Date Requested:March 14, 2013
Time Requested:03:04 PM
Agency: Health and Human Resources, Department of
CBD Number: Version: Bill Number: Resolution Number:
2013R2388 Introduced HB2756
CBD Subject: MEDICAID TO INCLUDE BUREAU OF MEDICAL SERVICES
FUND(S)
0403 - Div of Human Services General Administration Fund, 8722 - Cons Federal Funds Div of Human Services Gen Admn Fd, 0407 - Central Office General Administrative Fund, 5224 - Healthy Lifestyles Fund
Sources of Revenue
General Fund,Special Fund,Other Fund Federal
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The purpose of this bill is to reorganize the Department of Health and Human Resources by removing the Bureau of Medical Services from under DHHR and making the Bureau its own department, and moves the Office of Healthy Lifestyle under the new department.
    The Department of Health and Human Resources (DHHR) spends approximately $26 million for central department administrative support. This includes functions such as budget, accounting, cash management, grants management, payroll, human resource management, purchasing, etc. Currently approximately $2 million (or $1 million Federal Funding) is allocated to Medicaid. The Department will have to fund the costs previously funded with Medicaid federal funding with additional general revenue as Medicaid funding will no longer be available to support these costs. The costs associated with these functions will not be decreased as the staff also performs these functions for other DHHR programs, therefore they are necessary for continued administrative support.
    In addition, the newly formed Department of Medicaid will be required to recruit, hire and train staff to duplicate the administrative functions currently being performed by DHHR.
    Under the proposed bill all funding appropriations would be moved to the new Department of Medicaid and the Office of Healthy Lifestyles. Both entities currently receive appropriations of general revenue, federal revenue and special revenue funding.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 2,174,937 2,174,937
Personal Services 0 748,178 748,178
Current Expenses 0 1,426,759 1,426,759
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    The above information was derived from the Department's cost allocation procedures. It represents only the costs associated with the loss of funding for central agency costs to the DHHR. It does not reflect cash flow impact that is described in the memorandum section or other potential costs described in the memorandum section that we are not yet able to quantify.
    


Memorandum
Person submitting Fiscal Note:
Rocco S. Fucillo
Email Address:
dhhrbudgetoffice@wv.gov
    Information indicated below outlines changes/effects as a result of this bill.
    1) This bill may have the unintended consequence of violation of 42 CFR 431.10, the single state agency regulation. Under that provision other state agencies do not have the authority to change or disapprove any administrative decision of the Bureau for Medical Services. Under that provision it also means that the Department of Medicaid must have its own Board of Review, which is currently under DHHR, within the Office of Inspector General. This would require the transfer of a portion of those existing employees from the Board of Review that currently handle cases for the Department of Medicaid. As some of these positions could be carrying caseloads for multiple programs it could result in the need for additional positions.
    2) A review of the State Plan would need to be performed and, if necessary, amended to reflect the new Department of Medicaid. All of these matters would take considerable time and resources to accomplish, however given the variables and unknowns at this time there is not a reliable method to calculate the estimated fiscal impact.
    3) If the decision is made to maintain the current relationship of sharing costs for county office staff (Eligibility determination and computer system, case workers, etc.) the following would occur:
     a) Currently in place is a cost allocation plan that allows county offices to serve clients from multiple programs, resulting in those benefitting programs sharing in the cost. If the current business processes associated with eligibility determination, case management, etc. remains the same, there will have to be some type of agreement to bill from/to the department to the new agency. This would present cash flow issues due to the time that would transpire for the billing/reimbursement to take place. Historically, approximately $20-25 million a month are expended to support shared costs for the Department, with approximately $7-10 million attributable to Medicaid. Without immediate access to draw these funds to support the incurred costs, this will result in a cash flow issue trying to cover current expenditures for payroll, etc. for the $7-10 million attributable to Medicaid.
     b) As Medicaid currently utilizes other Bureaus within DHHR to carry out requirements of the Medicaid program, i.e. BPH nurses for the Breast and Cervical Cancer program and OHFLAC for Nurse Aide Training, these arrangements will be more challenging if the entities reside in separate agencies as each will have its own priorities and objectives.
    4) If the decision would be to change the business process of eligibility determination whereby the newly created Department of Medicaid would perform its own eligibility, case management, etc., the following issues exist:
     a) The ability for DHHR to draw Medicaid funds (historically, approximately $20-25 million a month are expended to support shared costs for the Department, with approximately $7-10 million attributable to Medicaid) to help support these expenses will be lost, but the costs would not be reduced as they perform the same functionality for other programs within the Department (i.e., TANF, Food Stamps, Low-Income Heating Assistance) therefore, not only is there an additional cost to Medicaid, there is a loss of funding to DHHR.
    
     b) The coordination of eligibility determination and assistance to clients with multiple needs will no longer exist. Clients will have to navigate between multiple agencies to receive services.
     c) As referenced above, Medicaid currently utilizes other Bureaus within DHHR to carry out requirements of the Medicaid program, i.e. BPH nurses for the Breast and Cervical Cancer program and OHFLAC for Nurse Aide Training, these arrangements will be more challenging if the entities reside in separate agencies as each will have its own priorities and objectives. This issue will exist regardless of whether the current business process continues, as listed in 3 above or if the decision is made to change the business processes identified in 4.
    5) The Director of the Medicaid Agency will have less proportional time dedicated to supervising the delivery of Medicaid Services as significant time will have to be expended on directing the administrative functions that will now fall to the new agency.