January 18, 2001

For more information contact:

Stanley S. Jones, Jr.

404-817-6133

           The Appropriations Committee held hearings again today on the 2002 Budget Proposals.  Below will summarize some of the information presented:

           Commissioner Russ Toal appeared before the Committee this morning to discuss the Governor’s recommendations and those of his Department of Community Health (“Department” or “DCH”).  Many accolades were given to the Commissioner and the Department for their hard work since the creation of the Department in 1999.  Toal explained that drawing down additional federal dollars was very important.  Further, maintaining current reimbursement levels was key.  Also, the Department of Community Health has no desire to make any modifications with the State Medicaid Plan amendments on file with the federal government relating to Medicaid.  Current federal participation is around 59% (this cannot go below 50%).

           The federal budget dealing with the Health and Human Services appropriations act, passed in December, raises the ceilings on the caps paid to Disproportionate Share Hospitals (“DSH”).  Approximately $34 million will be paid out next month to DSH facilities that have not previously been paid their full cost for indigent care.

           Some of the budget highlights include federal maximization of revenue, Tobacco Dollars being used for enhancements, expansion of PeachCare for Kids, and coverage for some uninsured persons.  Specific items are as follows:

          One large enhancement is for $20 plus million to provide additional funds for increased utilization in Medicaid benefits ($36,128,669) and increases in costs and utilization of pharmaceuticals for the Medicaid population ($54,193,003) netted against new federal matching funds derived from utilization of the Upper Payment Limits.  Total funds resulting from this new $20 million will be $222,357,637.  Toal noted that DCH is working diligently to get the best possible pharmaceutical costs.  There is also a $11 plus million enhancement to provide additional funding to reflect a reduction in the federal financial participation rate for Medicaid.

           Under federal revenue maximization items, the following increases were proposed for federal Medicaid funding: 

a)                  mental health services for children in out-of-home settings ($38,472,284);

b)                 targeted case management services for adults and children ($999,012);

c)                  nursing services provided in state facilities ($14,731,500);

d)                 medical services provided through public health clinics ($3,246,756);

e)                  mental health, mental retardation, and substance abuse services provided to adults in community settings ($23,579,945);

f)                   administrative costs related to current Medicaid services ($10,243,197); and

g)                 administrative costs related to new Medicaid services ($4,227,500). 

Providers will also be getting some boosts: 

A proposal of $6 plus million in order to reimburse physicians and physician-related providers based on 90% of the 1999 Resource Based Relative Value Scale (“RBRVS”)  with one year of inflation.  This would be effective on July 1, 2001 if passed. 

A proposal of more than $8 million to adjust reimbursement rates for nursing home providers using the base year 2000 Cost Reports and growth allowance for one year.  Presently, DCH is using the 1999 Cost Reports.  The inflation factor would be 3.2%. 

In an effort to help hospitals, approximately $7.7 million is proposed to increase reimbursement rates for inpatient hospital providers by adding an additional year of DRI inflation to base rates.  Currently, DCH is using 1996. 

An enhancement of $1,188,639 is proposed in order to reimburse 100% cost for Medicaid outpatient services for hospitals who provide indigent care equal to 5% or more of their adjusted gross revenues as determined by DCH.  With federal funds this would be approximately $2.9 million.  Presently, there is no determination of the number of facilities affected. 

$572,490 is proposed to increase pediatric newborn visits in hospitals to one per day.  Currently, DCH covers one per stay.  

An enhancement proposed of $44,829 would increase reimbursement rates by 5% for home health providers who provide indigent care equal to 5% of their Medicaid revenue and who participate in the Community Care Services Program. 

Rates for EPSDT healthcheck screens are proposed to be increased from $55 to $60 per visit.  These preventive health screen rates have not been raised in 10 years.  The cost in state funds would be $794,152. 

Home visit services for postpartum care would get an increase of $7.50 per visit.  Total state funds proposed are $79,736. 

          As for staffing needs within DCH, one of the enhancements includes two additional positions within the Division of Health Planning for a compliance manager and an assistant architect to support the review of Certificate of Need applications.  The amount proposed is $149,890. 

          In the DCH recommendations, there are transfers from DCH to the Department of Human Resources of the Medicaid waiver services monies to more than $88 million – it includes mental retardation, mental health, and HIV/AIDS services.  There is an addition of $2,132,851 for the Independent Care Waiver program in order to increase capacity by 85 slots (there are presently 144 persons). 

          In covering Georgia’s uninsured, there are also these inclusions: 

Payment of healthcare premiums of individuals covered by the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) with incomes up to 150% of the Federal Poverty Level. 

Another $3,009,097 is proposed for Medicaid coverage for children in families with incomes of up to 150% of the Federal Poverty Level.  This would impact approximately 5,000 persons.  Toal commented that even low-wage State employees might get some relief. 

          A number of Legislators asked questions: 

          Sen. George Hooks asked about the status of Georgia's surplus compared to the problems of Florida, North Carolina and others.  Commissioner Toal assured the Committee that the State was in better shape than most.  Revenue maximization efforts will allow for a cushion.  He also noted that all insurance costs were rising; this is due in part to greater utilization.  However, he did caution that in an economic downturn, the costs for Medicaid would escalate. 

          Sen. Nathan Dean asked why State employees could not participate in PeachCare.  Toal explained that this was due to the federal statue for the Children’s Health Insurance Program.  It precludes state employees and their dependents from participation. 

          Rep. Richard Royal, again showing interest in hospitals due to his involvement on indigent care issues, asked about the critical access hospitals impacted that would be paid at 100% of cost for out-patient services.  Commissioner Toal stated that he could not give a definite answer as not all “critical access hospitals” had been identified.  There are a number of facilities which are eligible but each must enter into an agreement with DCH.  The deadline for this agreement is the end of this month.  Currently, DCH has received 26 signed agreements; 3 have indicated that they will sign; and DCH has not heard from the other 25 eligible facilities. 

          Rep. Mike Snow asked pointed questions concerning the State Health Benefit Plan and the State’s PPO network.  Specifically, his concerns relate to third-party entities such as hospital-based physicians and laboratories that are not in the PPO network.  Rep. Snow claimed that he was receiving a number of calls from his constituents on this issue.  Commissioner Toal explained that DCH had done what it could to recruit the hospital-based physicians and to keep people in the state (in other words not going across state lines for care) where possible.  It is costly to the State if people travel outside to get treatment; thus, DCH decided to pay at 90% of cost.  Since July 1, 2000, there have been 3,700 physicians added to the network which makes the State Health Benefit Plan’s PPO the largest network in Georgia.  There are some groups of doctors which refuse to enter into an agreement with the PPO – for instance, there is the radiology group in Albany, GA.  Thus, these physicians have control over the market.  One recommendation that the DCH Board made is to pay beneficiaries directly.  Toal noted that the hospitals also had some obligation to bring in the physicians.  As for laboratory costs, the State has two statewide labs to which it refers tests.  Toal was not aware of this issue that Rep. Snow mentioned. 

          Sen. Ed Harbison asked questions concerning the market in Columbus.  Two local hospitals have been excluded from the PPO network.  Why?  Toal explained that SHBP members could nominate a provider through the Consumer Choice Option law.  Approximately 30,000 have done that throughout the state with the most in the Macon and Columbus markets.  The other option is for people to sign up for the indemnity plan.  The Commissioner tried to leave the impression that there was little cost differential in the premiums. 

          Rep. Steve Stancil asked about undocumented aliens and how the State was dealing with those costs.  Toal stated that any children born to those persons would be covered by Medicaid.  Perhaps hospitals and public health departments could collect data – uncompensated care, per Toal, is taken into account in looking at a provider’s reimbursement.  In follow-up, Rep. Stancil asked about those sponsored aliens.  DCH is not paying those claims; hospitals also might have more data on this if the sponsors are responsible for the charges. 

          Sen. Regina Thomas asked about the buy-in program for the working poor and how those costs would be assessed.  Toal answered that this would be based on a percentage of income.  Also, she asked whether children applying for PeachCare first had to apply for Medicaid – the answer to that was no. 

          Sen. Jack Hill asked about Medicaid’s third-party administrator and its response time to providers.  Commissioner Toal explained that there was a duty to respond in 30 days (claims should be adjudicated in that length of time) based on federal guidelines.  Toal did explain that due to the State’s antiquated claims processing system, there had been some difficulties.  DCH has been changing its approach and will soon be seeking a system integrator to help with locating the newest technology to assist in processing claims more rapidly. 

          Rep. Lynn Smith had some concerns about out-of-state claims for State Health Benefit Plan members.  How is the State addressing such?  The Commissioner stated that claims were being paid at a reduced cost as previously they were getting 100%.  Balanced billing by providers is the heart of the issue.  DCH will be contracting with a national PPO to take advantage of pricing in an effort to get people covered – including persons who travel with their jobs. 

          Rep. Orrock raised some concerns about smoking prevention and cessation.  Specifically, her questions were what efforts were being made with the Tobacco Settlement Funds.  DCH really picks up treatment; last year the Department of Human Resources received $15 million for prevention and cessation efforts.  DCH is analyzing claims and looking at high-risk populations.  It is also looking at ways in which Express Scripts (the Pharmacy Benefit Manager) can get drugs or products covered for those trying to cease smoking.  Rep. Orrock told the Commissioner that national statistics shows that $40 million should be spent annually on prevention initiatives.