While the Legislature has gone into budget freeze for two weeks, many members of the appropriations committees, and transportation committees were bustling around the Capitol, attempting to sort out the vast funding issues facing the State in Fiscal Year 2011.

The agency presentations of their budget cuts fueled the discussion about Georgia's revenue stream and whether any revenue enhancements are necessary. Many budget leaders think the Governor's prediction on additional revenue if FY 2011 is too optimistic.  The Hospital community vigorously expressed its support for a tobacco fee increase rather than a new hospital tax. The tobacco tax coalition had generated 57 signatures on the tobacco tax bill early in the week with promises from others to sign.  Some Republicans were counted in these totals.  The insurer health plan community continued to piggy back the hospital opposition to new fees.  As this discussion deepened, the legislators opposing any new taxes gradually shifted their language to "don't like any new taxes, but everything is on the table" because of the huge deficit in revenue collection.  As a result, the situation remains very fluid, pointing toward a Session ending deal. The February revenue receipts will be known when the Session reconvenes on March 8th. 

Committee News

Joint House and Senate- Appropriations Subcommittee on Health

The Subcommittee heard testimony from on the Department of Community Health's FY 2011 Budget this week; Senator Greg Goggans (R-Douglas) opened the meeting by acknowledging the $1.2 billion shortfall in revenue. 

The Georgia Cancer Coalition cited concerns about a loss in $4 million in funding which would have funded new research in Georgia and placed new cancer scientists in local community hospitals. Created in 2002, the Georgia Cancer Coalition has seen a seven percent decrease in cancer deaths.

Sen. George Hooks (D-Americus) questioned how many patients were still going out-of-state to receive care. According to data, before the coalition was created, over ten percent of the individuals in the State Health Plan were going out-of-state for care. Currently, twelve percent of all cancer patients are participating in trials in Georgia.

Commissioner of the Department of Community Health "DCH", Rhonda Medows, presented the Department's FY 2011 Program Budget to the Committee. The total state funding for the "DCH" FY 2011 budget totals $2.2 billion with overall funding at $12.3 billion. Aged, blind and disabled programs take up a large chunk of the funding at 42.9 percent with low-income Medicaid coming in second at 38.9 percent. The Department's administration funding took a 9.8 percent reduction of $10.8 million.

Under healthcare access, funding for Federally Qualified Health Center Startup and Behavioral Health Integration sites was reduced by $2 million. Public health saw a reduction of $35 million. To help shrink the funding gap in Public Health, the Department is proposing an increase in fees for lab tests; HIV testing, STD testing, Lead testing, and Hepatitis C testing would all have a fee of $10 charged to recipients. Currently, well water tests come at no charge, but the Department is seeking implement a $30 fee for future tests. Birth and death certificates would also see an increase in fees, with the new rate at $15. New revenue from these fees is predicted to bring in over $3 million to the State Treasury.

Commissioner Medows reported to the Subcommittee that the State Health Plan is now seeing increased utilization; however the State Health Plan did return $551,000 to the State Treasury last year. Ninety-one percent of individuals in the Plan are covered by United and the other nine percent by Cigna, while premiums for both remain comparative. Significant plan design changes implemented January 12, 2010 combined with CDHP enrollment projected curb expense growth and account for revenue shortfalls, creating a projected savings of $782.2 million.

The Medicaid and PeachCare serving a combined $1.6 million individuals are also facing cuts. Medicaid is facing a $610 million cut while expecting an age blind and disabled enrollment growth of 20 percent in FY 2011. However, Georgia has trended below national Medicaid experience for the past five years. PeachCare, serving children in low and middle income families, has seen a decrease of $22 million since FY 2009; however, an eight percent increase is expected in enrollment from June 2010 to June 2011. Medicaid and PeachCare will no longer have $506 in one-time funds available for FY 2011. The Department is also trying to  reduce expenses and increase revenue by tightening up on eligibility and fraud and abuse within the Medicaid and PeachCare programs.

In order to recoup funding, the Governor and the Department are looking at instituting a hospital provider fee and a managed care provider fee to generate new revenue and removing the Medicaid CMO exemption from the 2.25 percent Department of Insurance premium tax. An estimated $247.8 million would be generated from the 1.6 percent hospital provider fee. Another $97.1 million would be generated from the 1.6 percent managed care fees.

The Insurance Provider Premium Tax recommended by the Governor in his FY 2011 Budget, would remove the Medicaid CMO exemption from the Department of Insurance 2.25 percent premium tax, generating an estimated $67.9 million in state revenue. This revenue would be split between Low Income Medicaid and the Department of Behavioral Health, at $19.8 million and $48.1 million respectively. A 1.98 percent reduction in Medicaid reimbursement would also be applied to all fee-for-service and non-emergency transportation providers exclusive of home and community based services and inpatient and outpatient hospital services.

Public Comment on the FY 2011 Department of Community Health Budget-

Jon Howell with the Georgia Healthcare Association testified before the Subcommittee this week stating that nursing home providers would be willing to do another 40 cents on their provider fees to draw down additional $800 million in funding. This would maintain the 5.5 percent match, which is the maximum that federal law will allow.

Don McKenna, CEO of St. Mary's Health Care Center, told the Subcommittee that he is opposed to the proposed "sick tax" for hospitals and providers and the decrease in the Medicaid reimbursement to doctors.

Kirk Wilson, CEO of St. Joseph's Hospital of Atlanta, echoed Mr. McKenna's thoughts and proposed an additional idea for placing and extra fee for tags for trucks, whose owners wish not to wear a seatbelt. He also voiced his support for the increase in the tobacco tax, in order to tax the cause of the sickness

Earl Rogers, with the Georgia Hospital Association, spoke to the Subcommittee on behalf of the 170 hospitals that he represents throughout the State.  He cited that there are other ways to enhance revenue, rather than imposing an extra tax on hospitals. The proposed 1.6 percent tax could cause 100 hospitals to loose more money even after the federal match resulting in a loss of 1000 hospital jobs. The tax could increase to $850 million because the State law allows it to go up to 5.5 percent. Mr. Rogers also urged the Subcommittee to look at taxing what makes people sick, tobacco. He suggested raising the tax to $1.37 per pack of cigarettes, which would raise over $350 million, an estimate which factors in revenue loss from people quitting smoking and crossing state lines to purchase tobacco. This $350 million could then draw down and additional $1.1 million in federal funding.

Healthy Mothers Healthy Babies also addressed the Subcommittee. Healthy Mothers Healthy Babies has been around since 1973, improving healthcare access to mothers and babies in Georgia. In recent years the organization has paired with other such organizations to expand the Medicaid family waiver, so that pregnant women that have a higher income level, but no access to care could also be included in the Medicaid program.

Joint House and Senate- General Appropriations

The Department of Banking and Finance addressed the Subcommittee this week highlighting its lack of bank examiners. Since 2008, the Department of Banking and Finance has closed 32 banks, but now only has 60 bank examiners, as opposed to 90 in 1991. The Department brings in $10 to $11 million per year. All cuts have been made administratively, but the Commissioner is trying to keep the core administration available to process the reports. The Commissioner also highlighted that the examiners more than pay for themselves.

The Department of Revenue was next up on the agenda, vetting questions from members of the Subcommittee on what becomes of abandon trusts, and unclaimed safety deposit boxes. 

Commissioner Bart Graham of the Department of Revenue explained that the Department keeps all unclaimed safety deposit box items are kept for a number of years and then auctioned off. Any cash left in safety deposit boxes is then turned over to the State Treasury. Commissioner Graham also noted that the GRATIS System is in place to capture all sales tax revenues that are lost from out of state vehicle purchases.

Casual car sales were also a topic of discussion, brought up by Rep. Chuck Sims (R-Ambrose).  Rep. Sims questioned if taxing casual car sales is a viable option. Many members cited that the public would be vehemently against this change in this new tax.

Joint Appropriations- Human Development Subcommittee

Dr. Frank Shelp, Commissioner of the new Department of Behavioral Health and Developmental Disabilities, presented to the Joint Human Development Subcommittees of Appropriations Friday afternoon.  He spoke with the Committee about an hour and a half and had fairly extensive questions.  He described the pending discussions and hearings with the Department of Justice about the CRIPA Settlement Agreement and the Voluntary Compliance Agreement under the Olmstead issues.  A hearing had been expected the week of March 1, but has now been delayed for two weeks to give the parties an opportunity to reach a comprehensive settlement on all the issues that lays out a game plan for Georgia in the next several years.

Dr. Shelp described his plans for August and Savannah about engaging the medical schools to manage the care at the regional hospital and to move the admissions units to the community hospitals. He laid out in general terms how the new funds recommended by the Governor would be spent on training, staffing, administration and some other services.  We have a copy of his slides for those who would like to see them. They have some additional detail but are still fairly general. Dr. Shelp also described the need to replace the Cook forensic building in Milledgeville and thought there would be a new RFP issued by June 30.

Sen. Grant asked several questions about the contract with Dr. Singh to help the facilities come into compliance with the CRIPA settlement agreement. It costs approximately $500,000 per hospital per year. He also asked whether the state hospitals could bid to provide some community based services and Dr. Shelp indicated some openness to that and his interest in permitting all service providers to bid.  He was pressed some by Mark Butler about why the Singh contract had not been let for bids, and it appears that the Justice Department asked him to hire Dr. Singh.