Senate and House Budget Summary

Senate and House Budget Summary

The Senate passed its version of the 2014-15 continuation budget on May 31 and the House just passed its own, very different version, on Friday, June 13.  Two of the most significant differences are teacher raises and changes to the state's Medicaid program. As discussed below, the Senate provides for larger salary increases for teachers on the condition of relinquishing tenure, but also takes large cuts to Medicaid eligibility. The House provides for more modest salary increases for teachers, retains tenure, and preserves Medicaid eligibility, but increases the reliance on the lottery for Recurring spending while doing so. Negotiating a final compromise on these issues will be the focus over the next few weeks.

The 2014-15 Budget

Over the coming days, and perhaps weeks, budget conferees will meet to work out their differences. It is notable that 8 Democrats joined with the Republican majority to vote in favor of the bill in the House. They were Reps. Marcus Brandon, D-Guilford, William Brisson, D-Bladen, Tricia Cotham, D-Mecklenburg, Ken Goodman, D-Richmond, Charles Graham, D-Robeson, Edward Hanes, D-Forsyth, Paul Tine, D-Dare, and Ken Waddell, D-Columbus. One Republican, Rep. Debra Conrad, R-Forsyth, voted against the measure.

Health and Human Services

                       

MEDICAID

·         The Senate budget adds $350 mil in funding for next year’s rebase and to close this year’s shortfall. The House budget only includes $75 mil to cover the current year's shortfall. This is sure to be a major sticking point in budget negotiations.

·         Differing Proposals for the Medicaid Organization:

o   The Senate proposes $5 mil in funding for consultants, contractors and initial staffing for the development of a new, independent organization to oversee NC’s Medicaid program.

o   The House provides $1 mil to staff Medicaid Reform efforts. However, it provides for a new method of appointing the Medicaid Director – upon recommendation by the Secretary of Health and Human Services, appointed by the Governor, and subject to confirmation by the General Assembly, for a term of five years.

·          Recipient Appeals: the Senate proposes changes to the appeal period, shifts the burden of proof to the recipient, and adjusts mediation language to provide for dismissal if a recipient requests but does not then “meaningfully participate”.  The House only proposes adjustments to the mediation language, only specifying that a case will be dismissed if a recipient accepts an offer to mediate but does not attend without good cause.

·         The Senate proposed several changes that were not in the House:

o   Imposes a 3.5% assessment on Managed Care Organizations (MCOs) for a savings of $60 mil – shortly after the Senate budget passed. DHHS announced that the assessment would not be possible;

o   Implements a preferred drug program for mental health drugs;

o   Eliminates thousands of aged, blind and disabled people from the program by eliminating the Medically Needy category and automatic eligibility through the Special Assistance program;

o   Directs the Division of Medical Assistance to draft a waiver or proposal that limits Medicaid coverage for the aged, blind, and disabled to the minimum required to meet mandatory requirements of the Medicaid program and the Americans with Disabilities Act by March 1, 2015.

o   Imposes additional assessments for hospitals and other providers; and

o   Includes a 2% provider rate reduction, effective January 1, 2015 for all fee-for-service providers except for drugs, nursing homes, all cost-based providers and services where rates are set by the federal government, negotiated through a managed care contract, or as otherwise specified.

o   Study Additional 1915(c) Waiver: Direct DMA to design and draft a 1915(c) waiver  by March 1, 2015 that meets the following requirements: (1) The waiver should create 1,000 new slots each year for 3 years, to serve a total of 3,000 additional adults with developmental disabilities from January 1, 2016, to June 30, 2019.(2) The budget for each slot should be capped at twenty thousand dollars ($20,000) per plan year per beneficiary, and slots will target individuals on the registry of unmet needs. (3) The slots should be managed as part of the LME/MCO managed care system

o   Establishes a TBI study commission

o   Additional PCS rate reductions

o   The Senate adjusts the nursing home case mix ratio for a savings of $2.2 mil.

o   Eliminates CCNC.

·         The House proposed several changes that were not in the Senate:

o   Substitution Of Generic Drugs For Unavailable Preferred Drugs: This provision would allow pharmacists to substitute and dispense a generic drug in place of a preferred drug without prior authorization, when all of the following are true:  (1) The Division normally requires the dispensing of the preferred drug over the equivalent generic drug. (2) The pharmacist has not been able to acquire the preferred drug from at least two separate wholesalers within the two weeks prior to dispensing the generic substitute. (3) The pharmacist maintains records of the failed attempts to acquire the preferred drug. Such records shall be open to inspection and audit by the Division. (4) The prescriber has not indicated that the preferred drug is "medically necessary." IF DMA finds that there are savings to the Medicaid program.

o   1915(C) Innovations Waiver Services Assessment: Provides authorization to do an assessment on 1915(c) service providers if it allowed.

o   Directs DMA to draft one or more waivers that will expand mandatory enrollment in primary care case management to Medicare and Medicaid dual eligibles.

o   Non-Emergency Medical Transportation (NEMT): Directs DHHS to develop and issue a request for proposal for a contract beginning January 1, 2015, for the statewide management of Medicaid nonemergency medical transportation services.

o   Ambulance Transports To Crisis Centers:  Directs DMA to study the practice of reimbursing for ambulance transports that divert individuals in mental health crisis from hospital emergency departments to alternative appropriate locations for care. The Department shall study existing pilot programs in North Carolina, as well as other states, and shall specifically study expansion of the Wake County Emergency Medical Services (EMS) Advanced Practice Paramedics pilot program.

·         Provisions in BOTH Senate and House (i.e., in all likelihood, these will be in the final budget):

o   Modify Intensive In-Home Service: No later than October 1, 2014, DMA shall modify the service definition for the Intensive In-Home Service to reflect a team-to-family ratio of one Intensive In-Home team to families for both the Medicaid and NC Health Choice programs.

o   Traumatic Brain Injury Waiver: Directs DMA to design and draft a waiver to add a new service package for Medicaid eligibles with traumatic brain injury (TBI). (Language varies slightly between Senate and House, House directs DMA to develop the waiver in conjunction with the Brain Injury Association.)

o   PCS Study: The Senate provided $200k to the Legislative Services Commission to contract for a study to define a new limited PCS optional service program. This amount represents the State share of the total funding of $400,000. The remaining source of funding will come from the Medicaid administrative funding from the Centers for Medicare and Medicaid Services (CMS). The report from this study is due December 1, 2015.

o     Home Care agency Moratorium: The Senate proposes a permanent and the House a 2 year moratorium on new home care agency licenses., with certain exceptions including upon determination that an area is in need of increased access to care.

o   Special Care Unit Moratorium modified: Both the Senate and the House would allow the DHHS to issue a license to a facility that was in possession of a certificate of need as of July 31, 2013, that included authorization to operate special care unit beds. The Senate makes the moratorium permanent.  The House ends the moratorium July 1, 2015.

o

EARLY CHILDHOOD

NC Pre-K

·         $5m in non-recurring funds for 1,000 new PreK slots (House and Senate). House includes an additional $4 mil increase from TANF funds, to accommodate the recommended teacher pay increase and additional slots.   

SOCIAL SERVICES

Child Protective Services Funding (Senate and House)

·  $8.3 mil in additional funding for child protective services and $4.5 mil for expanded in-home services.

·  The General Fund appropriation for Child Protective Services is increased by 101% to $27 million.

Enhance Oversight of County Child Welfare Services (Senate and House)

·  Provides funding for nine positions to enhance oversight of child welfare services in local county departments of social services.

·  These positions will monitor, train, and provide technical assistance to the local county departments of social services to ensure children and families are provided services to address safety, permanency and the well-being of children who are served by child welfare services. 

Child Protective Services Statewide Evaluation (Senate and House)

·  Provides funding for an independent, statewide evaluation of Child Protective Services at local departments of social service and the Department of Health and Human Services.

·  The evaluation will assess performance, caseload sizes, administrative structure, funding and worker turnover and include recommendations on improving Child Protective Services.

Child Protective Services Pilot Program (Senate and House)

·  Provides funding to develop and implement a pilot program designed to enhance coordination of services and information among agencies to improve the protection and outcomes for vulnerable children served through Child Welfare Services. The agencies included in the pilot are local county departments of social services, local law enforcement, the court system, Guardian Ad Litem programs and other agencies as determined appropriate by the Department of Health and Human Services. 

Foster Care Assistance Payments 

·  Foster care assistance increased by $5 mil. (Senate and House)

Drug Testing for Work First

·         The House budget provides $343K in funding for implementation of drug testing Work First applicants and recipients (a requirement passed but not funded last year).

State/County Special Assistance (SA): A number of changes are proposed in the Senate budget to SA eligibility to accompany the elimination of Medicaid eligibility described above

·         State County Special Assistance Income Eligibility: Changes SA eligibility to income at or below 100% of Federal Poverty level, regardless of where recipients reside. Current recipients of SA are grandfathered in and will continue to receive SA. Saves $800k in the first year.  Accompanying reduction of $4.2 mil for reduced SA caseloads. (Senate only)

·         Adult Care Home Case Management (Senate and House): Eliminates funding for the Adult Care Home Case Management Service which ended in June 2013. This service provided funding for county DSS workers to perform the assessment and case management for individuals in adult care homes and licensed family homes who were heavy need residents. The Personal Care Services (PCS) Program now uses an independent assessment to determine eligibility for PCS and therefore the Case Management Service is no longer needed.

PUBLIC HEALTH

·         School nurses received a $3.5M cut in the Senate budget but there are no cuts in the House budget.

·         Both the Senate and the House continue to reduce funding for Early Intervention to the Children’s Developmental Services Agencies (CDSA) by $10 mil.  The Senate budget directs DHHS to close 4 CDSAs by January 1, 2015. There is additional language requiring the DHHS to maintain current eligibility standards. The House removes the language directing the program to maintain eligibility but allows them flexibility in achieving the $10 mil in savings.

Mental Health/Developmental Disabilities/Substance Abuse Services

·         The Senate Closes the Wright School, a $2.7 mil cut. The Wright School provides residential mental health treatment to NC’s children ages 6 to 12 with serious emotional and behavioral disorders. The House does not take this reduction.

• $1.8 mil reduction to LME/MCO administration through projected savings from consolidation from 9 LME/MCOs operating in FY 2013-14 to 7 or fewer by June 30, 2015. (Senate and House)

·         Eliminates 7 positions at Central Office Administration. (Senate and House)

• Eliminates $6 mil LME/MCO risk reserve. (Senate and House)
• Allocates $2.3 mil in TBI funding to the Brain Injury Association, residential programs and other specified purposes for individuals with TBI (Senate and House).
• The House allocates $5 mil for community-based crisis services.

Aging

·         The Senate proposes a $900k reduction to the Home and Community Care Block Grant but the House does not make the reduction.

·         The House allocates $100k Non-Recurring for Senior Center capital costs

K-12 EDUCATION

·         The Senate provides $465M funding increase for teacher salary in return for tenure (average 11% increase). The House budget proposes $176 mil Recurring and $2 mil Non-recurring to increase the base pay for new educators to $33,000 and an average 5% pay raise for all step-eligible educators (not tied to relinquishing tenure)

·         The Senate proposes a $233 mil reduction for teaching assistants beginning July 1, only funding assistants for kindergarten and first-grade classes. The House does not take this reduction.

·         The Senate and the House both propose a $4 mil cut to classroom teachers as a result of rescinding requirement in last year’s budget to improve teacher to student ratio in grades 2 and 3.

·         Adds $18.7 million to extend supplemental pay for teachers with Master’s degrees to those who have completed at least one course in a graduate program as of July 1, 2013. (Senate and House)

·         Includes an additional $6 million to fully fund the Read to Achieve program, which provides focused reading camps, special literacy intensive classrooms and other resources to ensure students can read proficiently by fourth grade. (Senate and House)

·         The Senate decreases funding to DPI by $15 mil. There is a hold harmless provision to ensure that certain contracts are not reduced, including Communities in Schools and Beginnings.

Public Schools First NC has a great summary of Education provisions in the proposed budgets here.

Justice and Public Safety

• ·         Eliminates all misdemeanants from state prison (Senate and House).
• ·         Prison Changes:   Closes Fountain and North Piedmont Correctional Centers for Women and converts Eastern Correctional into a Women’s Minimum Custody facility. (Senate and House).
• ·         Moves the SBI and Crime Lab into the Department of Public Safety.
• ·         Reduces administrative funding to IDS ($233k in Senate, $466k in House).