Colorado Legislative Council Staff

STATE and LOCAL

FISCAL NOTE

State General Fund Expenditure Impact

Cash Funds Exempt Expenditure Impact

Federal Funds Expenditure Impact

TITLE:            CONCERNING ENACTMENT OF STATE OPTIONS FOR ENHANCED MEDICAID COVERAGE FOR LOW-INCOME CHILDREN UNDER THE FEDERAL CHILDREN’S HEALTH PLAN LEGISLATION.

Summary of Legislation

            The bill includes the following provisions relative to enhanced Medicaid coverage for low-income children under the federal children’s health insurance legislation:

            •   expands Medicaid coverage for low-income children to obtain enhanced matching funds available under the federal legislation;

            •   changes the resource standard for determining Medicaid eligibility for children, and makes it the same as that used for determining eligibility under the Colorado Works Program;

            •   accelerates the time frame for bringing certain children (known as the “Ribicoff Kids”), into the Medicaid program so that effective July 1, 1998, all children between the ages of 6 and 19 who are otherwise eligible for Medicaid can qualify for Medicaid; and

            •   is effective July 1, 1998; except that the act shall only take effect if the state is eligible to receive an enhanced federal medical assistance percentage, as described in Subtitle J, Chapter 2, of P.L. 105-33, for the additional expenditures resulting from SB 98-134.

Background

            Federal Legislation: State Children’s Health Insurance Program (S-CHIP) — authorized by Congress and effective October 1, 1997, created Title XXI of the Social Security Act. Over a five-year period, $24.5 billion will be available to the states, giving them the option of whether to participate and at what level. The federal legislation represents the largest child health program since Medicaid. It would cover low-income uninsured children below 200 percent of the federal poverty level, up to 19 years of age. Services provided must mirror a standard health care insurance package, such as that provided by a state’s largest health plan. It is estimated that Colorado would receive $42 million in federal funds annually, and would have to provide $21 million in state funds to receive the full federal match. Federal statute sets a limit on the amount of administrative costs that are matchable — 10 percent of total program expenditures.

            HB 97-1304, Concerning the Creation of the Children’s Basic Health Plan (CBHP) — authorized an insurance program for low-income uninsured children, up to 18 years of age and below 185 percent of the federal poverty level. HB 97-1304 appropriated $2 million General Fund in start-up funding to the Children’s Basic Health Plan Trust Fund, and specified that funding for the program come from health care savings, consolidations, reforms, and donations. SB 97-05, Concerning Medicaid Managed Care, specified that net savings to the state associated with moving Medicaid clients into managed care be earmarked for CBHP and a grants program to assist essential community provides to serve medically indigent persons. DHCPF reports $2.9 million of General Fund savings in FY 1998-99 will be available for CBHP.

            HB 98-1325, Concerning the Implementation of the Non-Medicaid StateSubsidized Insurance Program Known as the “Children’s Basic Health Plan” — from a fiscal perspective, changes the date of implementation of the full package of services under the CBHP created in HB 97-1304, from July 1, 1998, to March 1, 1998, and allows DHCPF to access $1.8 million in federal funds under Title XXI.

NOTE:  The CBHP under HB 97-1304 and HB 98-1325 is an option the state can exercise under Title XXI. CBHP is an insurance model, is not an entitlement program, is capped, and provides services to children up to 185 percent of poverty. The funding level for CBHP for FY 1998-99 will be determined through the budget process.

SB 98-134 is an option the state can exercise under Title XXI. Services offered under it are an entitlement and are provided to children up to 133 percent of poverty.

             Department of Health Care Policy and Financing. For FY 1998-99, DHCPF will require $14,944,416 to comply with the bill’s provisions. The amount estimated for FY 1999-00 is $15,489,441. Costs will be incurred in several areas as noted below:

            Medicaid Services — DHCPF indicates that 1,508 children will be newly eligible each month (or 18,097 children total with a total cumulative monthly enrollment of 117,631 for FY 1998-99). The average monthly cost for these children is $109.57 per month or $1,314.84 annually. Total expenditures are estimated at $12,888,774. Of this amount, $4,333,206 is General Fund (33.62%) and $8,555,568 is federal funds (66.38%). In its estimate of costs for SB 98-134, DHCPF assumes 22,188 children who would qualify under SB 98-134 will be receiving services under CBHP. To the extent that fewer children are served in CBHP, then a greater number of children would be served under SB 98-134, thus increasing the overall cost. The number of children served in CBHP will be determined during figure setting for DHCPF and cannot be identified at this time.

            Early and Periodic Screening, Diagnosis, and Treatment Program (EPSDT) — Federal law requires EPSDT services be made available to all Medicaid children. Increased case management costs due to the bill’s proposed expansion will require $401,210 in FY 1998-99 (18,097 children x $22.17 per child). This amount is funded 50 percent with General Fund and 50 percent with federal funds in DHCPF. Because the program is administered by the Department of Public Health and Environment, $401,210 is transferred to it as cash funds exempt.

            Client-Oriented Information Network (COIN) — DHCPF will require 60 hours of edits to this computer system to comply with the bills provisions. At a rate of $65 per hour, the department will require $3,900 for FY 1998-99 only (60 hrs. x $65/hr = $3,900).

            Administration — Additional county staff will be required to conduct eligibility determinations on 18,097 new cases eligible for Medicaid under SB 98-134. It is assumed that one-twelfth of these new cases will be added each month during FY 1998-99, resulting in an average monthly caseload of 8,364. The workload standard for eligibility technicians is 284, after weighting the time for various tasks related to these new cases (client application/approval, eligibility redeterminations, case changes, address changes, inter-county transfer changes, Medicaid provider calls, and replacement of the Medicaid authorization card). There will be a need for 29.5 FTE additional eligibility technicians and 19.0 FTE combined administrative and support staff. Total personal services and operating expenses are estimated at $1,650,532 in FY 1998-99. For FY 1999-00, the average monthly caseload is anticipated to be 17,054, resulting in a need for 60.0 FTE additional eligibility technicians and 37.6 combined administrative and support staff. Total personal services and operating expenses are estimated at $2,965,207.

            Although eligibility determinations for children will be done at the county level with county staff, there is no agreement requiring counties to share in the administrative costs of determining eligibility for Title XXI as there is with Medicaid. Thus, all administrative costs will be funded with General Fund and federal funds in the DHCPF, then transferred as cash funds exempt to the DHS. Under the federal Title XXI legislation there is a 10 percent cap on administrative expenses which are eligible for enhanced federal funding (66.38%); any amount above that 10 percent ceiling is eligible for federal funding at 50 percent. Thus, the total administrative costs of $1,650,532 under SB 98-134 include $1,036,384 federal funds and $614,148 General Fund.

            The following table provides a summary of costs under SB 98-134.

Local Government Impact

            Although eligibility determinations for children will be done at the county level with county staff, there is no agreement requiring counties to share in the administrative costs of determining eligibility for Title XXI as there is with Medicaid. Thus, all administrative costs will be funded with General Fund and federal funds in the Department of Health Care Policy and Financing, then transferred as cash funds exempt to the Department of Human Services.

Spending Authority

            The fiscal note indicates that for FY 1998-99, the Department of Health Care Policy and Financing should receive an appropriation of $14,944,416; and of this amount, $5,149,908 is General Fund and $9,794,507 is federal funds. The Department of Human Services should receive an appropriation of $1,650,532 cash funds exempt. The Department of Public Health and Environment should receive an appropriation of $401,210 cash funds exempt.

Departments Contacted

            Health Care Policy and Financing

            Human Services

            Public Health and Environment