SB 0855 - Fiscal Note

Fiscal Note - SB 0855 - Allows for transfer and reallocation of certain care facility beds without a certificate of need requirement

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 1901-04

BILL NO. SB 855

SUBJECT: Revises Certificate of Need Law to Allow Transfers of Certain Beds

TYPE: Original

DATE: February 16, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($15,400)	($18,479) to ($2,830,889)	($18,479) to ($6,038,472)
Total Estimated Net Effect on All State Funds	($15,400)	($18,479) to ($2,830,889)	($18,479) to ($5,788,472)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Federal	($338,975)	($406,771) to ($4,250,387)	($406,771) to ($9,061,761)
Total Estimated Net Effect on All Federal Funds	($338,975)	($406,771) to ($4,250,387)	($406,771) to ($9,061,761)

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Office of Attorney General, Office of State Courts Administrator, and Department of Mental Health, and Department of Social Services - Division of Aging and Division of Family Services assume this proposal will not fiscally impact their agencies.

Officials from the Department of Health (DOH) assume that half of the 502 long term care facilities which would be able to add additional beds would file an application. Assuming the minimum application fee of $1,000 is charged, the proposal would generate $250,000 for the General Revenue Fund. This revenue was prorated to 10 months for FY 99.

The DOH also assumes a long-term fiscal impact could result from this proposal. The DOH assumes additional long-term care beds could reduce the statewide occupancy to lower levels. This lower rate of occupancy would impact the Medicaid program ranging from $29,000,000 to $117,000,000. The DOH did not provide the basis for this range or if the impact would be positive (increased Medicaid) or negative (reduced Medicaid). Oversight assumes the impact would be negative but will not present this long-term impact in the fiscal note.

Officials from the Department of Social Services - Division of Medical Services (DMS) assume the DMS will be fiscally impacted by this proposal. The DMS assumes there are 162 licensed intermediate care or skilled nursing facilities whose average aggregate occupancy over the last four consecutive calendar quarters is equal to or greater than ninety percent. Of these, 141 facilities are Medicaid certified. The facilities have a total of 12,635 certified beds and an average of 90 certified beds per facility. The DMS estimates that 25 of these facilities (18 %) will expand their bed capacity through this proposal.

The DMS is not assuming these 25 facilities will fill their new beds with Medicaid recipients. The DMS assumes the facilities will request and receive an increase to their Medicaid per diem. Current regulations allow for a rate increase because of the addition of beds. Over the past three years the average rate increase granted due to the addition of beds was $1.48 and current Medicaid occupancy is 56 percent. Therefore, the cost of increasing rates due to the addition of beds is calculated as follows: 90 certified beds per Medicaid certified facility multiplied by 56% capacity equals 50 Medicaid recipients multiplied by the $1.48 rate increase for 365 days a year equals $27,010 multiplied by the estimated 25 facilities that will increase their beds. This totals $675,250. The cost for FY 99 was prorated to 10 months. The costs were split approximately 40% state and 60 % federal funds based on prior year funding sources. The DMS based the above calculations and assumptions assuming the proposal would not increase the current number of total beds and the moratorium on new beds is still in effect.

ASSUMPTION (continued)

However, if the proposal allows for the state-wide total of beds to increase and ends the moratorium on new beds, the additional cost of the Medicaid program would total $6,406,026 and $14,424,983 for FY 00 and FY 01, respectively. This is assuming 1,000 new beds are built in FY 00 and 504 of the beds will be occupied by Medicaid eligible clients with an average Medicaid payment of $76.11 per day per bed.

Oversight, for the purposes of this fiscal note, will include the costs for the assumption that the moratorium on new beds is still in effect and also include the fiscal impact if new beds are built. The costs could increase an additional $6,406,026 in FY 00 and 14,424,983 in FY 01 if new bed are built. These additional costs will be split approximately 40 % state and 60 % federal funds also.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
GENERAL REVENUE FUND
Revenue
Certificate of Need Application Fees	$208,333	$250,000	$250,000
Costs- Department of Social Services -		($268,479)	($268,479)
Division of Medical Services		TO	TO
State Share of Medicaid Increase	($223,733)	($2,830,889)	($6,038,472)
		($18,479)	($18,479)
ESTIMATED NET EFFECT ON		TO	TO
GENERAL REVENUE FUND	($15,400)	(2,580,889)	($5,788,472)
FEDERAL FUNDS
Costs-Department of Social Services -		($406,771)	($406,771)
Division of Medical Services		TO	TO
State Share of Medicaid Increase	($338,975)	($4,250,387)	($9,061,761)
ESTIMATED NET		($406,771)	($406,771)
EFFECT ON		TO	TO
FEDERAL FUNDS	($338,975)	($4,250,387)	($9,061,761)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0

FISCAL IMPACT - Small Business

Small businesses would be expected to be fiscally impacted by this proposal. The businesses would be required to pay an application fee of at least $1,000 to add additional beds to long-term care facilities. The Department of Health assumes that 250 small businesses will apply for additional beds. The small businesses may also realized increased revenues due to the additional beds; however, the estimated revenue cannot be determined.

DESCRIPTION

This proposal will allow residential care facilities and skilled nursing facilities with occupancy rates less than ninety percent to transfer the ownership of licensed beds to similarly licensed facilities. Such transfers shall not require a certificate of need, review, or approval.

Residential care facilities, intermediate care facilities, and skilled nursing facilities with occupancy rates greater than ninety percent for more than four consecutive quarters shall be allowed to expand their licensed bed capacity. Furthermore, residential care facilities may reallocate any portion of their licensed beds to other facilities that are similarly licensed and within five miles of the residential care facility.

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 Health

Department of Social Services

Department of Mental Health

Office of State Courts Administrator

Office of Attorney General

Jeanne Jarrett, CPA

Director

February 16, 1998