costs to ALTSD for a cost of living
increase to individuals with Brain Injury (BI) served through the Mi Via Waiver. For FY 07,
ALTSD estimates that 200 BI participants will access Mi Via Waiver services with average
annual budgets of $29,749 per participant, for a total BI Mi Via Waiver budget of $5,949,896.
GG/mt