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F I S C A L I M P A C T R E P O R T

SPONSOR Papen

ORIGINAL DATE

LAST UPDATED

2/20/07

2/24/07 HB

SHORT TITLE Personal Care Single Rate of Reimbursement

SB 940/aSPAC

ANALYST Weber

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$3,900.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Appropriation in the General Appropriation Act

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

$9,670.0

Recurring

Federal

Medicaid

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates HB 614

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department (HSD)

Aging and Long Term Services Department (ALTSD)

SUMMARY

Synopsis of SPA Amendment

The Senate Public Affairs Committee makes the following amendment.

1.

On page 1, line 20, strike the second "of" and strike line 21 in its entirety.

Senate Bill 940/aSPAC – Page

2

This change removes the specific rate of pay increase but leaves the appropriation. This would

allow for more flexibility in the increase to help maintain budgetary integrity. Including a

mandated $13.94 per hour could create a situation making the $3.9 million appropriation

insufficient to pay for the additional expenditures.

Synopsis of Original Bill

Senate Bill 940 appropriates $3.9 million from the general fund to the Human Services

Department for to implement a single reimbursement rate of $13.94 per hour for Personal Care

Option (PCO) services.

FISCAL IMPLICATIONS

The appropriation of $3.9 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of Fiscal Year 2008 shall revert

to the general fund.

SIGNIFICANT ISSUES

The PCO program has two service delivery models, Consumer-Delegated and Consumer-

Directed. The Consumer-Delegated model is the only model which has a tiered reimbursement

rate structure. Providers offering services under the Consumer-Delegated model bill $13.50 per

hour for the first 100 hours of personal care services provided to a consumer in a month, and

$11.50 per hour for 101 + hours of personal care services provided to a consumer in a month.

SB 940 proposes eliminating this tiered reimbursement rate structure and reimbursing providers

at a rate of $13.94 per hour for services under the Personal Care Option (PCO) program.

Providers under the Consumer-Directed model bill at a rate of $12.50 per hour for personal care

services provided to consumers.

It is assumed the single rate of reimbursement would apply to both the Consumer-Delegated and

Consumer-Directed models.

The appropriation would be federally matched at 71.26% for a total of program increase of

approximately $13.6 million.

The PCO program currently enrolls about 114 new consumers per month. This equates to

slightly more than a 1% program growth rate per month. The $3,900.0 may not be adequate to

re-price the per-hour basis for both models if the growth of PCO continues at the present rate.

PCO is a Medicaid benefit for individuals that are Medicaid eligible and meet the nursing home

level of care by requiring assistance with two or more activities of daily living. As with any

other Medicaid benefit that is medically necessary, the individual is entitled to receive that

benefit. SB 940 appropriates a specified amount of funding for a single provider rate increase

may not fully take into account the growing number of recipients that are entitled to utilize PCO

program benefits.

Currently in FY 07, 10,325 unduplicated persons have received PCO services. Approximately

9,000 persons are served each month. The average annual "Plan of Care" cost for PCO services

is $20,412. The aggregate budget projection for FY 07 is approximately $205.0 million.

MW/mt