Presentation to Virginia Network of Private Providers
Susan Massart, House Appropriations Committee
Mike Tweedy, Senate Finance Committee
October 15, 2015
Health & Human Resources
2015 Session
 How Did We Begin the 2015 Session?
 What Changed in the 2015 Session?
 Spring Revenue Changes
 Impact of Revenue Changes and Adoption of HB 1400
 Looking toward the 2016 Session
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How Did We Begin the
2015 Regular Session?
 At the beginning of the 2015 Regular Session, the Governor’s proposed
biennial budget (HB 1400) included a net spending increase of $87.2
million for the FY 2014-16 biennium
 HB 1400 amended the 2014-16 budget passed in the 2014 Special Session I.
 Assumed $94.8 million in additional resources
 Included $51.7 million in year-end balances and $272 million in savings
strategies
 Contained an unappropriated balance of $7.6 million GF
 Assumed growth rates in revenue (no change from prior budget):
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FY 2015: 2.7%
FY 2016: 2.9%
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How Did We Begin the 2015 Session?
Health & Human Resources (HHR)
 HB 1400 included a net decrease of $193.5 million GF over the biennium for HHR,
with 69% of new funding driven by mandated programs
 Additional spending of $85.6 million offset by $279.1 million in declining expenditure forecasts and
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savings strategies
Net decrease of $267.7 million GF for Medicaid and FAMIS forecasts
Medicaid forecast savings would have been greater except for inclusion of $116.9 for the Governor’s
“A Healthy Virginia” initiatives
Mandatory spending was mainly related to lower revenue for the Health Care Fund, expected loss
of Medicaid revenue at Piedmont Geriatric and Catawba Hospitals, delay in individuals
transitioning from training centers, increase in involuntary mental commitment costs, offset loss of
child support enforcement revenue, and backfill loss of Medicare incentive payments.
Discretionary spending included costs to redesign the Day Support Waiver along with rent
subsidies ($1.9 million GF).
Included savings of:
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$194.7 million GF in Medicaid forecast savings
$51.4 million by using a cash balance in the Health Care Fund
$21.6 million GF in FAMIS forecast savings
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HHR Issues for 2015 Session
 Governor’s Access Program (GAP) for the Seriously Mentally Ill
 Foster Care to 21
 ID/DD Waiver Redesign
 Provider Rates
 Mental Health Services
 Other Medicaid Provider Rates
 Safety Net Programs for the Uninsured
 Fee Increases in the Governor’s Budget
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HB 1400: Major Differences Between
House and Senate HHR Budgets (GF $ in millions)
Major Spending Actions
Behavioral Health Services
House
Senate
$6.1
$7.9
$0
$8.5
Medicaid Provider Rates
$0.2
$9.3
Health Safety Net Services
$6.3
$2.0
Services to People with Disabilities (VR, Brain Injury, LTESS)
$2.3
$0.5
Other HHR
$2.6
$1.6
Total:
$17.5
$29.8
Central Accounts (Restoration of Budget Cuts and Fees)
$5.0
$7.2
ID / DD Waivers (Primarily Rates)
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HB 1400: Major Differences Between
House and Senate HHR Budgets
 Behavioral Health (biennial amounts)
 House: Modified Income Eligibility for GAP Program from 100 to 60%
and eliminated a waiting list for services
 House: Therapeutic Drop-Off Centers ($1.6 million GF)
 House: Child Crisis Psychiatry and Crisis Services ($2.5 million GF)
 Senate: Permanent Supportive Housing ($4.3 million GF)
 ID/DD Waivers (biennial amounts)
 Senate: Increased rates per consultant rate study ($8.2 GF) – included
a one percent rate increase for group homes
 House: Delayed Day Support waiver redesign (-$1.9 million GF)
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HB 1400: Major Differences Between
House and Senate HHR Budgets
 Medicaid Provider Rates
 Senate: Increased personal care rates by two percent ($5.5 million GF)
 Senate: Eliminated ER fee reduction for non-ER claims ($2.2 million GF)
 Senate: Increased Medicaid supplemental payments to Children’s Hospital
of the King’s Daughters ($1.4 million GF)
 Health Safety Net Services
 House: Expanded Services at Free Clinics ($3.1 million GF)
 House: Expanded Services at Community Health Centers ($2.5 million GF)
 House: Funded additional Medication Assistance ($0.5 million GF)
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HB 1400: Major Differences Between
House and Senate HHR Budgets
 Services for People with Disabilities
 House: Increased funding for Vocational Rehabilitation Program
($1.0 million GF)
 House: Increased funding for Brain Injury Program ($750,000 GF)
 House: Increased support for Public Guardianship ($500,000 GF)
 Other HHR
 House: Eliminated Foster Care to 21 Program (-$3.2 million GF)
 Senate: Included language directing development of a Medicaid
Provider Assessment for Hospitals
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2015 Session: Conference
 The House and Senate Budget Conferees found common ground on most
of the major differences in each Chamber’s budget in late February
 During Conference, an update to the revenue forecast occurred, resulting
in additional GF resources available
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Additional money helped resolve many differences in Conference
Forecast of 4.7% in FY 2015 and 3.3% in FY 2016
 The Final Conference Report reflected an adjustment to the biennial
revenue forecast of $532.2 million which was primarily used for:
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High-Need Capital Outlay ($141.4 million GF)
Rainy Day Fund deposit ($129.5 million GF)
Compensation Increase ($113.9 million GF)
VRS Rates ($32.3 million GF)
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HHR Conference Actions
 Adopted New Program for the Seriously Mentally Ill ($96.5 million GF)
 Provides targeted mental health and medical services to individuals with serious mental
illness
 Income eligibility up to 60 percent of the poverty level
 Allows nearly 22,000 individuals access to needed care, eliminates waiting list
 Provided $42.1 million GF of additional funding in HHR
 Community Behavioral Health Services ($8.9 million GF)
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$3.0 million GF for 3 additional PACT teams
$1.8 million GF for 6 additional therapeutic drop-off centers
$2.0 million GF to expand children’s psychiatry and crisis services
$2.1 million GF to provide stable, supportive housing for 150 individuals with serious mental illness
 Safety Net Services ($27.6 million GF)
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$23.0 million GF to enroll 35,000 children in Medicaid and FAMIS, allow state employees to enroll
their children in FAMIS, and provide dental coverage to 45,000 pregnant women enrolled in Medicaid
for FAMIS MOMS
$3.1 million GF for Free Clinics
$1.0 million GF for Community Health Centers
$500,000 for medication assistance counselors
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HHR Conference Actions
 Medicaid Provider Rates ($15.4 million GF)
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$8.2 million GF and $8.2 million NGF in FY 2016 to increase Medicaid Intellectual and Development
Disability waiver rates
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Includes a 2% increase for congregate care rates, 5.5% for in-home residential supports, 2% for day support and
prevocational services, 10% for therapeutic consultations and 15.7% for skilled nursing services
$3.5 million GF and $3.5 million NGF in FY 2016 to increase Medicaid personal care rates by 2%
$2.2 million GF and $2.2 million NGF to eliminate the practice of pending and reducing Medicaid payments
for emergency room triage services
$1.4 million GF and $1.4 million NGF in FY 2016 to increase supplemental physician payments at Children’s
Hospital of The King’s Daughters
 Services for Individuals with Disabilities ($4.2 million GF)
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$1.0 million GF for the vocational rehabilitation program to address the waiting list
$864,943 GF to restore and expand funding for long-term employment support services
$750,000 GF to restore and expand funding for community-based brain injury services
$600,000 to restore funding for personal care services for disabled individuals who are not eligible for
Medicaid
$580,800 GF to restore funding reductions for the Centers for Independent Living
$400,000 to restore funding for Didlake
$605,000 GF in FY 2016 for Part C early intervention services for infants and toddlers
$500,000 for public guardianship services
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HHR Conference Actions
 Elimination of Fee Increases
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$3.7 million GF in FY 2016 to rollback the proposed restaurant inspection fee from $285 to $40
$947,000 GF in FY 2016 to eliminate the proposed licensing fee for providers of adult behavioral health
and developmental services
$221,568 GF in FY 2016 to eliminate a proposed increase in the tobacco stamp tax
$117,000 GF to eliminate proposed fees for Community Services Boards and private providers in order
to use on-line training courses offered by the Dept. of Behavioral Health and Developmental Services
 Key Budget Language
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Directs the Secretary of Health and Human Resources to conduct an analysis of provider assessments
and present a plan with options for consideration by the 2016 General Assembly
Requires the Secretary to convene a workgroup on the Certificate of Public Need (COPN) process and
report back to the General Assembly prior to the 2016 Session
Directs the Department of Medical Assistance Services and the Department of Behavioral Health and
Developmental Services (DBHDS) to develop a comprehensive plan for the redesign of the Medicaid
Intellectual and Developmental Disability waiver programs
Directs DBHDS to review Piedmont Geriatric and Catawba hospitals and examine alternate options
for care
Continues a joint subcommittee of the House Appropriations and Senate Finance Committees to
monitor training center closures, options for transitioning individuals into the community, and plans
for redesigning Medicaid waivers
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Virginia’s General Fund Budget
82% of the GF Budget goes to Education,
Health and Human Resources, and Public Safety
 30% of the general fund budget is
comprised of HHR funding
 Medicaid and Children’s Health
Insurance makes up 71% of the
HHR general fund budget at $7.8
billion
 DBHDS’ budget is the next largest
at almost $1.4 billion comprising
only 12.3% of the HHR general
fund budget
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Budget Development Reality
 The Governor and the General Assembly largely operate on the margin
when it comes to the budget
 Many decisions are driven by federal mandates, state law, and previous
“high-priority” commitments that often require funding changes
related to enrollment and/or population growth
 Discretionary spending proposed by Delegates and Senators compete
with new spending proposed by the Governor
 While general fund revenues are improving, growth will not be
sufficient to satisfy agency budget requests
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Where Are We Now?
 Surplus - What Surplus?
Major Sources/Uses of FY 2015 General Fund Surplus
Sources
Amount ($ in millions)
Revenue collections above official forecast
Transfers to the General Fund (actual vs. forecast)
$549.6
(11.1)
Withdrawal from Rainy Day Fund (actual vs. forecast)
(2.3)
Natural Disaster Reserve
$1.8
Total Major Revenue Sources
$538.0
Addition to reserve for deposit to Rainy Day Fund in FY
2017 above amount already budgeted ($605.6 million
required deposit less $129 million in budget)
$476.1
Uses
Reserve for Water Quality Improvement Fund
Total Major Uses
61.7
$537.8
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Where Are We in the Budget Process?
 First time in several years that state agencies have not been asked to submit
budget reduction proposals
 State agencies have just completed the first round of budget requests to the
Department of Planning and Budget
 Requests reflect “have to do” or mandatory programs and other agency
priorities
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Requests for the current year total $77.5 million
Requests for the 2016-18 biennium total $2.1 billion
 Increasing costs of mandatory programs appear to be significant
 K-12 Standards of Quality Rebenchmarking
 Per diem payments to local and regional jails
 Inmate medical costs
 Aid to local police departments
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HHR Budget Drivers
 For Health and Human Resources a number of big issues will drive budget
decisions
 Medicaid and Children’s Health Insurance Program forecast
 Medicaid provider rates
 U.S. Department of Justice Settlement Agreement
 Redesign of the Medicaid waivers for individuals with intellectual and
developmental disabilities
 Behavioral health and substance use disorder treatment services, including
psycho-geriatric system of care
 Children’s Services Act (formerly Comprehensive Services Act or CSA)
 Foster Care and Adoption Subsidy caseloads
 Information technology needs
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HHR Budget Drivers
 Forecasts for HHR “mandatory” programs are still being developed
 Medicaid and Children’s Health Insurance Program forecast
 Foster Care and Adoption Subsidies
 Budget requests for other mandatory and high priority programs indicate
growing costs, for example:
 Medicaid provider rate increases total $95.4 million GF over the 2016-18 biennium
 Children’s Services Act (formerly Comprehensive Services Act) caseload and
utilization
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$16.4 million in FY 2016
$32.8 million over the 2016-18 biennium
 Medicaid decertification of Hancock Geriatric Treatment Center at Eastern State
Hospital will require up to $4.7 million in FY 2016 and up to $20.3 million over the
2016-18 biennium, depending on policy decisions
 Agency information technology requests total $38.6 million GF over the 2016-18
biennium
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U.S. Dept. of Justice (DOJ) Settlement Agreement
 Agency budget requests to comply with DOJ Settlement Agreement (not including
waiver redesign)
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$7.3 million GF in FY 2016
$49.2 million GF over the 2016-18 biennium
 October 23, 2015 status conference between parties in open court could influence funding
decisions
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DOJ filed a Statement of Issues and Motion for a Court-Ordered Schedule regarding the
implementation of the Settlement Agreement
DOJ cites a number of issues that necessitates a court-ordered schedule for compliance
 Failure to develop community services and integrated setting
 Crisis services do not meet the needs of the ID/DD population
 Failure to provide integrated living settings
 Continued reliance on segregated housing and inappropriate placements
 Failure to provide more integrated settings for children in nursing facilities and large institutions
 Failure to provide skilled nursing services for medically complex individuals
 Failure to provide integrated day opportunities
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 Failure to ensure quality and risk management
ID/DD Waiver Redesign
 DBHDS proposal has been submitted to Department of Planning and
Budget for fiscal review
 Preliminary costs for the ID/DD waiver redesign
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$24.8 million GF over the 2016-18 biennium for rate increases
$7.8 million GF over the biennium for new services
 Costs will be refined during the fiscal review process
 House Appropriations and Senate Finance Subcommittees on Health
and Human Resources had preliminary briefings on the waiver redesign
but several policy decisions and fiscal decisions had not been finalized
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The Road Ahead
 Caution will continue to be the guiding principle in any funding decisions
going forward
 Revenue growth will not meet programmatic requests, so difficult decisions will
have to be made
 Medicaid forecast will be key in any decision-making due to the magnitude of the
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program
Tenor and substance of court-ordered changes to the DOJ Settlement Agreement will
impact budget decisions
Fiscal and operational uncertainties related to the state’s delivery system for psychogeriatric treatment will be an issue
Health care safety net will continue to be an issue
Work of the Joint Subcommittee to Study Mental Health Services in the 21st Century
may influence budgetary decision-making during the 2016 Session
 Election results may play a role in defining key issues for Session
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Sources of Budget Information
House Appropriations Committee Website
http://hac.virginia.gov/
Senate Finance Committee Website
http://sfc.virginia.gov/
Department of Planning and Budget
http://www.dpb.virginia.gov/
Commonwealth Datapoint (APA)
http://datapoint.apa.virginia.gov/
Virginia Performs
http://vaperforms.virginia.gov/
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