Colorado Legislative Council Staff

STATE and LOCAL

REVISED FISCAL NOTE

(replaces Fiscal Note dated April 3, 1998)

State General Fund and Cash Funds Exempt Expenditure Impact

Local Expenditure Impact

Federal Funds Expenditure Impact

TITLE:            CONCERNING PARITY FOR LONG-TERM CARE SERVICES IN MEDICAID.

Summary of Legislation

             The reengrossed bill extends spousal protection of income and resources to spouses of persons enrolled in the PACE Program, persons receiving Home- and Community-Based Services in the Medicaid Program, and persons receiving services under the Integrated Care and Financing Project. The bill includes an effective date of July 1, 1998, with the extension of spousal protection effective July 1, 1999. The bill includes a “no appropriation” clause for FY 1998-99, and further states that for FY 1999-00 and beyond, savings from the deinstitutionalization project shall be applied to cover additional costs associated with implementation of SB 98-079.

State Expenditures — No New Costs in FY 1998-99

            Department of Health Care Policy and Financing (DHCPF) — will require $641,925 in FY 1999-00 to comply with the bill’s provisions. The bill extends spousal income and financial resource protection provisions, currently available to Medicaid clients in nursing facilities, to clients receiving Home- and Community-Based Services under Article 4, Part 6 of the Medical Assistance Act accordingly:

          —   Home- and Community-Based Services for the Elderly, Blind and Disabled (HCBS-EBD);

          —   Home- and Community-Based Services for Persons with Developmental Disabilities (HCBS-DD);

          —   Home- and Community-Based Services for persons with health complexes related to Acquired Immune Deficiency Syndrome (a.k.a. HCBS for Persons Living with AIDS, or HCBS-PLWA);

          —   Home- and Community-Based Services for Persons with Major Mental Illness (HCBS-MI); and

          —   Home- and Community-Based Services for Persons with Brain Injury (HCBS-BI).

Nursing facility spousal protection includes the following two provisions:

(1)       Monthly Income — allows a portion of an institutionalized client’s monthly income, that otherwise would be collected as patient payment to help defray Medicaid costs, to remain with the noninstitutionalized spouse to help with living expenses. The federally established maximum needs standard for the noninstitutionalized spouse is $2,019 per month, effective January 1, 1998.

(2)       Community Spouse Resource Allowance — allows the noninstitutionalized spouse to avoid impoverishment by keeping assets (i.e., savings and investments) up to a set maximum dollar value, assets that the couple otherwise would have to spend down in order for the institutionalized spouse to qualify for Medicaid nursing facility care. The federally established community spouse resource allowance is set at $16,152 minimum up to $80,760 maximum, effective January 1, 1998.

            This fiscal note bases HCBS spousal protection costs on the current nursing facility spousal protection guidelines.

            Client Services — DHCPF will require $1,850,210 in FY 1999-00 for medical services to an estimated 207 clients. [See Table 1 on page 4 for an itemized breakdown of client categories.]

            Case Management — DHCPF will require $178,848 in FY 1999-00 for case management services to clients through the Single Entry Point (SEP) system. SEPs are paid an annual fee to provide case management. The annual fee for FY 1999-00 is estimated at $864.

            Systems Edits — DHCPF will require 100 hours of programming changes to its Medicaid Management Information Systems (MMIS) claims payment system at a cost of $109 per hour. Additionally, the Client-Oriented Information Network (COIN) will require 100 hours of programming changes at a cost of $65 per hour. These are one-time only costs for setup. Total costs for FY 1999-00 are estimated at $17,400.

            PACE Program — Extension of spousal protection to clients in the PACE Program is federally required. Due to the small number of clients who will be affected (estimated at 8) and the unique parameters of the program, this provision of the bill is assessed as having no fiscal impact.

            Integrated Care and Financing Project — The reengrossed bill extends spousal protection to persons receiving services under the Integrated Care and Financing Project. This pilot project in Mesa County has not yet been approved by the Health Care Financing Administration. Because total statewide costs are identified in Client Services above, there will be no additional costs to provide spousal protection to persons who eventually receive services under this project.

            Offsetting Cost Savings/Costs Avoided — For FY 1999-00 the combined cost savings/costs avoided under SB 98-079 are estimated at $1,450,866. Cost savings are based on 27 persons leaving nursing facilities for HCBS services with a total savings of $621,800. Additionally, it is estimated that 36 persons who would otherwise be placed in a nursing facility at an average annual cost of $23,030 will now be receiving HCBS services at an average annual cost of $4,722. For the purpose of this fiscal note, the $23,030 annual cost for nursing facility care is based on an annual cost of $93 per day times 8.15 months, which is the average length of stay for nursing facility patients. Total costs avoided for FY 1999-00 are estimated at $829,066. For FY 1999-00 the combined cost savings/costs avoided are estimated at $1,450,866 as noted below.

            Savings from the Single Entry Point Deinstitutionalization Pilot Project — This pilot project was implemented in FY 1997-98. Section 9 of the reengrossed bill includes an appropriation clause requiring DHCPF to apply savings associated with this project to cover additional costs under the bill for FY 1999-00. Additionally, DHCPF is required to present those savings to the Joint Budget Committee for FY 1999-00. DHCPF indicates that it will do a formal evaluation of the project in September 1998 and report to the Joint Budget Committee once completed. Although these savings have not been thoroughly reviewed, rough estimates to date indicate savings could be as much as $460,000, with approximately $226,000 of that representing General Fund. The fiscal note does not reflect these savings because they are preliminary and may be over- or understated. It is assumed that once the savings are reviewed and reported to the Joint Budget Committee, they will be factored into implementation of SB 98-079.

            Department of Human Services (DHS) — will require $46,333 in FY 1999-00 to conduct eligibility determinations and process HCBS spousal protection applications in the county departments of social services. It is estimated that the application process will take 8 hours. Although no longer authorized in the Long Appropriations Bill, it is estimated that DHS will require 1.3 FTE county staff in FY 1999-00 to conduction eligibility determinations for this new program.

Local Government Impact

            There are no new county costs in FY 1998-99. The county share for FY 1999-00 is $9,267 and this amount represents the counties’ 20 percent share for conducting eligibility determinations.

Spending Authority

            The fiscal note indicates that no appropriation is required for FY 1998-99. The bill includes a “no appropriation” clause.

Departments Contacted

            Health Care Policy and Financing                  Human Services

TABLE 1: Summary of Total Costs Under SB 98-79 in FY 1999-00

FACTS AND ASSUMPTIONS

Nursing Facilities Spouse Protection:

1.         Implemented in FY 1989-90.

2.         FY 1992-93 — 555 persons (5.7% of Medicaid nursing facility clients) were receiving services due to spouse protection provisions.

3.         FY 1997-98 — 1,162 persons (11.1% of Medicaid nursing facility clients) are receiving services due to spouse protection provisions.

4.         DHCPF’s appropriation for FY 1998-99 for nursing facility care is $2,743 per month.

5.         Current average cost for nursing facility care for spouse protection clients is $37 million.

HCBS Spouse Protection:

1.         HCBS-EBD — This program’s client characteristics most closely resemble those of nursing facility residents: 13.7% of nursing facility residents have spouses and 17.7% of HCBS-EBD clients have spouses. Caseload growth estimated at 1.5 % annually.

2.         HCBS-PLWA — One-third of this program’s caseload includes married clients (5.1%). Caseload growth estimated at 0.5% annually.

3.         HCBS-MI — This program’s caseload includes 7% married clients. Caseload growth estimated at 0.6% annually.

4.         HCBS-BI — This program’s caseload is a younger population and includes 50% married clients. Caseload growth estimated at 0.6% annually. HCBS-BI is an alternative to an acute level of care (rehabilitation hospitalization) rather than an alternative to long-term care. Assumes the addition of new clients as a result of extending spouse protection will not be cumulative over time.

5.         HCBS-DD — Client characteristics of this program are not at all similar to those of nursing facility residents. Only one client with a spouse was admitted to the HCBS-Supported Living Services for the Developmentally Disabled Program over the last two years. The fiscal note assumes one client per year.