SB 0673 - Fiscal Note

Fiscal Note - SB 0673 - DOSS & Nursing Care Providers Negotiate Reimbursement Rates

L.R. NO.  2363-01
BILL NO.  SB 673
SUBJECT:  Department of Social Services; Health Professionals; Nursing Homes;
Public         Assistant
TYPE:     Original
DATE:     January 22, 1996



                              FISCAL SUMMARY


                    ESTIMATED NET EFFECT ON STATE FUNDS

FUND AFFECTED                 FY 1997         FY 1998        FY 1999

General Revenue            $2,552,990      ($992,408)    ($1,022,180)


Total Estimated
Net Effect on All
State Funds                $2,552,990      ($992,408)   ($1,022,180)


                   ESTIMATED NET EFFECT ON FEDERAL FUNDS

FUND AFFECTED                 FY 1997         FY 1998        FY 1999

Medicaid                           $0              $0             $0


Total Estimated
Net Effect on All
Federal Funds                      $0              $0             $0


                    ESTIMATED NET EFFECT ON LOCAL FUNDS

FUND AFFECTED                 FY 1997         FY 1998        FY 1999

Local Government                   $0              $0             $0



                              FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Health and the Department of Mental Health
assume this proposal would not fiscally impact their agencies.

Department of Social Services (DOS) - Division of Medical Services (DMS)
officials state that this proposal would have a fiscal impact on DMS.  DMS
assumes higher costs would be incurred from the increased interim rate paid
to nursing facilities and the annual trend factor given to intermediate care
facility/mentally retarded (ICF/MR).  DMS would also experience a cost
savings from using the Dodge Index (Index) when calculating the capital
component of the Medicaid per diem.

DMS states they have reviewed those current facilities that have interim
rates and classified those facilities as either urban or rural.  Each
facility's projected FY96 patient days were multiplied by the increase in
their interim rate by DMS to arrive at the cost per facility.  DMS estimates
this cost to be $6,018,048 annually.  The cost for FY97 are estimated to be
$4,994,980 with subsequent fiscal years to reflect new facilities entering
the program to be about one-third of the annual amount.  DMS estimates the
cost of the interim rate increase to be $2,066,196 in FY98 and $2,128,182 in
FY99.

DMS states that ICF/MR facilities currently do not receive an annual trend
factor.  DMS states this proposal would require these facilities to receive
an annual trend factor.  DMS states there are currently seventeen ICF/MR
facilities certified as Medicaid providers.  DMS assumes the trend factor
would be based on the Health Care Financing Administration (HCFA) Market
Basket Index which is currently 4.6%.  DMS estimates this cost to be $405,152
annually.

DMS further states that using the Dodge Index as included in this proposal
instead of the current fair rent value in the capital cost component of the
Medicaid rate would create one-time savings in the first year of this
proposal only.  This change in the calculation of the rate would affect all
nursing facilities who entered the Medicaid program since 1983.  The capital
cost component of a facility's rate is facility specific.  The calculation is
based on the size of each facility.  The capital component is based on the
fair rental value.  The Dodge capital rate was calculated for each facility
and compared to each facility's fair rental value component.  DMS estimates
the one-time savings to be $11,720,120 in FY97.


FISCAL IMPACT - State Government     FY 1996     FY 1997     FY 1998
                                    (10 Mo.)

GENERAL REVENUE FUND

Savings - Department of Social Services
Division of Medical Services
     Change in capital component  $4,683,360          $0          $0

Costs - Department of Social Services
Division of Medical Services
     Interim rate increase      ($1,995,994)  ($825,652)  ($850,422)
     Trend factor for ICF/MR
       facilities                 ($134,376)  ($166,756)  ($171,758)
Total Costs-
  Department of Social Services ($2,130,370)  ($992,408)($1,022,180)


ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND              $2,552,990  ($992,408)($1,022,180)


FEDERAL FUNDS

Income - Department of Social Services
Division of Medical Services
     Interim rate increase
       reimbursements             $2,998,986  $1,240,544  $1,277,763
     Trend factor reimbursements    $201,900    $250,551    $258,068
Total Income - Department of
     Social Services              $3,200,886  $1,491,095  $1,535,831

Savings - Department of Social Services
Division of Medical Services

     Change in capital component  $7,036,760          $0          $0

Loss - Department of Social Services
Division of Medical Services
     Capital component
       reimbursements           ($7,036,760)          $0          $0


Costs - Department of Social Services
Division of Medical Services
     Interim rate increase      ($2,998,986)($1,240,544)($1,277,763)
     Trend factor for ICF/MR
       facilities                 ($201,900)  ($250,551)  ($258,068)
Total Costs-Department of
     Social Services            ($3,200,886)($1,491,095)($1,535,831)

ESTIMATED NET EFFECT
FEDERAL FUNDS                             $0          $0          $0


FISCAL IMPACT  - Local Government    FY 1996     FY 1997     FY 1998
                                    (10 Mo.)

                                          $0          $0          $0


DESCRIPTION

This proposal would delete language which exempts intermediate care
facilities used exclusively for the mentally retarded/developmentally
disabled which entered the Title XIX program after July 1, 1983, from
negotiating a trend factor with the Department of Social Services to be
applied to the per diem reimbursement rate.

This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.

SOURCES OF INFORMATION

Department of Social Services
Department of Health
Department of Mental Health