The Forecast
The state issued its most recent fiscal forecast on Thursday, December 2, 2010. The forecast was a mixture of good and bad news. First, the good news, the current biennium that ends June 30, 2011 (FY 2010-11) is projected to end with a surplus of $399 million, up from the previously projected $6 million surplus. With the projected surplus the new legislature and Governor can enter the next legislative session without having to worry about the current biennium, thereby focusing on solving the huge challenge of the next biennium’s deficit. Additionally, with no immediate budget deficit, the Governor does not have the need or the authority to unallot state spending.

The bad news in that the projected deficit for the biennium beginning July 1, 2011 (FY2012-13) has grown to $6.188 billion. The state revenues for FY2012-13 are forecast to be $32.004 billion, a $1.510 billion or 5 percent increase from the previous biennium. State spending is projected to be $38.591 billion, an $8.324 billion or 27.5 percent increase from the previous biennium.

The 27.5 percent increase in spending is a bit misleading as it reflects many one-time measures taken to balance the FY2010-11 budget that artificially “lowered” state spending for that biennium. The $8.324 increase in spending includes:

● $ 1.456 billion from a temporary higher federal Medical Assistance match;
● $ .816 billion from one-time federal state fiscal stabilization funding;
● $ 1.900 billion from K-12 education shifts;
● $ 1.400 billion from the required K-12 shift buyback; and,
● $ .660 billion in one-time spending reductions made in FY2010-11.

These FY2010-11 fixes total $6.232 billion making the actual biennial spending growth $2.070 billion, or about 6.6%.

The next step in the budget process is the development of the Governor’s budget which will be presented to the Legislature in February. In early March the “February” forecast will be issued and then the Legislature will need to put its budget forward. The regular legislative session is scheduled to adjourn on May 23, 2010. But, special sessions can be called by the Governor after that date if an agreement has not been reached on a budget. If no state budget is adopted by the beginning of the next biennium, Minnesota state government will be forced into a shutdown (it’s actually a partial shutdown as vital services continue to be funded).

 The final agreement resulted from intense negotiations over the weekend.  It appeared as if an agreement would be reached early in the weekend until House Republicans raised concerns about the Governor’s willingness to support the Medical Assistance expansion to include low income adults without dependent children.  In the end, the final agreement allows the Governor to unilaterally decide prior to January 15, 2011 whether to opt-in to the program, thus allowing the next Governor the opportunity to decide and making it an election issue.  The agreement also ratifies most of the unallotments that were made by the Governor last summer.  This action effectively makes the recent court decision moot with regard to those unallotments. 

 The legislature took up the compromise bill this morning and passed it.  The Governor is expected to sign the bill.  

 Other issues of interest included in the final bill are:

 Rate Reduction: The compromise includes no general rate reduction for medical assistance continuing care providers!!

 Customized Living Rates: It appears that the committee adopted the entire Senate position on Housing with Services which includes a reduction, effective July 1, 2010, of the service component rates and service rate limits for customized living services and 24-Hour customized living services by 5%.

 Medicare Payment Limit:  The compromise includes a provision that states that physician, professional and basic care services shall not be reimbursed at a rate in excess of the Medicare reimbursement level.

 Certification of Transitional Consultation: The provision that prohibited Housing with Services Establishments from entering into a contract with a prospective resident unless the prospective resident has received a certificate that he/she has received “transition to housing with services” consultation was not included in the final compromise.  However, language was included about information that such providers need to provide to residents.

 PCA Monthly Cap:  The bill ratifies the Governor’s unallotment action effective July 1, 2009 and makes permanent the cap of 275 hours per month that a PCA may work.

 Private Duty Nursing:  Adopted was a requirement that private health plan coverage of Private Duty Nursing services for those people who have both private insurance and are on Medical Assistance.

 Waiver Caps: The committee adopted the Governor’s waiver cap proposal.  The proposal limits the growth of the Community Alternatives for Disabled Individuals (CADI) at 60 new waivers per month and Developmental Disabilities (DD) Waivers at 6 waivers per month. 

 Rehab Therapies (PT/OT/ST):  Lifetime limits on these therapies were agreed to.  The limit can be exceeded with prior authorization.  The one-time service thresholds are by recipient, and include care from all providers for all episodes of care and conditions.  The thresholds do not apply to rehabilitation services provided in the recipient’s home by home health agencies, and these services are not tied to the current thresholds, either

 Specialized Maintenance Therapies: The House position to eliminate Specialized Maintenance Therapies from Home Care Therapies was not included in the final compromise bill.  

 Elderly Waiver: Elimination of automatic increase in EW case mix caps was not adopted.

 Health Teams:  Adopted was the Health Team concept that establishes health teams to support the patient-centered health home.and provide the services.  Health teams are community-based, interdisciplinary, inter-professional teams of health care providers that support primary care practices.  These providers may include medical specialists, nurses, pharmacists, nutritionists, social workers, behavioral and mental health providers, doctors of chiropractic, licensed complementary and alternative medicine practitioners, and physician’s assistants.

 Health Care Delivery System:  Also adopted was a Health Care Delivery System demonstration project to test alternative and innovative health care delivery systems.  For more detail see the bill beginning at line 85.12.

 PACE:  The House PACE proposal was included.

Here is the link to the bill:

https://www.revisor.mn.gov/bin/bldbill.php?bill=H0001.1.html&session_year=2010&session_number=1

The Health and Human Services Conference Committee wrapped up its work early Wednesday morning adjourning at 2:20 a.m.  The Conference Committee reached agreement on how to reduce spending to balance the state’s budget deficit, at least partially.  The bill also included the expansion of the Medical Assistance program to include the former General Assistance Medical Care Program.  The House and Senate hope to pass the conference committee report Wednesday night.  The Governor is unlikely to sign the bill unless there is some global compromise to solve the entire state deficit.

 Here is a summary of some issues of interest:

 Rate Reduction: The compromise includes no general rate reduction for medical assistance continuing care providers!!

 Customized Living Rates: It appears that the committee adopted the entire Senate position on Housing with Services which includes a reduction, effective July 1, 2010, of the service component rates and service rate limits for customized living services and 24-Hour customized living services by 5%.

 Certification of Transitional Consultation: Housing with Services Establishment would not be allowed to enter into a contract to allow a prospective resident unless the prospective resident has received a certificate that he/she has received “transition to housing with services” consultation.  This provision was adopted by the committee with some amended language.  I will have access to it later tonight.

 PCA Monthly Cap:  The committee agreed to the Governor’s unallotment provision to make permanent the cap of 275 hours per month that a PCA may work.

 Private Duty Nursing:  Adopted was a requirement that private health plan coverage of Private Duty Nursing services for those people who have both private insurance and are on Medical Assistance.

 Case Management: Reform report requirement to define functions, standardize and simplify processes, and increase opportunities for consumer choice was included in the bill.

Waiver Caps: The committee adopted the Governor’s waiver cap proposal.  The proposal limits the growth of the Community Alternatives for Disabled Individuals (CADI) at 60 new waivers per month and Developmental Disabilities (DD) Waivers at 6 waivers per month. 

Rehab Therapies (PT/OT/ST):  Lifetime limits on these therapies were agreed to.  The limit can be exceeded with prior authorization.  

Specialized Maintenance Therapies: The House position to eliminate Specialized Maintenance Therapies from Home Care Therapies was adopted.

Elderly Waiver: Elimination of automatic increase in EW case mix caps was not adopted.

Health Teams:  Adopted was the Health Team concept that establishes health teams to support the patient-centered health home.and provide the services.  Health teams are community-based, interdisciplinary, inter-professional teams of health care providers that support primary care practices.  These providers may include medical specialists, nurses, pharmacists, nutritionists, social workers, behavioral and mental health providers, doctors of chiropractic, licensed complementary and alternative medicine practitioners, and physician’s assistants.

PACE:  The House PACE proposal was included.

Highlights of the bill include:

1. Provisions that increase the notice requirements and protections if a provider of home care services will be terminating services due to provider sanctions imposed by the Department of Human Services (Article 1, Section 8, line 7.11).

2. Allows for a PCA, under certain circumstances, to enroll with a different PCA agency upon the initiation of the new background study. The circumstances are related to situations where the previous PCA agency is shutting down. This offers an opportunity for the new PCA agency to provide the services without worrying about getting reimbursed during the period that the PCA is getting the new background study.  This provision is retroactive to July 1, 2009 (Article 1, Section 11 & 12, beginning at line 9.25)

3. Home Health Aide visits now include “including ensuring that the person gets to medical appointments if identified in the written plan of care” (Article 2, Section 1, line 27.6).

4. Definition of “Wages and Benefits.” This definition was included to address what counts as Wages and Benefits for the purposes of the certification that a PCA Agency must provide that 72.5% of the Medical Assistance rate paid for PCA services goes to Wages and Benefits (Article 2, Section 2, at line 29.10).

5. The number of hours per day that a PCA works shall not be disallowed by DHS unless it is a violation of law (Article 2, Section 5, at line 33.8).

6. Qualified Professional Training: must be provided on-line. Medicare Certified Agencies are exempt from the QP training requirement (Article 2, Section 6, line 34.5).

7. Qualified Professional Duties: clarifies the requirements regarding supervisory visits and allows for some “phone” or “remote” visits (Article 2, Section 7, beginning at 34.21).

8. PCA Choice. It makes clear that the hiring and firing of a PCA is subject to the agreement between the Agency and the recipient (Article 2, Section 9, line 36.30).

9.  Non-Compete restriction.   The bill requires that a PCA agency provide  “documentation that the agency does not burden recipients’ free exercise of their right to choose service providers by requiring personal care assistants to sign an agreement not to work with any particular personal care assistance recipient or for another personal care assistance provider agency after leaving the agency and that the agency is not taking action on any such agreements or requirements regardless of the date signed” (Article 2, Section 11, at line 40.26).

10.  PCA Management Training (Article 2, Section 11, beginning at line 41.1). 

Changes who needs to be trained—“all employees in management and supervisory positions and owners of the agency who are active in the day to day management and operations of the agency.” This removes QPs, other owners and members of the Board of Directors from the training requirement (at line 41.7).

Requires that training be available online or by remote connection and provide for competency testing (at line 41.13).

Exempts Medicare Certified Agencies from these management training requirements (at line 41.20).

11.  Expands the ability of an agency to market by removing the limitation of only being allowed to “market agency services only through printed information in brochures and on Websites”  (Article 2, Section 12, line 42.1). 

12. Adds language regarding the duties that a PCA providing services to a ventilator-dependent recipient can perform (Article 2, Section 13, line 42.19).

Here is a link to the conference committee report as it passed the Senate and the House:

https://www.revisor.mn.gov/bin/bldbill.php?bill=ccrsf2933.html&session=ls86

The Senate appointed the following conferees: Sen. Linda Berglin (Chair), Sen. SteveDille, Sen. Yvonne Prettner Solon, Sen. Tony Lourey, Sen. Kathy Sheran; and, Sen. Ann Lynch. 

The House Conferees are:  Rep. Tom Huntley (Chair), Rep. Paul Thissen, Rep. Larry Hosch, Rep. Erin Murphy, Rep. Jim Abeler, and Rep. Karen Clark.  

They are in the process of reviewing the differences between the two versions.  Rep. Huntley stated that they hope to have the committee’s work completed by Sunday.

That’s an aggressive goal, we will see if they can acheive it–it will require an awful lot of work this weekend.

It found 4 to 3 that the Governor exceeded his authority under the statute. Accordingly, it upheld the lower court ruling reinstating funding for the Special Diet Program. It does not directly impact the other unallotments, but provides a basis for others to seek reinstatements of funds unalloted.

The ruling held that the statute can not be used to balance the state budget when a balanced budget was not enacted into law. Unallotment can only be used to balance a previously balanced budget that became unbalanced because of unexpected changes in subsequent revenues and expenditures.

It’s possible that this ruling could impact the Governor’s ability to use unallotment this session, because the current state budget was never balanced. I’ll keep you informed as I learn more.

Here is a link to the opinion: http://www.mncourts.gov/opinions/sc/current/OPA100064-0505.pdf

Kevin

The proceeds from this revenue was used in the amendment to do the following:  

1.  Reduce the level of Mental Health reductions

2. Eliminate the cuts to the CCSA grants

3. Increase continuing care provider rates by 2% for FY2011 (it appears that this rate increase is adjusted downwards to a 1.5% increase in subsequent fiscal years.  This is unclear, but that is the way I would read the language).  

Although this makes for a good “political” amendment on the House floor, the Governor has clearly stated that he will not support a tax increase.  

The Governor had a press conference this afternoon at which he announced the following:    

Governor Pawlenty today announced a plan to solve the state’s FY 2010-11 budget deficit without the anticipated $408 million in federal matching funds for state Medicaid (FMAP).  The Governor and DFL legislators previously included the federal funds in their budget proposals.  Recently, the National Governors Association and the National Conference of State Legislature have raised concerns regarding the likelihood that Congress will pass the federal funds before the end of Minnesota’s legislative session.

 The Governor’s budget proposal solves the state’s remaining $536 million deficit through four areas: 

Remaining reductions from the Governor’s budget proposed in February:  $405 million

Additional local government aid program reductions:  $30 million

• Use of remaining Douglas J. Johnson Trust Fund:  $65 million
• Additional health and human services program reductions:  $36 million

TOTAL:  $536 million

As you can tell, the negotiating rhetoric increased considerably this afternoon–it will be a fun final two weeks!  By the way, don’t spend the increase yet. 

Kevin Goodno

 Rate Reduction: The bill includes no general rate reduction for medical assistance continuing care providers.

House: Same.

 Customized Living Rates: Effective July 1, 2010, service component rates and service rate limits for customized living services and 24-Hour customized living services are to be reduced by 5%.

House:  No provision.

 Certification of Transitional Consultation: Housing with Services Establishment would not be allowed to enter into a contract to allow a prospective resident unless the prospective resident has received a certificate that he/she has received “transition to housing with services” consultation.

House:  No provision.

PCA Monthly Cap:  The Senate carries a Governor’s unallotment provision to make permanent the cap of 275 hours per month that a PCA may

House:  No provision.

Private Duty Nursing:  Requires private health plan coverage of Private Duty Nursingf services for those people who have both private insurance and are on Medical Assistance.

House: Same.

Case Management: Reform report requirement to define functions, standardize and simplify processes, and increase opportunities for consumer choice.

House: Similar Language.

Waiver Caps: Included the Governor’s waiver cap proposal.  The proposal limits the growth of the Community Alternatives for Disabled Individuals (CADI) at 60 new waivers per month and Developmental Disabilities (DD) Waivers at 6 waivers per month. 

House:  Same.

House Only Provisions:

Rehab Therapies (PT/OT/ST):  Lifetime limits are implemented, but no elimination as the Governor proposed. 

Specialized Maintenance Therapies: eliminated from Home Care Therapies

Elderly Waiver: Elimination of automatic increase in EW case mix caps

Health Teams:  Establishes health teams to support the patient-centered health home.   and provide the services.  Health teams are community-based, interdisciplinary, inter-professional teams of health care providers that support primary care practices.

These providers may include medical specialists, nurses, pharmacists, nutritionists, social workers, behavioral and mental health providers, doctors of chiropractic, licensed complementary and alternative medicine practitioners, and physician’s assistants.

PACE:  Inclusion of PACE proposal.

The House Health & Human Services Committee is meeting right now (Tuesday night) to hear the bill, take testimony, take amendments, and pass the bill onto the next committee.  During this process Rep. Huntley, the Chair of the Committee and Chief Author of the bill, offered an amendment to remove the 1% rate reduction from the bill.  This was paid for by taking additional money from health plans.

The amendment was adopted.  These are still a number of committees that the bill still needs to move through before it goes to conference committee.  But, this is a great position for us coming out of committee.

Kevin