MINUTES OF THE JOINT SUBCOMMITTEE MEETING OF SENATE COMMITTEE ON FINANCE AND ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session May 18, 1995 The joint subcommittee meeting on Human Resources/K-12 of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman Raymond D. Rawson at 7:55 a.m. on Thursday, May 18, 1995, in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. SENATE COMMITTEE MEMBERS PRESENT: Senator Raymond D. Rawson, Chairman Senator William J. Raggio Senator Bob Coffin Senator Dean A. Rhoads ASSEMBLY COMMITTEE MEMBERS PRESENT: Mrs. Jan Evans, Chairman Mr. Lynn Hettrick, Chairman Mrs. Vonne Chowning Mr. Joseph E. Dini, Jr. Ms. Sandra Tiffany Mr. Dennis L. Allard STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Mark Stevens, Fiscal Analyst Steve J. Abba, Program Analyst Sue Parkhurst, Committee Secretary OTHERS PRESENT: Myla C. Florence, Administrator, Welfare Division, Department of Human Resources Michael J. Willden, Deputy Administrator, Administrative Services, Welfare Division, Department of Human Resources Christopher Thompson, Administrative Services Officer, Health Care Financial Analysis Unit, Department of Human Resources Hospital Tax Account - Page 993 Steve J. Abba, Program Analyst, reviewed the adjustments and recommendations made by staff and presented the policy issues requiring a decision by the committee. Regarding policy issue 1 on page 1 of the budget closing action sheets (Exhibit C), he said the Governor's most recent Intergovernmental Transfer (IGT) Program proposals have been incorporated into this budget, as reflected in the adjustments on page 1. He reminded the committee it had been indicated in testimony received from the administration May 4, 1995 that the proposals reflected in this document represent the latest efforts to gain compromise and agreement on the IGT program. Mr. Abba said the program as modified (revised from the original budget) includes an increase in the carryforward amount, originally budgeted at $45 million, of $4,052,563. Continuing, Mr. Abba said there have been some adjustments made in the benefits structure for the hospitals; as a result, Washoe Medical Center in Washoe County will receive an additional $2 million benefit each fiscal year. The revised program will also reduce the estimated net state benefit from approximately $17.7 million to $15.7 million over the biennium, Mr. Abba stated, and the original HMO (health maintenance organization) premium tax proposal included in this account and in the Medicaid budget has been eliminated due to complications and legal issues. Mr. Abba said policy issue 2 coincides with the above-stated issue. It concerns the potential for increasing the available carryforward by an additional $2.6 million which the Welfare Division has reserved as a contingency for Medicaid expenditure fluctuations or unanticipated costs that might be incurred in Fiscal Year (FY) 1995. Mr. Abba said the contingency was created because the Medicaid expenditure estimates were prepared in mid-March, and unforeseen expenditure volatility could have significantly changed the estimates. Based upon more recent projections and as the fiscal year draws to a close, the division can more accurately forecast its expenditure patterns, and it appears the $2.6 million will not be needed. The funds could therefore be used as additional carryforward that would be used in the Medicaid budget, thus allowing for a reduction in state funds in that budget. Senator Rawson requested Mr. Abba to again summarize the decision points to be considered in this budget. Mr. Abba said the first policy issue is whether or not to approve the latest proposal from the administration regarding the IGT program. The proposal is to have intergovernmental transfers of $52,551,000 each fiscal year from various public hospitals and Washoe County. This differs from the state's current program, wherein the IGT and hospital tax programs are combined. The hospital tax will be eliminated at the end of the current fiscal year, Mr. Abba noted, and the program will then consist only of the intergovernmental transfers which are still allowed by federal law. The program will consist of DSH (disproportionate share) payments at the capped level currently allowed by federal law, in the amount of approximately $73.6 million per year. The benefits to be derived by the state will be approximately $15.7 million for each fiscal year of the biennium, and the benefits to participating hospitals will be approximately $21 million for each fiscal year of the biennium. With regard to policy issue 2, Mr. Abba said the potential exists to add $2.6 million in additional carryforward funds over and above the administration's latest proposal of $49 million, based upon a reanalysis of what the Medicaid budget will need to receive from the hospital tax account for the current fiscal year. Stating the second policy issue is relatively easy to decide, Senator Rawson addressed the first policy issue. He noted there have been a number of proposals for developing a medically needy program, which would expand the size of the Medicaid Managed Care program. It would require using funds from the Hospital Tax Account. Senator Rawson said it has been learned from monitoring congressional action there is a potential cap on federal funding in this area. He said the block grant program proposed by Congress could be regarded as potentially harmful to Nevada because of the population growth being experienced in this state. Continuing, Senator Rawson indicated he favors developing a medically needy program. He said a good part of the driving force behind the cost of health care in Nevada is associated with the uncompensated care related to the state's uninsured residents. He suggested the state's health care costs could be moderated through a medically needy program. The senator pointed out there is some concern about initiating such a program, however, because of uncertainty regarding actions that might be taken by Congress that are relevant to this issue. Acknowledging there are many complex issues that revolve around funding of the Medicaid Managed Care program, Senator Rawson proposed that the committee take action to close the relevant budgets based on the state's pursuit of the federal 1915[b] waiver (a federal program waiver in the Social Security Act, 42 U.S. Code, section 1315, subsection 1915[b]). He reminded the committee the Health Care Financing Administration (HCFA) has informed the state it does not qualify for an 1115 waiver (a federal waiver pertaining to research and demonstration projects in the Social Security Act, 42 U.S. Code, section 1315, subsection 1115). The senator said if a medically needy program were to be developed, this waiver could again be requested. As the situation exists at present, Senator Rawson continued, the budgets should be closed and authority delegated to the interim finance committee (IFC) and the interim committee on health care to develop the mechanisms required for a medically needy program; to evaluate the funding mechanisms, in particular; and to proceed with the necessary adjustments during the interim. He said this would enable the development of a well-studied, carefully thought-out program. He invited comment from the committee on this issue. Mrs. Evans said she is not acquainted with any alternative proposals, and the Assembly Committee on Ways and Means has received no information regarding such proposals. She said she is therefore not prepared at this time to make an informed judgment about the issue. She agreed the idea of a medically needy program has significant appeal, but she recalled that when the proposal was discussed in the interim committee on health care it appeared the resources for such a program were not available. Mrs. Evans agreed with Senator Rawson's recommendation to proceed with the budget closing actions on the basis of what is known at present rather than on speculation. Senator Rawson commented there is a mood of change at this time, and it is known that significant change lies ahead with regard to health care financing. He said there is a tendency to want to take advantage of the situation, which he supports with the proviso that it be done wisely. Noting she had been on the interim health care committee, Ms. Tiffany said she has mixed feelings about the situation at hand. She said she regards the 1915[b] waiver as too inflexible and emphasized her concern in that regard. She commented it is not unusual for the Legislature to be presented with important issues toward the end of the legislative session. Estimating the session will continue for several more weeks, Ms. Tiffany said there is ample opportunity to investigate the plan for indigent care. She said she is not extremely knowledgeable about alternative plans, but maintained the legislators' purpose is to learn about the issues and alternative programs that are presented to the Legislature. She further maintained it would be appropriate to call forward (for the purpose of providing testimony) the key people connected with the alternative proposals. Continuing, Ms. Tiffany said the interim health care committee is committed to having Nevada residents insured. As an example of a health care proposal currently before the Legislature she called attention to an insurance plan for small businesses, recently presented to the Senate Committee on Commerce and Labor, that would provide health insurance for as many as 30,000 to 40,000 presently uninsured Nevada residents. She said the state is moving in the right direction with regard to implementing managed care for Medicaid. Ms. Tiffany said it is incumbent upon the 1995 Legislature to examine and consider an alternative program if it is one that is appropriate for an indigent care program, if it is cost effective, if it is quality assured, and if more people can be insured under such a program. She reiterated her desire to investigate alternative proposals. Senator Rawson responded with the suggestion the standing committee on health care develop a hearing process during the next 2 to 3 weeks for the purpose of holding a hearing during which the issues can be thoroughly discussed and the authority necessary to implement elements of an alternative plan during the interim can be ascertained. He said the reason for his suggestion that the committee proceed with its budget closing recommendations at this time is that the end of the legislative session will be delayed for at least a month if the budgets are held for 2 or 3 weeks pending the results of investigating alternative proposals. He voiced the opinion there are no aspects of this issue that cannot be addressed if the Legislature provides the proper authority for legislative action during the interim. Senator Rawson reminded the subcommittee that members of the interim committee on health care had presented the best arguments possible in support of the state's request for an 1115 waiver, but were discouraged in a meeting with officials in the Baltimore HCFA office from pursuing this waiver. He said HCFA's treatment of the state's request for the 1115 waiver was extremely disappointing in that the federal agency offered no hope the state would be granted this waiver. The senator said the interim committee subsequently obtained a legal opinion as to whether or not the state could pursue other courses of action. He further stated that while it would be appropriate to prepare a better proposal and then to pursue the 1115 waiver, the budget closing process should not be delayed pending the outcome of what he termed a "long-shot" effort. Senator Raggio endorsed Senator Rawson's recommendations. He reminded the subcommittee that if the Legislature is to reach its target date of adjournment, all of these budgets should be substantially closed by May 20; otherwise, the procedure for adjournment will be delayed. He said he would therefore endorse Senator Rawson's recommendation for adoption of the Governor's most recent IGT proposal (policy issue 1, page 1, Exhibit C). He further stated he would have no objection to the standing committee on health care pursuing the matter further even during the current legislative session. However, he continued, it is essential the budgets be closed as soon as possible. Mr. Dini inquired if anything is being done in other budgets or statutory changes to alleviate the problem of a lack of indigent funds in some of the counties. Mr. Abba said this problem is addressed in the Medicaid budget. Ms. Tiffany asked if it is Senator Rawson's intention that the budgets at hand be closed and all decisions related thereto be made at this time, including the decisions concerning pursuit of the 1915[b] waiver, the Medicaid Managed Care program and the impact of the hospital provider tax. Senator Rawson replied yes. He indicated it is his intention to proceed with the budget closing actions to the extent possible at this meeting. The subcommittee's actions would be taken with the understanding the standing committee will initiate the process during the legislative session of "reviewing broader scope" and seeking authority from the Legislature to act upon proposals that might be put forth during the interim, Senator Rawson said. Ms. Tiffany requested there be at least one meeting of the health care committee prior to closing the budgets under consideration. She expressed her willingness to remain in session until August, if necessary, to "flush out" the important issues. Senator Rawson replied that while acknowledging the concerns expressed by Ms. Tiffany, it should be pointed out the budgets are not developed in a vacuum. He said the budgets were constructed over a long period of time, and many of the decisions under discussion are the result of actions taken by the health care committee and various other committees, prior to and during the current legislative session. The senator reiterated his desire to pursue the budget closing actions, but said he would allow the subcommittee to decide whether or not to proceed accordingly. Senator Coffin said he has been giving this issue a good deal of thought and has been discussing it with people who have expressed concern the administration's present strategy is limiting. He voiced support for many of Ms. Tiffany's views on the issue and said he has discussed it with her. He acknowledged the concern regarding expedition of the budget closings to facilitate adjournment of the legislative session. The senator noted the budget closing process is only at the joint subcommittee level at this time, whereas traditionally the actions of the joint subcommittee are being endorsed at the full committee level at this point in the legislative session. Senator Coffin further remarked that if the subcommittee desires to make its closing recommendations now, in the interests of time, he would not object to doing so if it is provided in the motion that prior to the full committee closure a meeting of the standing health care committee would be held or the issue would be discussed in one or both of the money committees. This would enable the process to move forward and would allow a thorough discussion on the issues involved, the senator said. He offered to put forth a motion to accomplish the actions he had proposed. Senator Rawson responded a motion would not be necessary. He stated that a hearing on this issue by the standing committee on health care will be scheduled within 1 week of today's date, specifically for the purpose of seeking to broaden the Medicaid Managed Care program through the federal 1115 waiver and to examine the financial issues involved. He said the reason he opposes linking the budget closings with further consideration by the health care committee is that regardless of the results of the standing committee's deliberations, significant time and analysis will be required to assemble a new proposal. He reminded the committee of the thousands of hours spent on pursuing the 1915[b] waiver, "all with proper decisions behind it." Continuing, Senator Rawson said a tremendous amount of resources have been invested in the process of pursuing the 1915[b] waiver. While that does not mean the Legislature should commit itself to this waiver simply because of the effort that has been put into it, he continued, it is possible for the Legislature to provide the authority to make the desired adjustments to the program during the interim. He said there is no question the targeted budget closing date of June 1 will be jeopardized if the joint subcommittee postpones actions on these budgets for a week. He commented that at some point the legislators must decide to begin the process of bringing the legislative session to a close. Senator Rawson said he will meet with staff following today's meeting to schedule a meeting of the standing health care committee for the purpose stated above. He reiterated that as long as the Legislature provides the proper authority, the health care committee will be able to make the necessary adjustments during the interim. He stated, "That will give us a much better situation in the interim, anyway, to be able to adjust to and adapt to the circumstances." Senator Raggio commented he had hoped this would not be a contentious issue, and his remarks were not intended that way. He said even if the health care committee decides it is a proper course to follow, it would not be possible to structure this budget within a reasonable time frame that would allow the state to withdraw the existing waiver application and revise the budget based on a new application for an 1115 waiver, when it has been clearly indicated the waiver will not be approved. He stressed the need to move forward with the budget closing actions in order to avoid substantially delaying the Legislature's adjournment. Stating the budget must be closed on some basis, Senator Raggio agreed in concept with the chairman's proposal that the standing health care committee commence examining another alternative, but he emphasized that to delay closing the budgets while an 1115 waiver is pursued might cause the Legislature to remain in session as late as August. Senator Raggio further stated that while he respects Ms. Tiffany's position, it is necessary to be practical and to proceed with the actions necessary to close the budgets and expedite the Legislature's adjournment. He said the proposal for an alternative to the recommendations in the Executive Budget has unfortunately been presented too late in the legislative session for the Legislature to satisfactorily process and act upon the proposal. Senator Rawson said it must be understood that if the joint subcommittee were to make a decision at this time to pursue an 1115 waiver, there is no possible way to obtain the waiver by January 1, 1996; therefore, the budget at hand must be structured as it has been in the past. He pointed out the budget can no longer be structured on the basis of having hospital tax revenues because the hospital tax has been disallowed. The single decision to pursue the 1115 waiver would create a $30- $50 million "hole" in the budget, Senator Rawson said. He noted there are already funding gaps in the budget. He stated, "This is not the kind of decision that we should make just on the idea that we are going to be able to put a great program together in a few days." Ms. Tiffany responded that if necessary she could meet the next day in a health care committee hearing. She repeated her request that one health care committee meeting be held before the joint subcommittee presents its recommendations to the full committees. She stated her desire to hear the alternative proposals. Ms. Tiffany said she appreciates the need to close the budgets and is anxious to adjourn as quickly as possible, but the legislators' purpose is to listen and therefore the alternative proposals should be heard in the time remaining during the current session. She said the legislators deserve to hear the alternative proposal to determine if a change from the budget recommendations is desired. Ms. Tiffany stated, "Shame on us if government is going so fast down the track that we can't stop it if something else makes sense, and we won't even hear if something else makes sense." Acknowledging Ms. Tiffany's concerns, Senator Rawson averred that rather than moving too quickly on this issue, the entities involved have taken part in what the senator characterized as the most methodical, time-consuming, lengthy, well-thought- out process he has seen in his history in government. He expressed unwillingness to hold a meeting of the standing health care committee before it is properly noticed and all interested parties are given the opportunity to attend. He proposed that by closing these budgets at this time an orderly process will be maintained without negatively affecting the Legislature's ability to consider alternative proposals. Senator Rawson called for a motion to proceed with the budget closing actions. He said the joint subcommittee would either continue with the budget actions or adjourn at this time, depending on the vote of the subcommittee members. MRS. EVANS MOVED THAT THE JOINT SUBCOMMITTEE CONTINUE WITH THE PROCESS OF TAKING ACTION AT THIS TIME TO FACILITATE CLOSING THE BUDGETS UNDER DISCUSSION. SENATOR RHOADS SECONDED THE MOTION. Senator Rawson called for discussion prior to the vote. Ms. Tiffany agreed the subcommittee should continue with the budget closing actions as proposed by Senator Rawson, but that the motion should include the provision there will be a health care committee meeting for the purpose of hearing alternative proposals prior to presenting the subcommittee's budget recommendations to the full committees. Senator Rawson said the motion as presented does not include the request made by Ms. Tiffany. He pointed out he has already given notice that within 1 week a health care committee will hold a hearing on this issue. Senator Coffin expressed support for the motion on the table based on Senator Rawson's promise a hearing on this issue by the health care committee will be held within the week. Noting that each house in the Legislature makes its own decision on the final closure of the budgets, he suggested Ms. Tiffany continue her argument in the Assembly while he continues to spur the argument in the Senate, albeit from a different perspective. Senator Coffin inquired if, should the standing committee obtain useful information after meeting one or more times, the IFC has authority to make changes in the budget subsequent to the Legislature's adjournment. Senator Rawson said there may be some question as to the ability to make certain changes during the interim with regard to an issue that has not been discussed or voted upon by the entire Legislature. He voiced the opinion, however, that if the Legislature provides the necessary authority to the interim committees, changes made during the interim with respect to this budget should meet the constitutional requirements with regard to the issue of authority. Senator Coffin indicated support for the motion on the table, based on the prospects of a legal opinion on the issue of interim authority having been obtained by the time the full committees consider the recommendations for closing this budget. He stated, "It could be that we could pursue the concerns of Ms. Tiffany and myself, and perhaps others, as we move along toward closure, and then find that we could still have a say in the proceedings, both with the statutory committee and with the interim finance committee." Senator Raggio said he would agree that if it is appropriate and it is determined the IFC is the proper body to authorize a change in work program or similar mechanism to take advantage of changing circumstances during the interim, such a provision could probably be included in the authorization bill. He endorsed the proposal to obtain authority for interim action on this issue. He stated it is not his intention to "ride roughshod" over anyone's suggestion, but is very mindful of the steps and the procedures necessary to expedite closure of the Executive Budget, and it is necessary to proceed with the budget closing actions at this time to facilitate the process. Mr. Allard stated as a point of order that after speaking with Mouryne Landing, Chief Clerk of the Assembly, he believes it would be appropriate, particularly with regard to an issue as controversial as the one under discussion, that the second to a motion by a member of one house be made by a member of the same house and that the vote be taken separately for each house. Senator Rawson noted it had been previously agreed the issues are to be decided on a common vote unless they are problematic or controversial, in which case a separate vote would be taken for each house. He agreed to separate the vote on this budget. Mrs. Evans stated her willingness to restate her motion to include the provision that a meeting of the health care committee will be held within the week, if there is concern on the part of subcommittee members that this should be included in the motion. She indicated such a provision is not necessary as far as she is concerned, however, and said she would take the chairman at his word with regard to scheduling the health care hearing. Senator Rawson reiterated he is giving notice the hearing of the health care committee will be scheduled as promised. No vote was taken on the preceding motion. WITH REFERENCE TO POLICY ISSUE NUMBER 1 IN THIS BUDGET AS PRESENTED ON PAGE 1 OF EXHIBIT C, MR. DINI MOVED THAT THE JOINT SUBCOMMITTEE ACCEPT THE ADMINISTRATION'S MOST RECENT INTERGOVERNMENTAL TRANSFER PROGRAM PROPOSALS. MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * WITH REFERENCE TO POLICY ISSUE NUMBER 1 IN THIS BUDGET AS PRESENTED ON PAGE 1 OF EXHIBIT C, SENATOR RHOADS MOVED THAT THE JOINT SUBCOMMITTEE ACCEPT THE ADMINISTRATION'S MOST RECENT INTER-GOVERNMENTAL TRANSFER PROGRAM PROPOSALS. SENATOR RAGGIO SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * With regard to policy issue 2, Senator Rawson said staff is recommending the $2.6 million additional carryforward from the contingency reserve for caseload fluctuations be apportioned between the 2 years of the biennium, with $1.3 million added to the carryforward in each year of the biennium. Calling attention to the "Other Issues" item on page 2 of the budget closing sheets (Exhibit C), Mr. Hettrick noted HCFA's recommendation to disallow approximately $1.6 million relating to the hospital and noninstitutional tax program administered in FY 1993. He asked if it would be advisable to retain some of the $2.6 million in contingency funds to perhaps offset a disallowance by HCFA, should it materialize. Mr. Abba said contingency funds have been reserved to address the possible disallowance. WITH REFERENCE TO POLICY ISSUE 2 IN THIS BUDGET AS PRESENTED ON PAGE 1 OF EXHIBIT C, SENATOR RAGGIO MOVED THAT THE AVAILABLE CARRYFORWARD BE INCREASED BY THE ADDITIONAL $2.6 MILLION AND THAT IT BE PHASED IN 50 PERCENT EACH YEAR OF THE BIENNIUM. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * WITH REFERENCE TO POLICY ISSUE 2 IN THIS BUDGET AS PRESENTED ON PAGE 1 OF EXHIBIT C, MRS. EVANS MOVED THAT THE AVAILABLE CARRYFORWARD BE INCREASED BY THE ADDITIONAL $2.6 MILLION AND THAT IT BE PHASED IN 50 PERCENT EACH YEAR OF THE BIENNIUM. MR. DINI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Aid to Dependent Children - Page 1195 Mr. Abba reminded the committee this budget was held at the previous meeting pending receipt of additional information regarding activities in other states in reference to the Governor's welfare reform proposals and how those states have achieved savings through similar proposals. He said the Welfare Division has information to present regarding the division's survey of other states that have implemented similar proposals, and their findings. Myla C. Florence, Administrator, Welfare Division, Department of Human Resources, noted she had testified the previous day on Senate Bill (S.B.) 428, in preparation for which the division had conducted an extensive survey of all states with regard to what their current experience is in welfare reform savings. SENATE BILL 428: Requires establishment of program for self-sufficiency of applicants for and recipients of aid to families with dependent children. As previously testified, Ms. Florence continued, little definitive information is available on this issue because states are at different phases of their experimentation with welfare reform. She referenced a document provided by the division (Exhibit D) which she said shows the research of all states having components similar to provisions in the Governor's proposal, as well as S.B. 428. Drawing attention to page 1 of the document, Ms. Florence said the "Increase Earnings Disregards" component is essentially the common element among the various proposals. She said this component in the Governor's proposal and in S.B. 428 enables individuals to retain 100 percent of their earnings for the first 3 months and 50 percent for the remaining 9 months. Footnote 1 on page 1 (Exhibit C) indicates that in Michigan, the state has seen total cost savings of approximately 1.7 percent after 8 quarters of the reform program. Footnote 2 indicates the AFDC (Aid to Families with Dependent Children) expenditures in Utah were reduced by 31 percent through implementation of a welfare reform proposal. Ms. Florence said the AFDC grant expenditures in the St. George office in Utah declined by 16 percent. She said that except for the data reported earlier on the Riverside, California welfare reform program, the data presented in the document identified as Exhibit C is the only information the division has been able to obtain from other states. Ms. Florence further testified the division has also been advised by the Department of Health and Human Services (DHHS) the department is not requiring the level of detail once required with regard to assumptions for costs and savings in the budget pages of the waiver application. Instead, the DHHS indicates a dollar amount that the state cannot exceed over the 5-year period. Ms. Florence said she had hoped to have more definitive data for the committee at this time, but it is simply not available. Reviewing the information regarding the Riverside program, Ms. Florence said it was determined the welfare costs declined 15 percent over a 3-year period as a result of implementing a reform program. Senator Rawson inquired as to the basis used by the Welfare Division for calculating the projected savings. Ms. Florence replied the agency based the calculations on a 2 percent slowing of the caseload growth. The senator observed the division has been very conservative in its projected savings and advocated continued use of that approach at this time. With reference to the welfare reform proposal recommended by the Governor, Ms. Tiffany asked Ms. Florence how retention of income by AFDC recipients would affect their medical benefits. Ms. Florence replied there would be no impact on the medical benefits, even after a period of ineligibility, because under the waiver the recipients retain their eligibility and therefore retain their eligibility for Medicaid. When cash assistance is discontinued, recipients still remain eligible for Medicaid for 6 to 12 months, Ms. Florence stated. Upon further questioning Ms. Tiffany ascertained that under the 1915[b] waiver, nothing in the proposed welfare reform program would affect the eligibility of recipients to receive Medicaid. Senator Raggio questioned Ms. Florence regarding the manner in which the control group for the Welfare Reform Demonstration Project will be selected, assuming the 1915[b] waiver is granted. Ms. Florence indicated the waiver will probably be granted because it is consistent with components of welfare reform programs in other states. She said the latest information the division has received from the federal government is that the state's control group must include at least one-third of the Clark County (welfare) population. She noted the federal government has provided several different interpretations of the preferred number of participants in the control group. Ms. Florence said that as the waiver is finalized, pending legislative approval, the division will be negotiating with the federal government on this issue within the finalized budget. Continuing, Ms. Florence said the determination as to who would continue to be governed by the current rules would be made by random selection of individuals as they apply. Senator Raggio inquired if this might mean two families living next door to one another could be under two different welfare systems. Ms. Florence indicated this is a possibility. She remarked, "That's really the difficulty with these waiver programs." Mrs. Evans expressed appreciation for Ms. Florence's efforts in compiling the charts pertaining to welfare reform initiatives. She said the information clarified Ms. Florence's testimony at the previous hearing regarding the lack of data from other states on their welfare reform proposals, because the majority of the programs shown on the charts (Exhibit C) were implemented as recently as 1994 and therefore have not established a track record. Continuing, Mrs. Evans raised the issue of the NOMADS (Nevada Operations Multi Automated Data Systems) project because it is understood to be the key reason for the delay in implementing the welfare reform program. She asked how many components of NOMADS need to be in place and functioning well in order to implement the program. Ms. Florence responded the real impact on NOMADS pertains to the issue raised by Senator Raggio regarding assigning of test and control and having different eligibility determinations within the system to address that issue. She said the current design is not the issue, but rather the change to the design that will have to occur after the system is operational. The most significant part of that has to do with the determination of test and control groups and assuming two different eligibility tracks, she reiterated. Ms. Florence said she does not believe there is anything else (other components of the NOMADS project that need to be in place prior to program implementation) other than an adjustment for the earnings disregards that will be required. Mrs. Evans said the basis for her question is that the committee has been focusing on the October 1 deadline, but that date relates only to the child support enforcement component. She said the timetable for the other components of the program must be considered, as well. Ms. Florence replied the division believes the other elements, while they were also originally projected for October 1, will probably come on-line closer to April 1996, and the January 1997 implementation date therefore still appears realistic to the agency. Referencing earlier comments regarding the possibility of modifying the Governor's welfare reform proposal in the Senate, Mr. Dini suggested the Assembly work with the Senate on this issue to avoid unnecessary debate. Senator Rawson concurred. He said if anything, the proposals that would be considered by the Senate are somewhat more conservative than the Governor's plan, tending "to push the caseload reductions a little more," and therefore should not have a negative financial implication that might interfere with the budget closings. Senator Rawson called for motions from the Assembly and the Senate regarding the subcommittee's recommendations for this budget. SENATOR COFFIN MOVED TO RECOMMEND ACCEPTANCE OF THE CASELOAD PROJECTIONS CURRENTLY IN USE BY THE WELFARE DIVISION AND ACCEPTANCE OF THE FINANCIAL IMPLICATIONS OF THE WELFARE PROPOSALS AS PRESENTED IN THE GOVERNOR'S RECOMMENDATIONS FOR THIS BUDGET. THE MOTION INCLUDES THE CASELOAD ADJUSTMENTS OUTLINED ON PAGE 9 OF EXHIBIT C. SENATOR RAGGIO SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * MRS. EVANS MOVED TO RECOMMEND ACCEPTANCE OF THE CASELOAD PROJECTIONS CURRENTLY IN USE BY THE WELFARE DIVISION AND ACCEPTANCE OF THE FINANCIAL IMPLICATIONS OF THE WELFARE PROPOSALS AS PRESENTED IN THE GOVERNOR'S RECOMMENDATIONS FOR THIS BUDGET. THE MOTION INCLUDES THE CASELOAD ADJUSTMENTS OUTLINED ON PAGE 9 OF EXHIBIT C. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Nevada Medicaid - Page 1215 Mr. Abba said the first policy issue to be considered by the subcommittee has been somewhat decided already with the tentative approval of the Hospital Tax Account. The base budget adjustments on the closing documents (pages 11-12, Exhibit C) incorporate the additional carryforward funds that were recommended, with the exception of the $2.6 million. An adjustment to the closing sheets would be required for this item. The closing sheets (page 12, Exhibit C) also include the revisions that would have to be made for the latest Intergovernmental Transfer proposals, Mr. Abba stated. He noted the additional carryforward amount would be increased by $2.6 million, which would be reflected in adjustments to the base budget as an additional General Fund savings of $1.3 million in FY 1996 and $1.3 million in FY 1997 in accordance with the committee's determination to apportion the $2.6 million over both fiscal years. Senator Rawson noted the actions to be taken on this policy issue correlate with the earlier actions taken (with regard to the intergovernmental transfers). SENATOR RAGGIO MOVED TO RECOMMEND APPROVAL OF THE ADMINISTRATION'S MOST RECENT INTERGOVERNMENTAL TRANSFER PROPOSAL FOR THIS BUDGET, WITH THE $2.6 MILLION REDUCTION INDICATED ABOVE. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * MR. HETTRICK MOVED TO RECOMMEND APPROVAL OF THE ADMINISTRATION'S MOST RECENT INTERGOVERNMENTAL TRANSFER PROPOSAL FOR THIS BUDGET, WITH THE $2.6 MILLION REDUCTION INDICATED ABOVE. MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Prior to the vote on the above motion, Mr. Dini requested an explanation of the reduction in county reimbursement funds of $1.1 million in FY 1996 and $2 million in FY 1997 as shown on page 11 of the budget closing sheets (Exhibit C) for decision unit M-200. Mr. Abba said the reduction is based on the caseload reductions, and the figures shown represent reductions in the amount the counties would have to transfer to the Medicaid program to help pay for the county indigent program. Mr. Abba next explained decision unit M-100. He said there are no closing adjustments displayed for this decision unit, but the policy issue involved is whether or not the subcommittee wishes to delay Consumer Price Index (CPI) rate increases for non-Boren medical providers by 3 months. In lieu of providing a rate increase July 1, 1995, the increase would be delayed until October 1, 1995. Within the Medicaid budget under decision unit M-100 are rate increases for Medicaid providers mandated to receive CPI increases in compliance with the federal Boren amendment (hospitals and long-term care providers), Mr. Abba continued. He said the Executive Budget recommends a discretionary 2.5 percent CPI rate increase for both fiscal years of the biennium for the other providers (physicians, hospital outpatient and other non-Boren medical providers). Mr. Abba said if the decision is to delay the rate increase by 3 months, savings of approximately $600,000 in FY 1996 and $1.4 million in FY 1997 (50/50 state/federal) are projected. Senator Rawson inquired if there is a delay in rate increases for the Boren providers. Mr. Abba replied it is not recommended to delay the increase for these providers. Senator Rawson remarked staff has recommended the delay in non-Boren rate increases as a reasonable approach to achieve some savings. He asked Ms. Florence if the Welfare Division has any concerns regarding this proposal. Ms. Florence indicated there might be concern among the Medicaid providers, who already regard the level of state payments as inadequate. She said that as a practical matter, however, by the time the budgets are closed, the legislative session ends and the necessary steps are taken to implement the rate increase, there is often a delay of 2 or more months, anyway. She noted that after the close of the last legislative session there were many rate increases that did not take effect until October or later. Senator Rawson said if the rate increase is approved with the 3-month delay, the Welfare Division would be expected to begin the process of implementing the rate increases so they will be in place on the effective date. Ms. Florence replied the division would certainly do so. SENATOR RHOADS MOVED TO RECOMMEND APPROVAL OF STAFF RECOMMENDATIONS REGARDING POLICY ISSUE 1 IN DECISION UNIT M-100 AS PRESENTED ON PAGE 12 OF EXHIBIT C. SENATOR RAGGIO SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * MR. HETTRICK MOVED TO RECOMMEND APPROVAL OF STAFF RECOMMENDATIONS REGARDING POLICY ISSUE 1 IN DECISION UNIT M-100 AS PRESENTED ON PAGE 12 OF EXHIBIT C. MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Regarding the second policy issue in decision unit M-100 (page 12, Exhibit C), Mr. Abba said in the revised Medicaid budgets submitted by the Budget Division in April (pages 19-26, Exhibit C) there is a proposed increase for the Medicaid Fiscal Agent (Blue Cross/Blue Shield) of 6 percent in FY 1996 and 3.5 percent in FY 1997. No such increases were provided in the existing budget, he noted, and it appears the failure to provide the increases may have been an oversight. He pointed out the current contract with the fiscal agent requires a reasonable CPI rate increase. Continuing, Mr. Abba said staff recommends that the rate increase be consistent with the rate increase provided for the non-Boren providers of 2.5 percent and that the effective date be in October, also for the sake of consistency. This would be in addition to the current budget recommendations, Mr. Abba said. Calling attention to the three scenarios presented on page 13 (Exhibit C) to address this item, he said under the third scenario the 2.5 percent increase each year, with an effective date of October 1, 1995, would provide for an increase in the budget of $208,378 in FY 1996 and $275,498 in FY 1997. MRS. EVANS MOVED TO RECOMMEND APPROVAL OF STAFF RECOMMENDATIONS AS INDICATED ABOVE AND AS PRESENTED ON PAGES 12-13 OF EXHIBIT C. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR RHOADS MOVED TO RECOMMEND APPROVAL OF STAFF RECOMMENDATIONS AS INDICATED ABOVE AND AS PRESENTED ON PAGES 12-13 OF EXHIBIT C. SENATOR RAGGIO SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Regarding item 2 in decision unit M-100 (page 13, Exhibit C), Mr. Abba noted that in the revised budget there is an additional cost for CPI rate increases for pharmacy providers, who must be reimbursed costs for pharmaceuticals that are supplied. He said the original budget included a 5 percent increase in FY 1996 and a 5.6 percent increase in FY 1997. When the Welfare Division recalculated its Medicaid projections for caseload and cost-per-service utilization rates, he continued, staff requested that other areas that might have an impact on the budget also be examined. Continuing, Mr. Abba said the division examined the rate increases provided in the Executive Budget for the pharmacy providers, and it was determined that based upon historical information, the rate increases for reimbursement of their costs were too low. Mr. Abba said the revised budget includes a 7.85 percent increase for both fiscal years of the biennium, and that cost would also increase the budget by approximately $895,000 in FY 1996 and $1.3 million in FY 1997. MRS. EVANS MOVED TO ACCEPT THE ADMINISTRATION'S PROPOSAL TO ADJUST THE RECOMMENDED CPI INCREASE FOR PHARMACY PROVIDERS TO 7.85 PERCENT FOR BOTH FISCAL YEARS OF THE BIENNIUM IN ACCORDANCE WITH THE REVISED MEDICAID BUDGET AND AS PRESENTED ON PAGE 13 OF EXHIBIT C. MRS. CHOWNING SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR RHOADS MOVED TO ACCEPT THE ADMINISTRATION'S PROPOSAL TO ADJUST THE RECOMMENDED CPI INCREASE FOR PHARMACY PROVIDERS TO 7.85 PERCENT FOR BOTH FISCAL YEARS OF THE BIENNIUM IN ACCORDANCE WITH THE REVISED MEDICAID BUDGET AND AS PRESENTED ON PAGE 13 OF EXHIBIT C. SENATOR RAGGIO SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * With reference to decision unit M-200, Caseload/Demographics (page 13, Exhibit C), Mr. Abba said the first policy issue relates to the county reimbursements and whether or not the subcommittee wishes to adjust the state's coverage cap of $714 for Medicaid SSI (social security insurance) recipients residing in long-term care institutions. He said the Executive Budget recommends that the state continue to pay medical costs for Medicaid recipients residing in long-term institutions who have incomes up to $714 per month. The participating counties in the county match program would continue to pay the long-term care costs for SSI recipients above the $714, up to the 300 percent SSI limit which is currently $1,374. Mr. Abba noted there has been discussion at several meetings regarding adjusting the state's cap incrementally or indexing it on an annual basis. The cap, which has remained at $714 for a number of years, has shifted costs for long-term care to the counties as the income of recipients residing in long-term care facilities rises above the $714 level. Mr. Abba further explained that based upon the revised Medicaid budget, the county match program for FY 1996 is approximately $26.3 million and for FY 1997, approximately $31 million, in total. These amounts are split 50/50 between county monies that flow into this budget and federal Title XIX funds. Referencing the four scenarios presented in item 1 of decision unit M-200 (page 13, Exhibit C), Mr. Abba said under scenario A, if the 2.7 percent increase in the SSI benefit provided by the federal government were to be applied to the state's current cap of $714, the cap level would be increased to $733. He said a certain number of long-term care cases currently paid for by the counties would then become a state responsibility, and the additional cost to the state would be approximately $48,000 per year. Under scenario B, Mr. Abba continued, if the 2.7 percent SSI increase were to be applied to the old SSI level (300 percent of the SSI limit) of $1,338, the new cap would be $1,374. That is the level up to which the counties must pay for eligible residents residing in long-term care institutions. If the difference between the old 300 percent level and the new 300 percent level ($36) is applied to the state-capped amount of $714, the new level would be $750. The cost for the additional cases that would become a state responsibility under this scenario is estimated at $212,284 in FY 1996 and $249,477 in FY 1997. This scenario would result in essentially a status quo situation in terms of the cases that are the responsibility of the state versus those that are the county's responsibility. Mr. Abba said in scenario C the state's coverage cap is increased to $814 from $714. The cost to the state would increase by approximately $3.3 million in FY 1996 and $4 million in FY 1997. Scenario D is the request presented by the Nevada Association of Counties (NACO). Under this scenario, the state's cap would be raised to $914 from $714, which would shift a significant number of cases to the state. The estimated cost is approximately $6.8 million in FY 1996 and $8 million in FY 1997. Senator Rawson remarked this is a complex issue in that all of the counties must participate if the state is to qualify for federal funds. There are currently three counties that will probably not be able to meet their financial responsibilities for indigent care, he noted. He acknowledged the problems faced by the county when they reach the cap, but he expressed reluctance to raise the cap significantly because the state would thereby be committed to the increased level of support. If the counties are subsequently forced to opt out of paying for indigent care, the senator continued, the entire program will be lost. Continuing, Senator Rawson said the State of Nevada has reached the point at which a serious look at the demands placed on the local areas is warranted. He said this will probably entail a significant amount of time. Senator Rawson said the policy decision to be made is whether or not to raise the state's coverage cap of $714 for Medicaid SSI recipients residing in long-term care institutions. He voiced the opinion an adjustment should be made to the cap to keep pace with inflation, but noted this would be precedent-setting. He stated, "Either by appropriating the Medicaid or some other mechanism, we need to reserve enough money to be able to handle their program." The senator said a serious analysis of the entire issue then needs to be performed and suggested that it be undertaken as an interim study. Mr. Dini suggested the study proposed by Senator Rawson should indicate to the Legislature a satisfactory level of increase that would be greater than the $750 proposed in scenario B but less than the $814 in scenario C, in order to provide adequate relief to the counties that are currently having difficulty paying their portion of the indigent care costs. Senator Rawson said his greatest concern is whether or not a mechanism exists to audit the counties' participation. Senator Coffin inquired as to the possibility of legislative action to change the counties' tax situation to provide additional funds that will enable them to meet their responsibilities for indigent care. Senator Rawson indicated there appears to be nothing preventing such action. He remarked the Legislature would essentially be establishing an indigent contingency fund. Mr. Allard asked if, should the committee adopt scenario B, the three counties currently unable to pay for indigent care would then be able to do so. Michael J. Willden, Deputy Administrator, Administrative Services, Welfare Division, Department of Human Resources, said the situation for the current year would not be affected. He said in Lyon County's case, the county has informed the division there are no funds available to send to the state through the end of the current fiscal year. Mr. Allard asked if scenario B would solve the county's problem for FY 1996. Mr. Willden replied he does not believe so. Continuing, Mr. Allard said it is his understanding the federally established poverty level is $750. He asked if this is correct. Ms. Florence replied no. She said that is the base that was established in 1979 for 300 percent of SSI at that point in time. Mr. Allard inquired as to the current poverty level. Ms. Florence said 300 percent of SSI is $1,356; the state never adjusted from the $714 level, and the division has retained that amount as its threshold for determining eligibility for long-term care. She explained the federal poverty level is not represented among the figures in the four scenarios. Upon further questioning Ms. Florence said the Welfare Division will furnish the information regarding the current federal poverty level. Senator Rawson proposed making a base adjustment to the $750 level, in scenario B, providing Medicaid the authority to act as needed to prevent the program from disintegrating during the upcoming biennium; and commissioning an interim study of this issue to provide the next Legislature with recommendations regarding this issue. He invited response from the committee on this proposal. Senator Raggio requested further clarification of the problem. He inquired as to the facts regarding the three counties that have indicated they do not have the resources to pay for indigent care. Mr. Willden said according to the accounting records of the Welfare Division, there are three counties at present that are in a deficit situation. Lyon County has officially notified the division via letter that the county cannot remit additional funds until at least the beginning of the next fiscal year. Mr. Willden explained the way in which this program functions. He said each county advances the Medicaid program the nonfederal share of the cost of their long-term care patients. The division draws from the county's advance until reaching the level of balance in the account that is termed "a 30-day supply of money." At that point the division sends the county a request for more funds. The division provides the counties an accounting each month of the manner in which the county funds were expended by the state. Senator Raggio asked if, when counties indicate they cannot pay their portion of the costs for this program, they are actually saying they do not wish to pay the costs, do not have the cash to do so or will pay later. Mr. Willden replied the counties are saying they do not have the funds in their budget to pay for the indigent care rather than that they do not wish to pay. Ms. Florence said this issue affects more than the three counties under discussion. She noted both Clark and Washoe counties have indicated to the Welfare Division that they anticipate deficits in the upcoming biennium. She said the increase in costs of long-term care is a burden on all counties. Senator Rawson said there is a mechanism to address the problem, which is a pending legislative measure, Senate Bill (S.B.) 471. He said the debate on this issue can be pursued in the hearing on this measure. The other option, he stated, would be to make an appropriation to Medicaid at this time to enable the agency to address the problem. It was his suggestion the matter be pursued in the hearing on S.B. 471, where if necessary the bill can be modified to accomplish the committee's intentions relative to the indigent care situation in the counties. SENATE BILL 471: Revises provisions governing eligibility for coverage for long-term care under state plan for assistance to medically indigent. SENATOR COFFIN MOVED TO ADOPT OPTION B AS PRESENTED IN ITEM 1 OF DECISION UNIT M-200 ON PAGE 13 OF EXHIBIT C, AND TO FURTHER PURSUE THIS ISSUE THROUGH S.B. 471. SENATOR RAGGIO SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * MR. DINI MOVED TO ADOPT OPTION B AS PRESENTED IN ITEM 1 OF DECISION UNIT M-200 ON PAGE 13 OF EXHIBIT C, AND TO FURTHER PURSUE THIS ISSUE THROUGH S.B. 471. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RHOADS WAS ABSENT FOR THE VOTE.) * * * * * Senator Rawson noted Senator Rhoads was not present for the vote and should be indicated as "absent, excused" for the remainder of the meeting. Prior to the vote on the above motion, Mrs. Evans remarked there is a much larger policy question involved with this issue. She said the issue involves such questions as what should be done on a continuing basis in terms of state versus county responsibility, the counties' ability to pay and the property tax cap for counties. Mrs. Evans said she would somewhat reluctantly support the proposal to adopt option B as a temporary measure, but the question deserves further attention and debate. Observing that a hearing will be held on S.B. 471, Senator Rawson requested staff to assemble as much information as possible regarding this issue in preparation for the hearing. He further requested that NACO assist the fiscal analysis staff in obtaining the necessary information from the counties. Mr. Hettrick suggested the subcommittee be presented with additional scenarios indicating what the costs would be given several different cap levels above $750 and below $814, with the goal of achieving a level at which the counties could handle the situation without the necessity for additional taxes. He stated, "I think we're opening a huge can of worms if we get into that and try to make that a policy decision on the tax issue." Senator Rawson proposed that the committee proceed with the motion as presented. He said the proviso can be made that the budget can be reopened if necessary. He further stated S.B. 471 will allow further adjustments to be made, and the Senate and Assembly will work together to expedite action on this issue. The senator said the decision to approve option B would not limit the committee in its ability to pursue another course of action. Mr. Dini said the problem is related to the demographics of the state, with an aging population and senior citizens moving into the state who do not have the income to pay for long-term care. He said this is occurring in the rural areas and the problem is probably even greater in Clark and Washoe counties. He voiced the opinion the policy decision to be made, perhaps through S.B. 471, is to take into account the demographics of the aging population in Nevada. Senator Rawson said Mr. Dini's point is valid and well stated, and he said the hearing on S.B. 471 will be scheduled as soon as staff informs the committee enough information has been assembled to facilitate a decision by the committee. Following the vote subsequent to discussion on the above motion, Mr. Abba reviewed the adjustments and recommendations of staff on page 14 of the budget closing sheets (Exhibit C). Regarding item 1 in decision unit M-200, Caseload/Demographics, Mr. Abba said the closing adjustments reflected on pages 11 and 12 of the budget closing sheets (Exhibit C) include the revised caseload adjustments that were run as part of the Medicaid projection model. The revised caseloads have been approved in the AFDC budget, and the revisions also include the most current cost-per-service and utilization rates, Mr. Abba stated. He said in decision unit M-200 there are significant reductions because of the reduced caseloads. Continuing, Mr. Abba said the adjustments in M-200 also include previous actions approved by this subcommittee as well as the Senate Committee on Finance and the Assembly Committee on Ways and Means. Closing actions taken on the Aging Services Division's Senior Services budget included reductions in the Purchase of Services costs for the Community Home-based Initiatives Program (CHIP) of $134,282 in FY 1996 and $231,744 in FY 1997. Mr. Abba said decision unit M-200 also includes six new positions recommended over the biennium for the Medicaid program, primarily for caseload issues. Two nurse positions have been recommended for FY 1996 and two for FY 1997. A Management Analyst for the program and one clerical support position have also been recommended. The positions are recommended to be effective July 1, 1995, Mr. Abba stated, and staff recommends delaying the hiring of these positions for 3 months. He said the 3-month delay would achieve a savings of approximately $39,000 in FY 1996 and $21,000 in FY 1997. Senator Rawson proposed that several decision units be included in a single voting action. Senator Raggio suggested the committee vote on the remaining adjustments in decision unit M-200 before proceeding to the next decision unit. SENATOR RAGGIO MOVED TO RECOMMEND ACCEPTANCE OF STAFF ADJUSTMENTS AND RECOMMENDATIONS IN DECISION UNIT M-200 AS PRESENTED ON PAGES 11-14 OF EXHIBIT C. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RHOADS WAS ABSENT FOR THE VOTE.) * * * * * MR. HETTRICK MOVED TO RECOMMEND ACCEPTANCE OF STAFF ADJUSTMENTS AND RECOMMENDATIONS IN DECISION UNIT M-200 AS PRESENTED ON PAGES 11-14 OF EXHIBIT C. MR. DINI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Mr. Abba explained the adjustments in decision units M-530, Child Health Assurance Program (CHAP), and M-555, Early and Periodic Screening, Diagnosis and Treatment (EPSDT). He said the adjustments in these modules are based upon new information regarding caseload that was processed as part of the recent Medicaid projections. Those in decision unit M-530 are minor technical adjustments. Continuing, Mr. Abba said decision unit M-555 contains recommendations for significant reductions, totaling approximately $3 million in FY 1996 and $4.2 million in FY 1997. He said the reductions are based on further review of the level of EPSDT screening that the Welfare Division is actually performing versus the level that was indicated when the original budget was developed. Due to computer programming problems, Mr. Abba stated, the division estimated it was screening only approximately 39 percent of the children eligible for the EPSDT. Subsequent to a review of more recent information it was determined the actual level of screening by the division is at 64 percent. The division is well situated to meet the mandatory 80 percent screening level that will be effective later this year, Mr. Abba said. As stated in the budget closing sheets, "The significant difference [in percentage of screenings] appears to be a result of computer programming problems...." MRS. EVANS MOVED TO RECOMMEND ADOPTION OF STAFF ADJUSTMENTS AND RECOMMENDATIONS IN DECISION UNITS M-530 AND M-555 AS PRESENTED ON PAGE 14 OF EXHIBIT C. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR RAGGIO MOVED TO RECOMMEND ADOPTION OF STAFF ADJUSTMENTS AND RECOMMENDATIONS IN DECISION UNITS M-530 AND M-555 AS PRESENTED ON PAGE 14 OF EXHIBIT C. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RHOADS WAS ABSENT FOR THE VOTE.) * * * * * Mr. Abba explained decision unit M-598, Rite of Passage, on page 14 (Exhibit C). He reminded committee members that in previous meetings they were notified of a potential additional cost to the Medicaid program related to the state's having to assume Medicaid costs for Title IV-E eligible children housed in the Rite of Passage (ROP) program. The costs are not included in the Executive Budget and are not reflected in the closing sheets, Mr. Abba stated. Continuing, Mr. Abba said the Welfare Division estimated the potential costs which the Health Care Financing Administration (HCFA) has indicated the state must cover at $600,000 in FY 1996 and $628,000 in FY 1997. The Title IV-E eligible children are placed in Nevada by various California counties, he noted. Mr. Abba said the division also has received notification from Rite of Passage staff they will do everything possible to avoid adding cost to the Medicaid program. He said ROP has provided some historical information indicating they are currently spending approximately $75,000 per year on medical costs for youths participating in the ROP program. Mr. Abba observed it is difficult at this time to determine how much the out-of-state ROP program participants might cost the State of Nevada in future years because there is no history or data on which to base projections. He said staff recommends that a maximum of $75,000 be appropriated for each year of the biennium to provide the required Medicaid coverage. He noted that in the modified capping language that has been approved in the Appropriations Act, the Welfare Division has in the past been allowed the opportunity to seek contingency funds from the IFC during the interim in similar circumstances wherein the costs of mandated coverage of a group of eligible participants were not known during construction of the budget. Mr. Abba said this applies in cases wherein there is no other savings within the budget to cover the costs. He said the ROP situation would fall within the modified capping language that currently exists, and staff recommends using that mechanism in this situation. Senator Coffin cautioned against sacrificing the quality of medical care administered to ROP program participants for the sake of minimizing the Medicaid costs. He said this could be detrimental to a youngster who has been injured and might lead to larger medical costs later on. The senator said the action taken on this matter should not provide incentive to minimize the costs in order to continue the program. Senator Rawson concurred. Mr. Dini said a date should be specified to avoid assuming liability for coverage of ROP participants previously under contract. He noted there is a former ROP participant from California who has been brain-dead for several years and is in long-term care in Oakland, California. Senator Rawson inquired if the Welfare Division has the ability to monitor the Medicaid costs. Mr. Willden replied the welfare administration is working with the ROP accountant and the Nevada Medicaid deputy to develop a tracking system that will provide this capability. Noting the ROP youngsters have not yet made formal application for Nevada Medicaid benefits, he said when they do apply their eligibility will begin with the date of application and up to 90 days prior to the date of application if they have a covered Medicaid cost. Senator Rawson asked if the Welfare Division administration is satisfied with the staff recommendations proposed for this decision unit. Ms. Florence replied yes, given that the division has the ability to return to the Legislature should unforeseen costs be incurred. Senator Rawson said that prerogative is understood. MRS. EVANS MOVED TO RECOMMEND ADOPTION OF DECISION UNIT M-598 IN ACCORDANCE WITH STAFF RECOMMENDATIONS AND ADJUSTMENTS AS OUTLINED ON PAGE 14 OF EXHIBIT C AND AS STATED ABOVE. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR RAGGIO MOVED TO RECOMMEND ADOPTION OF DECISION UNIT M-598 IN ACCORDANCE WITH STAFF RECOMMENDATIONS AND ADJUSTMENTS AS OUTLINED ON PAGE 14 OF EXHIBIT C AND AS STATED ABOVE. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RHOADS WAS ABSENT FOR THE VOTE.) * * * * * Mr. Abba said the recommended adjustments in decision unit E-400 are technical and incorporate the projected Medicaid savings from the amended Adult Group Care Waiver Program that is within the Aged and Blind budget. He reminded the committee this budget had been reviewed and approved the previous week. The estimated savings are approximately $240,000 in FY 1996 and $327,000 in FY 1997. Mr. Abba next reviewed the policy issues and staff recommendations in decision unit E-401, Medicaid Managed Care after providing an update on the status of the federal 1915[b] managed care waiver. He said the Welfare Division submitted its waiver request to HCFA on March 30, 1995 and is anticipating the request for proposal (RFP) will be released the week of May 29, 1995. Continuing, Mr. Abba said the closing adjustments for decision unit E-401 incorporate the administration's proposed revisions that eliminate the Medicaid HMO premium tax in the Hospital Tax Account and also incorporate the modifications due to caseload adjustments. He said the Medicaid "tail" cost, which is the one-time appropriation provided for in S.B. 214, will be reduced from approximately $13.4 million to $12.8 million. SENATE BILL 214: Makes appropriation to welfare division of department of human resources for Nevada Medicaid managed care program. Mr. Abba reminded the committee the Welfare Division had been requested to provide the committee information on any last-minute changes or issues regarding the waiver process. He said the information was submitted earlier that week. With reference to this information, Ms. Florence said the division continues to pursue the implementation schedule that was previously reviewed with the committee. Since the last discussion on this issue, the division has held the request for information (RFI) session with potential bidders. The April 14 session was attended by approximately 50 people, and the responses to the RFI were received on May 1. Ms. Florence said the division is currently in the process of reviewing the RFIs in an effort to finalize the RFP, which is expected to be released during the last week of May 1995. Continuing, Ms. Florence made note of the issue involving alternative proposals to the welfare reform program recommended by the Governor. She also noted the division has been corresponding with the University of Nevada School of Medicine in efforts to further define the school's role with regard to the managed care program. She called attention to a letter received by the Nevada Association of Hospital and Health Systems stating the association's opposition to the 1915[b] waiver and urging the state to continue pursuit of an 1115 waiver. Ms. Florence said the division's position is that it is still pursuing the course of action designed and developed by the standing health care committee and will proceed in that manner until directed by either the Legislature or the executive branch to do otherwise. Senator Coffin asked Ms. Florence if she believes the 1915[b] waiver can be obtained as quickly as it was originally anticipated. Ms. Florence replied it is always difficult to predict what the federal government will do. At the time the discussions on this waiver were begun many months ago, HCFA had pledged to process waivers within 90 days pending any clarification of questions that might be required. Ms. Florence said President Clinton and DHHS Secretary Donna Shalala had committed to expediting waiver applications, particularly waiver 1915[b] applications. However, recently the Welfare Division has been advised that some of the waiver applications are taking 5 to 9 months to process, she stated. In discussions with the regional office, the division has been informed the state's waiver application appears to be acceptable, but a financial review has not yet been performed. Ms. Florence said it is her hope the waiver will have been processed well before the implementation date of January 1996. In questioning with regard to decision unit E-401, Ms. Tiffany referenced a letter from the medical school to the Welfare Division that she said was quite alarming. She said the school's participation in the Medicaid Managed Care program must be clarified for the Welfare Division prior to the division's issuance of an RFP. She suggested this needs to be done by the committee because if some of the requests proposed by the school of medicine as requirements are actually implemented, serious problems would ensue with respect to this program. Ms. Tiffany requested that the issue be addressed by the committee at this time. Senator Rawson invited response from Ms. Florence regarding the letter from the school of medicine. Ms. Florence said the division has proceeded with its understanding of the medical school's role in this program, which is that bidders would be encouraged to enter into arrangements with the school of medicine and would be given preference points in the review of the RFP. She said recent correspondence from the medical school suggests something more than those assumptions. Secondly, she continued, the interim health care report actually indicates conflicting roles for the medical school, from providing preference to requiring preference. Continuing, Ms. Florence said the Welfare Division requires direction from the Legislature on the relevant issues, but is continuing on the course that has been taken based on the testimony provided in the interim health care committees. Senator Rawson noted the interim committee had taken an action requiring the medical school to be given the opportunity to participate with any entity that is awarded the contract. He said he has seen the letter referenced by Ms. Tiffany and has been meeting with representatives from the school of medicine and the Governor's Office regarding how that requirement should be structured. He remarked the letter from the medical school was sent in response to questions directed to that institution, and it is recognized the school's position is stated strongly in the letter. The senator said this issue needs to be clarified and defined because the time for issuance of the RFP is close at hand. Senator Rawson said the interim committee took action that would assure maintenance of a patient base for the medical school programs, and the preference method probably assures such a base. He said there were other areas on which the interim committee took action in an effort to assure that certain standards are met in the development of this program. One of the actions was a mainstream requirement that a managed care facility or plan that would cater only to Medicaid patients not be developed. The danger in doing so would be the development of an inferior program that would provide an inferior quality of medicine to indigents or welfare recipients, Senator Rawson remarked. He said this would be intolerable and unacceptable, and he has therefore held firm to the concept of a mainstream requirement. Continuing, Senator Rawson said in the interests of being able to develop sufficient competition to provide a competitive market, it may be necessary to allow time for participants in the program to meet a mainstream requirement. He said it appears reasonable to specify a certain date or time by which prospective bidders would be able to meet the mainstream requirement. Senator Rawson said he feels strongly that the indigents and welfare recipients must be treated the same as other patients. He said there are other issues involved, and it is his opinion there are a number of forums in which the issues that are of concern can be resolved. Ms. Tiffany stated her desire to more clearly specify what is involved in this issue. She said her concern on the first "requirement" indicated by the school of medicine is that it was her understanding in deliberations of the interim committee that the medical school would be treated no differently than would anyone awarded the contract. The contract would include capitation, she said, and would place the primary care provider at risk. Ms. Tiffany said the medical school in the letter under discussion has requested a "special carve-out formula" that does not put the school at risk but gives it a 95 percent guarantee. She insisted that is not the intent (of the health care committee). Senator Rawson said he shares Ms. Tiffany's understanding of the committee's intent, but he noted there are extra costs associated with the medical school because of the education component that exists. He suggested the education component should be handled through a line item in the university system budgets. He expressed agreement with Ms. Tiffany's view the medical school should be treated the same as other providers with regard to the capitation rates. Ms. Tiffany said the second part of her concern is that the school of medicine requested to be allowed to use its own multi-specialty group, which is not part of what she understands to be the intent of the health care committee. According to her understanding of the committee's intent, the medical school would be included as a primary care provider, the same as any other primary care provider, and the HMO would then use its own multi-specialty group. She said if the medical school is allowed to do what it is requesting, the HMO would not be able to control its costs because it is not that organization's multi-specialty group that is being used. She reiterated it is her belief the medical school inclusion was for primary care, not the school's own multi-specialty group. Senator Rawson stated he does not believe Ms. Tiffany's assumption is entirely accurate. He said an 1115 waiver was approved for the medical school to establish its program, and the school is currently treating 20,000 or more patients out of the 46,000 to 48,000 patients if one considers fee-for-service and capitated patients. With that, the senator continued, the medical school has primary care teaching responsibility, but that is phased directly into the specialty programs. He further stated, "They have referring networks that are established, and it is important to maintain that." He said otherwise the entire teaching relationship is disrupted. Ms. Tiffany averred the interim health care committee had not included the specialty program provision in what the committee considered to be its 3 percent savings, and it was not the original intention according to her understanding. She said the medical school's request is a special requirement that was not included in the interim committee's actions. She voiced the opinion the HMOs should not be held hostage to such a requirement, but should have the discretion to allow the medical school to use its own multi-specialty group if it so chooses, since the HMO and not the school is responsible for the utilization review. Senator Rawson countered with the observation the medical school has been operating a managed care program with an 1115 waiver for over 10 years. Ms. Florence offered that the original primary care case management program was established under a 1915[b] waiver over 10 years ago; however, that waiver expired 5 or 6 years ago because a waiver is no longer required to operate a primary care case management program since it is not a capitated, fully at-risk program for the broad array of services. Senator Rawson inquired if the state is still capitating the medical school. Ms. Florence replied, "For the four services that they provide." She relayed the point made by Christopher Thompson, Administrative Services Officer, Health Care Financial Analysis Unit, Department of Human Resources, that the waiver is not required for voluntary capitation programs. Senator Rawson said his point was that the medical school has been acting as a gatekeeper for the length of time it has been participating in the managed care program, and it can be argued the school is teaching the gatekeeper concept. He asserted, "This may be the purest form of that practice, because it is practiced in the medical school as they are teaching physicians." He said the school of medicine is quite familiar with the managed care concept and understands the goals and objectives of managed care organizations. Ms. Florence said it was simply her intent to clarify for the committee that the school of medicine is not operating under an 1115 waiver or any other waiver. Ms. Tiffany remarked the school of medicine is also not operating under a pure capitation program, which is what is being discussed. She suggested the chairman is making "apples and oranges" comparisons in terms of where and under what conditions the school of medicine is operating. She reiterated that it should not be mandated the medical school use its multi-specialty program, but that such use should be left to the discretion of the HMO, because the HMO and not the primary gatekeeper is responsible for the utilization review. Ms. Tiffany said it is therefore her request regarding the RFP that the HMO would have discretion in this regard. Senator Rawson commented that giving preference points for programs that have a relationship with a medical school allows the contract to be formed between the school and the other managed care entity, and the details can be resolved fairly simply between the contract holders. He said the medical school should be allowed to be able to form those relationships that would include the specialists with whom they are currently working in a teaching situation. Ms. Tiffany responded, "As long as it is not mandated.... That should be up to the HMO, but not mandated." Mr. Dini remarked he was one of the legislators involved in establishing the concept of developing the students' skills through use of the multi-specialty groups. He said the groups receive excellent training and provide 24-hour care, and it is important the program be continued to enable the public to receive better care. He expressed the opinion that if the program is not allowed to continue, medical care that is not available to certain people anywhere else in the state will be eliminated. He said it is ludicrous to even consider reducing use of the multi-specialty groups. Ms. Tiffany acknowledged Mr. Dini's concerns, but said the issue is managed care. She indicated the concept of managed care needs to be distinguished from the concepts of fee for service and multi-specialty groups. She said the HMO has a multi- specialty group, and patients will not suffer in any care they receive. What is at issue, Ms. Tiffany said, is the utilization review. She maintained that for at-risk, capitation and managed care to be satisfactorily performed, that component must be involved. She reiterated patients will not receive less treatment or inferior treatment, but will receive adequate treatment that is accessible. She noted the managed care networks exist throughout the state. Continuing, Ms. Tiffany said the point she wishes to make is that under managed care, the quality of care and the cost must be maintained with respect to the utilization review. She said if the medical school is allowed to use its multi-specialty group at any time or place, at any cost, the utilization review is skewed, the HMO must "pick up the difference," and the savings are therefore not realized. Ms. Tiffany emphasized the need to handle this issue carefully. She further remarked that if the Legislature chooses to fund the medical school with regard to teaching, that decision should be independent of the managed care contract; otherwise, the program is not actually managed care. She repeated the level and quality of service to patients will not be sacrificed. Ms. Tiffany cited Sierra Health Services as an example of an organization that has very fine physicians throughout the state. Ms. Tiffany raised the issue of the 2 percent of gross Medicaid premiums, which she asserted should not be in the RFP, either. Senator Rawson said the letter from the medical school was written in response to specific questions, and it is not his intention nor that of the Governor's Office to base decisions related to this issue on the requests presented in that letter. Ms. Tiffany asked if the committee or the Governor will be sending a message to the welfare and Medicaid recipients regarding the participation of the medical school in the managed care program. Senator Rawson replied it has been clearly indicated in the interim work that there must be an attempt in this direction, and that preference will be given to those programs that form a relationship with the medical school. He said it is conceivable there would be at least one plan that would have a network that does not include the medical school's involvement. He acknowledged it is possible some providers would choose not to develop a relationship with the school. Continuing, Senator Rawson voiced the opinion there must be at least one participant in the program who establishes a relationship with the school of medicine, and the awarding of preference points would accomplish this. He suggested that in the event a situation were to develop in which no providers have established a relationship with the medical school, one of the better programs in the State of Nevada would have been defeated. This would mean a tremendous amount of resources have been wasted and the rural communities would be harmed, the senator maintained, and the program must therefore be protected. Ms. Tiffany asked if it is clear that, (1) the school of medicine will be "under pure capitation like everybody else," and (2) that the HMO has the option to use the medical school's multi-specialty groups, but is not required to do so. Senator Rawson answered that the medical school should be allowed, in its relationship with whatever managed care organization the state has contracted with, to work out the details regarding the specialty groups. He stated, "I'm comfortable not restricting that [further].... There is no way it will come together unless they can develop that relationship." He said development of this relationship between the medical school and the managed care provider will help maintain the school's patient base. Senator Rawson suggested that with the volume of patients being treated by the school of medicine, the school is probably somewhat at risk and must therefore try harder to develop a workable relationship with the HMO. Ms. Tiffany referred to discussion in the interim health care committee meetings in which it was indicated the medical school has approximately 10,000 patients under the PCCM (primary care case management). Senator Rawson responded the school has approximately 10,000 patients that are capitated for specific services, but given the number of fee-for-service Medicaid patients who choose the school of medicine for specific treatment, the actual number of patients being treated probably approaches 20,000. Ms. Tiffany answered that some of those patients may not be brought into the managed care program and that it is a separate issue. Senator Rawson agreed. Ms. Tiffany requested Mr. Abba to clarify certain estimates prepared by the fiscal analysis staff. She noted that if the managed care program is implemented at this time and the state seeks to obtain the proposed waiver, the savings projected for the biennium is $2.4 million, based on a 3 percent savings assumption. She asked if it is correct that if the state does not implement the managed care program it would not be required to cover the $12.8 million in Medicaid "tail" costs. Mr. Abba replied yes. Ms. Tiffany said her point is that if managed care is not implemented at this time it would not be too detrimental to the budget because of the relatively low level of projected savings and the fact the state would not be picking up the $12.8 million tail. She said this amount could be set aside in reserve if desired. She pointed out the projected savings might not even be realized during the upcoming biennium because the program would be just starting up. Mr. Abba noted the cost of the Medicaid tail will increase as the caseload increases, and the $12.8 million cost currently projected would be at a different level if implementation of the managed care program is postponed. Ms. Tiffany said she has been informed by one person that with a different waiver the state could avoid having to "pick up the tail." She said there are all kinds of possibilities for the future with regard to this issue. In further questioning regarding the issues in decision unit E-401, Ms. Tiffany said the health care committee had discussed the private sector component with respect to the utilization review and the quality assurance. She asked how this component would be treated in the RFP this time. Ms. Florence said within the RFP the quality assurance requirements will be defined, as will the quality data elements to be reported for external review. The requirements will be in the RFP to the extent they are defined, she stated. She said there is also qualifying language in the draft which she has recently reviewed, indicating there will probably be further refinement in the negotiations with the winning bidders. Senator Rawson asked Ms. Florence if the quality assurance is to be performed by an independent source. She answered there is a federal requirement for an external quality review. The senator said the committee regards this as an important item. Ms. Tiffany inquired if utilization review will also be performed by an independent contractor. She said the private sector component of the program as originally discussed by the health care committee has not materialized, but she wishes to ensure that at least the quality assurance and utilization review will be performed by private sector entities. Ms. Florence responded the HMO would obviously be required to conduct its own utilization review and would clearly have its own reason for doing so. She said the Welfare Division would also retain some component of utilization review, based on the HMO's reports, although it would not be involved in the review process to the extent it has been in the past. Seeking clarification, Ms. Tiffany asked if it would be the case that the private sector would not conduct the utilization review, but that it would be performed by the Welfare Division from the data provided by the HMO. Ms. Florence replied the HMO would conduct its own utilization review based on their reports, and the division has not determined "to what level of outside contractors it will go" to handle a number of different functions. She said any unusual patterns of utilization by HMOs would be either part of the Welfare Division's review process or the externally contracted review process, and probably both. Senator Rawson said the legislators would prefer to see an independent review by a source that is not associated with either the Welfare Division or the provider awarded the contract. Ms. Florence said that would be the case, and the division's participation primarily pertains to quality assurance rather than utilization. SENATOR COFFIN MOVED TO RECOMMEND ACCEPTANCE OF DECISION UNIT E-400 AND THE POLICY ISSUE RELATED TO THE MEDICAID MANAGED CARE PROGRAM IN DECISION UNIT E-401 AS EXPLAINED BY STAFF AND IN COMMITTEE DISCUSSION, AND IN ACCORDANCE WITH STAFF ADJUSTMENTS AND RECOMMENDA- TIONS AS PRESENTED ON PAGES 11, 12 AND 15 OF EXHIBIT C. SENATOR RAGGIO SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RHOADS WAS ABSENT FOR THE VOTE.) * * * * * MR. DINI MOVED TO RECOMMEND ACCEPTANCE OF DECISION UNIT E-400 AND THE POLICY ISSUE RELATED TO THE MEDICAID MANAGED CARE PROGRAM IN DECISION UNIT E-401 AS EXPLAINED BY STAFF AND IN COMMITTEE DISCUSSION, AND IN ACCORDANCE WITH STAFF ADJUSTMENTS AND RECOMMENDATIONS AS PRESENTED ON PAGES 11,12 AND 15 OF EXHIBIT C. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED. (MS. TIFFANY VOTED NO. MRS. EVANS ABSTAINED FROM THE VOTE.) * * * * * In discussion prior to the vote on the above motion, Ms. Tiffany asked if the motion would include that the committee would agree to pursue the 1915[b] managed care waiver. Senator Rawson replied it would, as would the actions regarding scheduling a meeting of the interim committee on health care for the purpose of providing a full hearing on the issues and requesting authority to make decisions during the interim. Ms. Tiffany asked if a "yes" vote on this motion would mean approval of the 1915[b] waiver. Senator Rawson said it would mean that at this point she would be indicating approval of the state's pursuit of a 1915[b] waiver. Senator Coffin remarked a "yes" vote by Ms. Tiffany would be consistent with her earlier vote on a related decision unit after she was assured a full hearing would be held on the issue. Ms. Tiffany indicated her objection is that the motion on the table specifically approves pursuit of the 1915[b] waiver. Mr. Allard asked if the motion includes the mandated use of the medical school by the HMO provider. Senator Rawson replied no. He indicated the motion includes the requirement that at least one of the providers that receive the contract be willing to form a relationship with the school of medicine, and preference points would be given to such providers in the bid process. He said the number of preference points would not be enough to mandate the medical school relationship, but enough to provide some incentive for doing so. Mr. Allard inquired as to what would happen if none of the providers wished to form a relationship with the medical school. Senator Rawson said while this situation might occur, most of the providers are inquiring as to how to form such a relationship. Senator Raggio disclosed for the record that he serves as director of Sierra Health Services, a company that operates an HMO. He indicated that to his knowledge there is no direct involvement (no conflict of interest) that would preclude his voting on this issue, and his "aye" vote would be cast for the limited purpose of advancing the budget to the full committee. Mrs. Evans disclosed for the record her intention to abstain from voting on this motion because she is an employee of the university system. Following the vote, Mr. Abba explained the remaining policy issues in decision unit E- 401. He reviewed the policy issue that involves whether or not to reappropriate $250,000 (50/50 state/federal) as requested by the division to continue a feasibility study of the Medicaid program's future data and information needs. As background information he noted the Welfare Division received IFC approval in June 1994 to transfer $300,000 into the agency's Operating category to initiate the feasibility study. The division was not able to complete the study by the end of the current fiscal year due to the efforts associated with the waiver application and has requested the unspent funds be reappropriated. A recap of the scope of the feasibility study was presented and is indicated below. The study would be conducted to: -- Determine if the claims processing system and managed care system should be merged or kept as two distinct systems. -- Determine the cost benefit of meeting federal data system standards to qualify for the federal enhanced funding for an MMIS (Medicaid Management Information System). -- Determine if the system should be developed and/or operated within the state or by a private contractor. -- Determine if the system should be housed on the state computer system or out-sourced. -- Determine minimum data elements. -- Determine system reports and layout of reports needed. -- If necessary, to write the Advanced Planning Document to obtain required federal approval. Mr. Abba said in the revised budget, which is not reflected in the closing sheets, there is a reduction in an already-budgeted contract for the quality assurance services. The original budget included $250,000 for the quality assurance contract, but that was based on a full year of the managed care operation, and the contract has been reduced to a prorated amount of $125,000 for the last 6 months of FY 1997. Mr. Abba said this theoretically would reduce the division's request to reappropriate the feasibility study funds to $125,000, half of which would be state funds. Continuing, Mr. Abba explained the last policy issue in decision unit E-401. He said the issue is whether not to approve a three-person oversight unit recommended for the managed care component. He directed attention to information previously provided the committee regarding the advantages of a single unit designated for dealing with HMO contractors who participate in the program, and the duties of that unit (page 16, Exhibit C). The three new positions would be effective July 1, 1996. MR. DINI MOVED TO RECOMMEND ACCEPTANCE OF STAFF RECOMMENDATIONS AND ADJUSTMENTS FOR THE POLICY ISSUES IN DECISION UNIT E-401 THAT RELATE TO THE REAPPROPRIATION OF $250,000 BUDGETED FOR A FEASIBILITY STUDY OF THE MEDICAID PROGRAM'S FUTURE DATA AND INFORMATION NEEDS, AND THE PROPOSAL TO ESTABLISH A MANAGED CARE OVERSIGHT UNIT, AS PRESENTED ON PAGES 11, 12, 15 AND 16 OF EXHIBIT C. MRS. CHOWNING SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR RAGGIO MOVED TO RECOMMEND ACCEPTANCE OF STAFF RECOMMENDATIONS AND ADJUSTMENTS FOR THE POLICY ISSUES IN DECISION UNIT E-401 THAT RELATE TO THE REAPPROPRIATION OF $250,000 BUDGETED FOR A FEASIBILITY STUDY OF THE MEDICAID PROGRAM'S FUTURE DATA AND INFORMATION NEEDS, AND THE PROPOSAL TO ESTABLISH A MANAGED CARE OVERSIGHT UNIT, AS PRESENTED ON PAGES 11, 12, 15 AND 16 OF EXHIBIT C. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RHOADS WAS ABSENT FOR THE VOTE.) * * * * * Regarding item 1 in "Other Issues" on page 16 (Exhibit C), Mr. Abba said that in approving the various budgets in the Division of Child and Family Services (DCFS) and the Division of Mental Health and Mental Retardation (MH/MR), the subcommittee had approved the concept of separately identifying categories within the Medicaid budget for the federal Title XIX funds which are transferred to the above-mentioned divisions as part of their medical costs. Currently these funds are all segregated in the Medicaid medical payments categories and there is no way to separately identify how much in Title XIX funds are accessed for the MH/MR division and the DCFS, he stated. Mr. Abba said the adjustments in item 1 are not reflected in the closing sheets, and the fiscal analysis staff must work with the Welfare Division to identify exactly how much federal Title XIX authority is available for the two divisions. The adjustments required are technical and no additional funds would be added to the budget. With reference to item 2 in "Other Issues," Mr. Abba said that in reviewing the MH/MR budgets, the subcommittee approved a plan to return to Nevada 24 mentally retarded individuals currently placed out of state. The plan was to "transition back" the out-of- state placements to Nevada over a period of several months. Mr. Abba said it was his understanding at the time the subcommittee took action on the MH/MR budgets that the committee was informed of possible additional costs to the Medicaid budget. Working with the three divisions involved, an analysis has been completed that indicates there may in fact be additional costs to the Medicaid budget, in the amount of $63,000 in state funds in FY 1996 and $94,000 in state funds in FY 1997. The additional costs are based upon a number of assumptions that may or may not occur, Mr. Abba pointed out. He said the assumptions are based upon a specific schedule for returning the 24 individuals to Nevada which is apparently in a state of flux, and the transition may not occur as currently anticipated. Mr. Abba said it is also doubtful the current 24 children that have been selected to be returned to Nevada will actually return home. Mr. Abba said staff recommends at this time that no modifications be made in the Medicaid budget with regard to this issue, based upon the uncertainties that currently exist with regard to the planned transition. SENATOR RAGGIO MOVED TO RECOMMEND ADOPTION OF STAFF RECOMMENDATIONS PERTAINING TO ISSUES 1 AND 2 AS DESCRIBED ABOVE AND AS PRESENTED ON PAGE 16 OF EXHIBIT C. SENATOR COFFIN SECONDED THE MOTION. Mrs. Chowning requested clarification as to why the assumption is being made that the 24 individuals involved will not readily accept the proposed transition and that it therefore will not occur as planned. Senator Rawson said the Senate Committee on Finance received a letter during the week indicating parental concern about bringing the children back to Nevada, which is typical of what has occurred in the past. Mrs. Chowning asked if the committee is assured that the necessary negotiations will be pursued to ensure the individuals eventually will be returned to Nevada, and if the message is being sent to the division that it is the committee's position negotiations should be pursued toward that end. Senator Rawson said he believes that is the message that has been conveyed. He commented that ultimately the state is at the mercy of the court on some of these situations, and court challenges may or may not result in the individuals being returned to Nevada. He said the situation will need to be worked out as carefully as possible, recognizing the need to provide adequate care for the individuals returned to Nevada. The state's inability to do this might also preclude some of the individuals from being returned, he said, but the attempt will be made to bring them back. THE MOTION CARRIED. (SENATOR RHOADS WAS ABSENT FOR THE VOTE.) * * * * * MR. DINI MOVED TO RECOMMEND ADOPTION OF STAFF RECOMMENDATIONS PERTAINING TO ISSUES 1 AND 2 AS DESCRIBED ABOVE AND AS PRESENTED ON PAGE 16 OF EXHIBIT C. MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Rawson expressed appreciation for the subcommittee's efforts regarding the budgets under discussion, which he noted involved difficult issues. He complimented the legislative staff as "the greatest staff in the world." The meeting was adjourned at 10:25 a.m. RESPECTFULLY SUBMITTED: Sue Parkhurst, Committee Secretary APPROVED BY: Senator Raymond D. Rawson, Chairman DATE: Assemblywoman Jan Evans, Chairman DATE: Assemblyman Lynn Hettrick, Chairman DATE: Senate Committee on Finance Assembly Committee on Ways and Means Joint Subcommittee on Human Resources/K-12 May 18, 1995