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F I S C A L I M P A C T R E P O R T
SPONSOR Altamirano
ORIGINAL DATE
LAST UPDATED
02/03/06
HB
SHORT TITLE
CERTAIN MEDICAID REIMBURSEMENT
RATES
SB 663
ANALYST Weber
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
$3,200.0
Recurring
General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
Relates HB 704, SB 734
Duplicates HB 779
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
FY08
$8,200.0
$10,000.0 Recurring Federal Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Human Services Department (HSD)
SUMMARY
Synopsis of Bill
Senate Bill 663 appropriates $3.2 million from the general fund to the Human Services
Department for the purpose of adjusting for inflation Medicaid rates paid to intermediate care
facilities for the mentally retarded. The new provider rates each year shall equal the previous
year's rate plus the current market basket index inflation adjustment as determined by the federal
pg_0002
Senate Bill 663 Page 2
centers for Medicare and Medicaid services. In years when the reimbursement rate is re-based,
the market basket index shall be used to index each provider's operating costs to a common point
of December 31 for the base year and then indexed to a midpoint of the rate year to adjust for
inflation.
The funds are appropriated as follows:
two million two hundred thousand dollars ($2,200,000) to increase the Medicaid
reimbursement rate for licensed nursing facilities and licensed intermediate care facilities
for the mentally retarded, and
one million dollars ($1,000,000) to restore funding lost due to reductions in the Medicaid
reimbursement rate made in fiscal years 2005 and 2006 to licensed nursing homes and
licensed intermediate care facilities for the mentally retarded.
FISCAL IMPLICATIONS
The appropriation of $3.2 million contained in this bill is a recurring expense to the general fund.
Any unexpended or unencumbered balance remaining at the end of FY07 shall revert to the
general fund.
SIGNIFICANT ISSUES
HSD indicates that the $3.2 million would create a rate increase for FY07 that would in effect
become part of the facilities' rates by the end of FY08. When those rates are rebased for FY08,
the normal rebasing increase for future rates would be augmented because the rate rebasing
process would have to take into account the increase from FY07 as well as any other costs
associated with the facilities' operation. This increase would, therefore, compound the increase
associated with the FY08 automatic rebasing. HSD estimates the FY08 general fund
requirement would jump to $3.9 million.
POSSIBLE QUESTIONS
Many medical providers are affected by the relatively low Medicaid reimbursement rates yet
only this one provider group is offered relief. Should more providers be included.
MW/nt