Legislative Update June 11, 2009

House Partially Restores Funding for Adult Care PCS

Clearly, NCALA's messages to House members got through!

After much negotiating, arm twisting, and persuasion, the House Health and Human Services Committee proposed on June 10 to partially restore funding for adult care homes' PCS. Medicaid provider rates, which were slashed by 5.5% in FY 09-10 and by 6% in FY 10-11, are proposed to be partially restored to 3.06% in FY 09-10 and 3.56% in FY 10-11. The restoration of funding for these proposals is, however, dependent upon passage of the House's finance package. NCALA commends Rep Bob England, MD (D-Rutherford) for his efforts to restore funding for these services!

On June 9, during the debate over S202 in the House Appropriations Committee, NCALA worked with Rep Jean Farmer-Butterfield (D-Nash) to delete a provision which would have placed a moratorium on new Special Care Units in adult care homes. Earlier in the deliberation, Rep Verla Insko (D-Orange) passed an amendment that would have further complicated the moratorium. Rep Farmer-Butterfield listened to NCALA's concerns that the moratorium would result in unfairly impeding providers' ability to serve low-income seniors who suffer with Alzheimer's disease. She also was sensitive to the considerable savings to the state garnered by serving low-income seniors in less costly and more appropriate adult care homes. The only other alternative---nursing homes---cost the state almost twice as much as ACH's SCUs. Rep Farmer-Butterfield's amendment passed unanimously. NCALA commends Rep Farmer-Butterfield for her leadership on aging issues and her willingness to stand up for NCALA's members, on this matter in particular.

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Next Steps

The House of Representatives will vote on June 11 on the combined House budget and finance proposals, S202. The vote is expected to be very close because some members will not support any measure that could be called a tax increase. If S202 passes the House on separate votes today and tomorrow, the bill will be considered by the Senate, which is expected to put the bill into a Conference Committee to resolve the differences between the House's proposal and the original Senate version. The original Senate version was passed months ago, without the information about the April revenues, which were substantially below estimates. Furthermore, the Senate finance package has not yet emerged. Senate Finance leaders had released an outline of their proposal but, to date, no bill has been released. So, how Senators will react to the House's Finance package remains to be seen.

This bill has a long way to go.

Background

Last week, House subcommittees reported "without prejudice" a proposed budget with drastic and severe cuts in state services and provider reimbursement. The full House Appropriations Committee put those pieces together on June 9. In the meantime, House lawmakers worked to craft a proposal to produce revenues that could garner sufficient votes to pass the House. The House Finance Committee rolled out a draft on June 9, including a slate of service taxes, income tax increases on wage earners over $200,000, new corporate taxes, and loophole closures. On June 10, House budget subcommittees met to consider program restorations, incorporating the new revenues made available through the proposed finance package.

The latest version of S202 included the following provisions, which are of interest to NCALA members:

Restore all but $2 million of funds for adult care homes Medicaid PCS: Previously, proposal was to cut ACH PCS funding by $10 million. This change would restore $8 million in funding for ACH PCS.
Lower across-the-board cut for all Medicaid providers: 3.06% instead of 5.5% in FY 09-10 and 3.56% instead of 6% in FY 10-11.
Restore funding of PT/OT/ST: Outpatient services for adults and children.
Rollback of State/County Special Assistance rates to pre-January 2009 rates: Assisted living communities that received in January a $33-per-month increase in SA for the low-income seniors they serve will lose the increase, despite the increased costs of food, fuel, and utilities that all businesses have experienced. NCALA is especially concerned about this cut because it will adversely affect the cost of room and board for low-income seniors.
Reduce dispensing fee for both brand and generic drugs and reduce reimbursement for prescription drugs: The proposed budget would affect Long Term Care Pharmacies as well as community pharmacies by changing the reimbursement for prescription drugs from Average Wholesale Price (AW) -10% to Wholesale Acquisition Cost (WAC) +7%. This change is expected to generate almost $10.5 million in savings this year and almost $14 million next year.
Implement a preferred drug list: Commonly used in states across the country, drug companies fought off this provision for many years in North Carolina, home to numerous drug manufacturing operations. This provision is slated to generate $40 million in savings in FY 09-10 and $50 million in savings in FY 10-11.
New and increased licensure fees: Virtually no provider escapes a fee increase or, if they didn't pay a fee, they will. New fees are proposed for Medicaid provider of $100 payable every three years and for initial licensure of a health care facility. An annual fee for hospice and increased fees for license renewals for health care facilities are proposed.

To read the complete proposals, please view:
http://www.ncleg.net/sessions/2009/budget/2009/S202-CSLR-29.pdf and
http://www.ncleg.net/sessions/2009/budget/2009/S202-ASVxf-21.pdf

NCALA sent alerts to members last week apprising of the ACH cuts and asking them to contact their members immediately. Please continue to call and write legislators to thank them for their efforts to restore funding and to ask them to do everything possible to also restore funding for State County Special Assistance.

NCALA asks member communities to please contact your legislators immediately to ask them to spare further cuts to adult care homes and to restore funding for SA. Please make clear that this cut will hurt low-income seniors by making make it harder to pay their bills.

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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 Jerry Cooper, or Evelyn Hawthorne by e-mail: evelynhawthorne@nc.rr.com or by phone at (919) 523-9096.

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Do You Know Your Legislators?

Knowing who represents you in Raleigh is paramount to ensuring that your voice is heard! Do you know which legislators represent your communities? If not, let NCALA help you invite your legislators to visit you, your residents, and your staff.

Hosting a legislative event or visit is easier than it sounds, and NCALA will help you every step of the way. Are you hosting a special event this Spring or Summer? If so, invite your representatives to join in the celebration.

Contact NCALA for more information on who your legislators are and how to host a visit or event with them.

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In this Issue:

Legislative Update June 2, 2009

Legislative Update June 2, 2009

House Appropriators Unveil Health, Human Services Cuts

House Health and Human Services appropriators released a proposed budget on May 28. Staff reviewed the proposal with committee members and a committee room filled with concerned advocates and stakeholders. No provider or program was left uncut. Some programs were zeroed-out.

Late on May 29, reports leaked that House budget writers were seeking and additional $265 million cuts in the Health and Human Services Budget, to be reported on by June 2. That would put the House proposal nearly a full $1 billion below the Senate proposal. So, it is clear to observers that the cutting is not done yet!

Items of interest to NCALA members include the following proposals:

Across-the-board cut of 4% for all Medicaid providers. Adult care homes' PCS payments will be among those cut, despite the fact that DMA has not adjusted PCS for cost of living along with increases for other Medicaid providers for the past three years. In addition, DMA has not responded to the evidence that proves adult care homes' PCS payments have not covered the actual cost of care provided to frail elderly residents.
Rollback of State/County Special Assistance rates to pre-January 2009 rates. Assisted living communities that received in January a $33 per month increase in SA for the low-income seniors they serve will lose the increase, despite the increased costs of food, fuel, utilities all businesses experienced. NCALA is especially concerned about this cut because it will adversely affect the cost of room and board for low-income seniors.
Elimination of the Quality Improvement Consultation Program. This successful program that aimed to improve quality at adult care homes will be zeroed-out, saving the state $190,204 in this year and next year.
Reduce reimbursement for Prescription Drugs. The proposed budget would affect Long Term Care Pharmacies as well as community pharmacies by changing the reimbursement for prescription drugs from Average Wholesale Price (AW) -10%, to Wholesale Acquisition Cost (WAC) +7%. This change is expected to generate almost $10.5 million in savings this year and almost $14 million next year.
Reduce Prescription Drug Costs. The proposed budget would generate savings by reducing prescription drug expenditures by employing the following actions: enhancing utilization management of the PAL list, increasing use of generic drugs and by increasing rebate collections on generic drugs. If sufficient savings are not realized, the department shall implement a preferred drug list for all drug classes in the Medicaid programs, a list that would include generic and brand name drugs that offer supplemental rebates. This change is budgeted to save almost $26 million this year and more than $30 million next year.

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After heated debates, lawmakers agreed to treat Personal Care Services funding for adult care homes separately from that for In-home PCS and significantly reduced the appropriation for in-home PCS. The recommended reduction in in-home PCS is due to recent reports of misuse of the program by some home care agencies. NCALA is seeking language to make that distinction clear. Concurrent with these discussions, ACH PCS is under a restructuring initiative mandated by the Center for Medicare and Medicaid Services. Changes to ACH PCS rates—even the 4% reduction as applied to all Medicaid providers—could jeopardize the program changes directed by CMS. NCALA will make these points in discussions with lawmakers.

House leaders aim to have its budget approved by June 18. NCALA will continue to work to ask lawmakers to spare as much as possible cuts to communities that serve low-income seniors.

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