Governor Barnes spoke to the Joint Committee on Tuesday, January 8, 2002 about his Budget Recommendations. Speaking in the packed Appropriations Room, Governor Barnes reminded Legislators and members of the audience that they were to begin a "job that won’t be easy, won’t be pleasant – in fact, the only positive word to describe it is necessary." In his remarks, Governor Barnes discussed the State’s rainy day fund and why it was important not to ‘tap’ that fund during FY 2002 and why it would be more needed in FY 2003 and FY 2004. He also reminded the Joint Committee that surrounding states also had similar economic plights – but that Georgia was much better off financially than its neighbors.

The Governor’s Supplemental FY 2002 Revenue estimate was initially $14,433,000,000 and the revised estimate was $13,867,000,000. The prior year’s surplus and audited lapses is $906,374,741. The revised budget uses some of this, but still maintains the reserve.

In the bond package in the Governor’s recommendations, he recommended that there be $621 million in order to "fast-track construction for grades K through 12, including $501 million to complete construction of the classrooms we need to guarantee lower class size." Additionally, there are $10 million in bonds for the new Cancer Research Center at the Medical College of Georgia.

Governor Barnes again set aside money for teachers by recommending $2.7 million in increased funding for teacher scholarships "to aid in bringing the best and brightest into our classrooms."

As folks continue to harp about the long lines to get driver’s licenses, Governor Barnes has recommended that 44 new examiner positions be created in order to do the reviews of such and the building of four new facilities in the metropolitan counties where lines have been the longest.

Since September 11, many of the State’s residents have not taken vacations or traveled as they previously did. Thus, Governor Barnes has recommended that the Department of Industry, Trade and Tourism get $1,000,000 for "special tourism marketing initiatives" in order to attract folks to Georgia.

If Governor Barnes’ budget items are approved, Superior Courts in the State will have four new judgeships funded through the recommendations in the amount of $556,552.

Under the Department of Community Affairs, the Governor recommended $1.5 million for the Georgia Cities Foundation in the Georgia Housing and Finance Authority and $1.3 million for the City of Warm Springs to support a wastewater treatment facility.

Under the Department of Corrections, among the many recommendations were these noteworthy items:

• $1,013,664 for increased utility costs
• $3,877,289 for the provision of additional county subsidy funds and to fund a projected shortfall in jail subsidy
• $2,529,470 to fund a 2.8% increase for the private prison contracted rate and increases in the utilization of prison beds
• $303,529 to expand the residential substance abuse treatment program to five additional prisons
• more than $1.8 million for projected healthcare needs including a physical health contract with the Medical College of Georgia; mental health capitated rate; and reimbursement of city/county jails and county correctional institutions

Under the Department of Education, aside from items previously mentioned, the following are of interest:

• $158,108,709 to provide funds for the midterm adjustment based on 1.75% growth in FTEs
• $2,431,896 for the provision for a midterm adjustment to equalization to reflect increased millage rates
• $1,021,546 for a midterm adjustment to Local Five Mill Share to reflect declining tax digests
• $9,055,969 to provide additional funds to continue the implementation of the America’s Choice school improvement program for 163 schools for student achievement
• $4,385,810 for funds to continue the development of the CRCT in social studies and science in grades 3-8, English/Language Arts and Math for grades 1-8
• $4,015,000 to provide funds to revise the Post Secondary Options program

Examples of Lottery Fund recommendations include: $30,482,004 for the provision of $21 per FTE student for 1,451,524 FTEs for computers, equipment technology, and technology training; $2.5 million for the provision for Assistive Technology for handicapped students at local schools; and $2 million for the increased funding for computers in the classroom and the wireless laptop program for selected elementary and middle school students.

The Georgia Bureau of Investigation also received some enhancements. One such recommendation was for $473,000 for the replacement of 22 high mileage vehicles.

Under the actual Governor’s Office portion of the Budget, Governor Barnes recommended some additions for disasters. He recommended $3,266,667 for an increase in the Governor’s Emergency Fund to cover disasters declared by the Governor that are not eligible for federal matching funds. He also asked for $122,720 in order to allow GEMA to cover necessary disaster related expenditures.

Reapportionment issues also surfaced – he recommended $1.8 million, also included in the Governor’s Office portion of the Budget, in order to provide for increasing per diem and fees to allow the Office of Planning and Budget to cover anticipated legal fees regarding reapportionment. Some of this may also be spent on new voting machines.

There were also some entries relating to education within his Office: $65,000 for the provision for an increase in funds for the Georgia Teacher Alternative Preparation Program ("TAPP") for development of a candidate-tracking database and to initiate a program evaluation; $50,000 for a computer server to support the TeachGeorgia teacher recruitment website; and $234,000 for funds to provide stipends for 631 National Board Certification candidates to match funds provided by the Georgia Partnership for Excellence in Education and other private sources.

Some additional highlights of the Governor’s Budget Recommendations are as follows:

Department of Community Health:

Commissioner Gary Redding spoke with the Committee on Thursday. He explained that there were 74,000 persons on TANF (Temporary Assistance for Needy Families) which were reinstated in the Medicaid program which had previously rolled off the system. In order to meet the increases in eligibility, more than $429,000,000 has been included (more below). In the 2002 Budget, there had been some increases such as the 3% adjustment to hospital inpatient rates and an 11% increase for nursing homes. Additionally, there was a $37.9 million increase for physicians due to the maximum allowable cost changes. He also reminded the Committee, that since the implementation of the Pharmacy Benefit Manager ("PBM"), his Department had seen cost savings relating to pharmaceuticals. However, the PBM had only been implemented 9 months of FY 2001.

In discussing upper payment limits, Commissioner Redding noted that $319 million had been received from hospitals and nursing homes in order to get federal dollars. There were $69.7 million in "upper payment limit credits" which were to be received. Commissioner Redding noted for the Committee the status of the upper payment limits usage and the fact that the rule from CMS had not received a final ruling. The $4.5 million in the Budget was the DSH facilities intensity rate adjustment – Commissioner Redding explained that the hospitals could make this up through intergovernmental transfers.

Some specific items in the Department of Community Health budget recommendations include:

• $429,331,909 is proposed for increased funding for Medicaid benefits to fund cash obligations for prior year claims and to fund the FY 2002 projected incurred cost (total funds with federal dollars: $1,052,026,240)
• $361,489 is proposed for funding to increase hospice reimbursement rates, effective April 1, 2002, to reflect October 2001 Medicare rates (with federal funds: $885,785)
• $2,456,753 is suggested in additional dollars to implement the new health care information and claims payment system for Medicaid (with federal funds: $24,567,530)
• $329,000 is mentioned in State dollars to fund the beginning implementation of the Health Insurance Portability and Accountability Act ("HIPAA") (in total funds: $3,290,000)
• $939,733 in State dollars is suggested to fund the increased costs of the Pharmacy Benefit Manager contract (with federal dollars: $3,458,930)
• $680,826 is intended for the increased postage costs due to higher postal rates and growth in the number of Medicaid recipients (in total funds: $1,361,652)
• A reduction of $34,000,000 is included for the direct funding of the State Health Benefit Plan (for the State’s employees and retirees)
• Reductions to the pharmaceutical benefit proposed are:

• $1,476,000 to remove the generic and preferred brand dispensing fee incentive in Medicaid and PeachCare programs (total funds: $3,616,761)
• $1,083,333 to require prior approval for proton pump inhibitors effective February 1, 2002 (total funds: $2,610,801)
• $1,530,710 to implement quantity level limits and require prior authorization for the drug Oxycontin, effective December 1, 2001 (total funds: $3,530,000)
• $816,200 to restrict the number of drugs identified as "narrow therapeutic index" or not appropriate for generic substitution, effective December 1, 2001 (total funds: $2,000,000)
• $161,258 to identify and contract with a single vendor through competitive procurement for the provision of diabetic monitors and strips, effective January 1, 2002 (total funds: $395,143)
• $463,452 to require prior authorization for oral antifungal agents Lamisil, Sporanox and Diflucan as recommended by the Drug Utilization Board, effective December 1, 2001 (total funds: $1,135,633)
• $68,256 to require prior authorization for the following high cost arthritis medications: Arava – oral tabs, Auranofin caps, and Enbrel injectables (total funds: $154,856)

• $4,495,737 is a proposed reduction to utilize intergovernmental transfers from public hospitals to support payments for Disproportionate Share Hospitals ("DSH") intensity rate adjustments
• $272,396 is the suggested reduction to exempt dual eligibles (Medicaid and Medicare) from Georgia Better Health Care participation (this would be the $3.00 per member per month co-payment) (total funds: $667,474)
• $445,016 is put forth as the reduction to exempt Medicaid eligibles with other third party coverage from Georgia Better Health Care participation (total funds: $1,090,458)
• The following FY 2002 enhancements are proposed to have funding eliminated:

• $2,126,097 for Medicaid program expansion for children in families with incomes up to 150% of federal poverty level (total funds: $7,428,711)
• $1,357,477 for non-emergency transportation rate increase (total funds: $3,326,334)
• $250,000 for start-up grants for community and migrant health centers
• $1,631,476 for Medicaid program expansion for adults with Cystic Fibrosis (total funds: $3,997,736 (Commissioner Redding explained that this would have impacted 225 persons.)
• $500,000 for the Medicaid buy-in program for the working disabled (total funds: $1,225,190) (Commissioner Redding explained to the Committee that this would have impacted less than 500 persons in Georgia.)
• $533,213 for funding for one quarter in the Independent Care Waiver Program available from a slot freeze (total funds: $1,306,574)

• A $65,000 reduction is proposed for the cost of the Patient Right To Know Act implementation and operating costs (Commissioner Redding told the Committee that the Composite State Board of Medical Examiners will move forward with the implementation of this.)

Language is included in the Governor’s recommendations, under the Indigent Care Trust Fund portion of the Dept. of Community Health’s Budget, to fund six additional "right from the start" Medicaid workers performing Medicaid eligibility determinations for children in state custody.

Under the PeachCare portion of the Department’s Budget, there is an "add" of $21,606,113 for the funding of PeachCare benefits in order to fund the projected FY 2002 incurred costs (in total funds: $75,493,057) (Commissioner Redding announced that the Department was currently serving 145,000 children, and it is projected that 170,000 children will be served by the end of the year.) An additional $630,837 is recommended for the increased funding to cover increases in the PeachCare eligibility determination contract (with total funds: $2,204,182).

In the questions, the first to take the lead was Rep. David Lucas. Rep. Lucas asked about the State Health Benefit Plan and the increased amount of the deductibles and out-of-pocket charges for drugs. Rep. Lucas claimed that he had experienced a 45% increase in his pharmacy costs due to changes to the program (the implementation of the three-tiered co-payment system). Commissioner Redding mentioned that it was the Department’s goal to get members of the plan to participate in the cost of care – further, there may be times where higher cost drugs may actually have a lower cost drug equivalent with the same efficacy. Rep. Lucas also asked if the State was taking full advantage of drug rebates. Commissioner Redding assured the Committee that Georgia had the highest amount of drug rebates last year in its history.

Rep. Channell queried Commissioner Redding about the shortfall or need for $429 million in order to pay claims for Medicaid benefits and why the State did not see that it would need $1 billion (with the federal dollars) to meet such obligations. Rep. Channell noted that this was a 27% increase. Commissioner Redding stated that some Medicaid claims do not get paid on a timely basis and that there is a lag – the lag is not accounted for properly and done only on an annual basis rather than on an ongoing basis.

There were a number of Legislators concerned about the prior approval of drugs. Rep. Michele Henson asked that the Department ‘re-think’ the prior approval of the drug Diflucan noting that the alternative of messy creams was not necessarily a good answer. Rep. Childers asked why Oxycontin needed prior approval on the first prescription – and why such could not be required on future refills. Commissioner Redding tried to assure the Joint Committee that prior approval was just a telephone call and not a lengthy process as in the past. Additionally, Rep. Childers asked if the Department had considered ‘triplicate’ scripts; this would require that the Drug Enforcement Agency would be notified about certain prescriptions, which is what some other states have done.

Rep. Nan Orrock asked about the Indigent Care Trust Fund and how many facilities were participating in such. Commissioner Redding noted that DeKalb Medical Center, previously not a participant in the fund, would be participating in 2002 as it met its 15% Medicaid population service requirement. There is $433 million in the Indigent Care Trust Fund in the current year. Rep. Orrock was concerned that with more hospitals participating in the Fund and that Grady Hospital in Atlanta would receive a lower amount of money which would place further burdens on the citizens of Atlanta, Fulton and DeKalb counties to fund the care given at Grady.

Department of Human Resources:

Commissioner Jim Martin, in his first appearance in his capacity as Department of Human Resources’ Commissioner, explained that the federal Medicaid match rate, which his Department (and the Department of Community Health) had been receiving, had decreased. The matching rate, previously at 59.67%, has now dropped to 59%. Additionally, Commissioner Martin is focused on trying to shore up the efforts of the Division of Children and Family Services and thus, child protective services did not receive cuts in the Budget for FY 2002. He also explained that there were 298 persons over the age of 100 receiving home and community based services through the Department. When discussing the reductions of the life flight funding which was cut, Commissioner Martin explained that there were five other life flight programs in the State which receive no state funding. As for telemedicine, those dollars can be obtained through pure federal funding. In trying to achieve goals placed on the State due to the Olmstead decision, the Blue Ribbon Commission on MH/MR/SA expressed the need for adequate services available in the community and the Department is committed to achieving those goals. Also, the Department is removing adolescent respite care beds so that a more humane location in the community may be found for these children to receive such services.

Some items specifically mentioned in this portion of the recommendations:

• $3,659,911 to fund contracts with District Attorney’s offices in 9 judicial circuits (32 counties) for Child Support Enforcement services (total funds: $10,764,444)
• $500,000 to fund beginning implementation of HIPAA
• $1,679,874 to supplement existing funds for the AIDS Drug Assistance Program to cover increasing drug costs and to maintain average monthly enrollment of 4,383 clients
• $873,354 to provide additional funding to cover the increasing costs of vaccinations for uninsured children, including the cost of a new pneumococcal conjugate vaccine, which projects against bacterial meningitis and ear and blood infections
• $598,750 is being recommended to fund the State’s ability to react to bioterrorism. These dollars will help fund six epidemiologists in Dalton, Gainesville, Clayton, East Metro, Dublin, and Brunswick; emergency coordinators in each of the 19 Public Health Districts; a state-level epidemiologist, emergency coordinator and molecular biologist; statewide satellite communications system for each of the 19 Public Health Districts; operating expenses to expand the State’s diagnostic testing capabilities; and funding to develop an integrated statewide trauma system, support hospital data collection, and emergency simulation training.
• The following FY 2002 enhancements are proposed to be eliminated:

• Effingham County Health Department expansion - $50,000
• Suicide prevention - $150,000
• Georgia Asthma Initiative - $75,000
• Babies Born Healthy - $2,537,000

• A $2,021,660 reduction is proposed to maximize federal Medicaid funding available for the Cancer State Aid Program.
• Numerous reductions of contracts in the Division of Public Health are suggested:

• Life Flight at Georgia Baptist Hospital - $100,000
• Savannah Memorial Hospital Trauma Helicopter - $50,000
• Healthy Mothers/Healthy Babies Powerline - $16,000
• Purchase of clotting factor by Hemophilia of Georgia - $131,000
• Visiting Nurses Services - $222,805
• Genetic evaluation and treatment recommendations by Emory University $29,500
• Scoliosis Screening by Children’s Healthcare of Atlanta - $43,000
• Miscellaneous TB Program funding - $109,824
• Staff certification and training for diabetes - $84,634
• Community Outreach Program for Substance Abuse Prevention - $25,000

• $1,960,364 is suggested to fund deficits in MATCH and Institutional Foster Care due to increased utilization and the provider cost report methodology for rate increases
• The following DFACS contracts are proposed to be eliminated:

• Telemedicine system - $200,000
• Georgia Career Information System - $22,779

• Restoration of State funds is recommended for:

• Funds reduced for MH/MR/SA mental health services for children in State custody in the amount of $1,040,000
• Funds reduced for MH/MR/SA mental health services for children participating in the Outdoor Therapeutic Program in the amount of $1,000,000

• Elimination of MH/MR/SA contracts with the following is recommended:

• Emory Autism Resource Center - $100,000
• Circle of Recovery, Inc. - $65,000

• Three contracts at Atlanta Regional Hospital - $63,285
• Georgia Council for Hearing Impaired - $10,000
• Project Plus - $75,000
• University of Georgia Carl Vinson Institute of Government - $30,000
• Miscellaneous contracts - $12,960

• Under Tobacco Settlement Funds, the following has been recommended:

• $65,000 for additional funding to geocode the Georgia Cancer Registry
• $1,550,000 to add new funds for the public education multimedia campaign for cancer awareness
• $5,750,000 for the addition of a new contract for the Unite Georgia smoking prevention and cessation media campaign
• $2,021,660 for funding for the Cancer State Aid treatment program to provide medical benefits to uninsured persons with certain types of cancer
• $709,590 to cover additional cancer screening and detection cost incurred by county health departments
• $356,250 to fund a second round of challenge grants to Public Health Districts for screening and detection initiatives
• $250,000 to add additional funding for challenge grants to community partners for public education
• $237,500 to provide Grant-In-Aid funding for local cancer education programs through county health departments
• $125,000 to fund a second round of challenge grants to community healthcare providers for screening and detection

Georgia Cancer Coalition

In all, Governor Barnes recommended $24,445,036 for the Georgia Cancer Coalition’s initiatives in FY 2002 (Supplemental). Among the big ticket items include: $3,231,000 for the provision of funds for a Georgia Research Alliance eminent scholar and equipment in bioinformatics and eminent cancer scholars and $3,000,000 for the provision of a seed capital fund to support the growth and development of a statewide biotechnology and associated life sciences industry (the money for the Cancer Research Center at the Medical College of Georgia is among these items as well). In explaining the Governor’s recommendations, Russ Toal told the Committee that Georgia was the only state, among the top 10 states, without a nationally designated cancer treatment center. Toal explained that the Coalition was looking for innovative ways to use Indigent Care Trust Fund dollars for screening and wanted to expand clinical trials availability (children are now participating at a greater number than adults). Additionally, the Coalition is working with the hospitals in an effort to update the Cancer State Registry. In defending the amount included for bonds for the Medical College of Georgia, Mr. Toal explained that this money did not assure the cancer center of excellence for the Augusta area.

There were a number of questions raised by Legislators during these presentations. Interest in suicide prevention was expressed by Rep. Carl Rogers and the reduction of that contract by $150,000. Commissioner Martin explained that $200,000 would remain, and that the Department understood that suicide is a grave problem for young people.

Rep. Ray Holland expressed some concern about one hospital’s purchase of another facility with a life flight operation. He wanted more information on the impact of the program by the reduction of funds. There were discussions concerning that such a system of transportation was similar to a hospital’s operation of an ambulance service.

Rep. Anne Mueller was also concerned about respite care for children and the removal of beds from Gracewood.

Both Rep. Judy Manning and Rep. Earl Ehrhart raised some questions relating to billing done by Community Service Boards. According to the Commissioner, the Community Service Boards ("CSBs") had worked on their monthly billing practices and he understood their questions stemmed from revenue maximization efforts.

Rep. Nan Orrock championed the hearing impaired population. She asked for consideration of the rehabilitation services for those who are hearing impaired. Rep. Orrock also asked why there were cuts made within both the Department of Labor as well as Department of Human Resources as it would appear that the Council on Hearing Impaired was cut more than 10%. Commissioner Martin expressed that small contracts for services were not the answer, if the State was going to provide services to this population.

Rep. Orrock also asked questions concerning the contract with Visiting Nurse Health System and the reduction of its contract with the State by $222,000. According to Commissioner Martin, this represents a cut by 50% of the Visiting Nurse Health System contract, and this is because the treatment for HIV persons has changed.

Rep. Mickey Channell asked Mr. Toal about more details of the public-private initiative that the Georgia Cancer Coalition is building. Mr. Toal explained that the Coalition is a 501(c)(3) which will use both state funds as well as private dollars to achieve its goals. Rep. Channell asked if there was a way in which to track those dollars from the private sector and how such were used. Mr. Toal explained that an annual report would be prepared explaining such – citing the example that Avon had given $5 million for the Grady Hospital breast cancer center.

Rep. Childers asked Mr. Toal about what resources were actually lost to other states through the care of cancer patients outside Georgia. Mr. Toal explained that there was no measurement for such, but Georgia was aware that a number of persons needing cancer treatment were seeking such at facilities such as M.D. Anderson as well as Sloan Kettering. Toal also noted that a number of deaths to Georgians could be avoided, but that early detection is key to prevention of such.

Sen. Nadine Thomas asked Mr. Toal about the governance of the Coalition. He explained that no Board had been established for the Coalition, but that he is working with the Governor’s Office on those appointments. Additionally, Sen. Thomas noted that she had learned that the Georgia Research Alliance had recommended that no physicians be included on the Coalition’s Board. She also asked that Mr. Toal look at cancer in African-American women as those persons have a high incidence rate. She also asked that some mechanism be put into place in order to assure that no fraud would occur with the $10 million startup at the Medical College of Georgia (she asked for a documented list of steps). She also asked that he outline for her the Coalition’s goals for use of PET (positron emission testing) scanners.