[BLANK_AUDIO] Thank you it's finally working, to our pages James fits Henley/g, Hope, Karncrum/g, Jake Jeffreys, Dahama/g Wilson, and to our house sergeant of arm Arms, Reggie Steeles/g, Terry McGraw, Joe Cook and Russell Saltsberry/g. I'll begin with ladies and gentlemen. We're just gonna turn this over to Pam Copatrick/g, who's our assistant day's budget officer of the Office of State Budget management, Ms.Kilpatrick/g it's all yours [BLANK_AUDIO] >> Good morning, good morning to the chair and the members in attendance and to those in public I am Pam Kilpatrick, I am here from the office of state budget management, my role there is assistant state budget officer for health and human services. [BLANK_AUDIO] And first I need to find my presentation [BLANK_ AUDIO] So we do really appreciate the invitation to be hear before the house appropriations subcommittee on health and human services we recognize that this is in fact and invitation and we are very grateful for that invitation to present To you the recommendations for adjustment to the health and human services budget for the fiscal year but starts July one 2016. If I may I'd like to acknowledge the cooperation collaboration the budget process really started back in January and I'd like to thank Secretary Brazier and his deputies and his team, they really put forward a very thoughtful and strategic plan for the governors consideration that would look at what they needed for critical infrastructure investments, critical service needs going forward and other priorities for the governor To take a look at a number of those who are reflected in the package that you are going to see here today and certainly we appreciate working with your stuff during the interim and throughout the year on the medicate worth and on the medicate forecasting as we monitor that jointly, and finally if I could I'd like to acknowledge that this first meeting of your appropriations sub committee the stuff of the state [INAUDIBLE] who are responsible for the day to day execution oversight for health and human services they are ceded here in front of me and they are responsible for so much of the content that you are going to see and certainly the volume Volumes of supporting information that we'll be providing in support of the governor's budget [BLANK_AUDIO] so by way of overview this morning we have so much ground to cover in trying to handle a budget that has 11 lines of business covers any number of Social and economic issues. But just to set the tone for today,the state invests more than $5 billion in the programs and services that really are the heart and soul of the department of health and human services. It represents about 23% of our combined state general fund appropriations. Short session budget adjustments that are recommended for DHHS, invest in addressing critical issues that are facing our state today. We ask ourselves, why now? This is the short session. But we're going to make recommendations to address opioid addiction. Chronic and persistent mental health and substance use disorders which directly impact our children, our child welfare, our families, our society and even our economy. In the current state fiscal year one of the larger numbers that's been getting some attention in the governor's budget is the return as a result of looking into the Medicaid program, looking at where we stand here to date, and comparing that to a very conservative and very generous budget that has been enacted for Medicaid. The rebase will return $318 million of state general fund appropriations which just as a point of reference is actually more than the new revenues that the state will be receiving in the current state fiscal year. Medicaid performance we strongly belief as reflective of investment but the governor has been willing to recommend that this body has raised and made a priority for funding In the states physical plan and it also demonstrates very dramatic
improvements, the investment that the HHS has made over the last two to three years in improving the forecasting, the planning, the integration of the oversight of medicate across the agency and ultimately how they are managing that program. We hope that you all agree with us that these are at least important priorities to be discussing in our short session budget environment and I hope that you will also agree it's a very thoughtful and collaborative DHHS that's brought this forward. So the objective of the short session really just from the budget geeks perspective is to modify the second year of the enacted state budget and to address changes in the biannual budget since it was enacted late last summer. Typically when we talk about modifying on the interim basis We're looking at revenues and availability that typically drives the state wide perspective of what can be recommend in the short session budget. We always take a look annually at programs where it's based on populations served that's public schools that's adoption foster cares state county specialist systems and then again the bigger numbers Come in when we talk about the medicate program, and finally unforeseen events and what are the most important emerging issues and policy responses that are needed to be addressed in where the state puts its money which is its physical plan. So some big things have happened with the HHS since we last came together to craft a budget the governor created and we have gotten valuable feedback from mental health and substance abuse task force. You'll ind recommendations in this package. We've had a federal child welfare review that suggests we need to make some changes to what we're doing there. Make some improvements. Zika virus has emerged. And we also again engage in that annual process of taking a look at Medicaid and the other enrollment based programs. So to give ourselves a starting point of reference here today, you have enacted a budget, and it is reflected here in front of you. This is the total state appropriated budget for the department of health and human services. On the left hand side, what we have are the eleven discreet appropriations, that are made in the State Budget Act for funding to the 11 lines of business of the Department of Health and Human Services. We have the column that says 2015 16 enacted state budget. You see that's $5.1 billion. We are approaching the last few months of the state fiscal year So we will know very soon how that year is going to end up. But we're expecting a cash surplus at the end of the year. The middle column shaded in green is the budget that we are here to amend today. To discus the amendments that the governor is proposing to be made. The final column on the right hand side just shows you the delta or the increment of change in the budget that's already been enacted by this body. So it increases state appropriations spending by $137 million second year of the biennium over the first year of the biennium. So a snapshot of the recommended changes which are the accumulation of all of the items that you see in the Governor's recommended budget. This presentation starts with total requirements meaning expenditures. Receipts are Offsets that reduce the demand or burden on state appropriations, typically leveraging federal funds and other receipts of the agency, and finally the state's general fund investment in DHHS. So in total in aggregate there are expansion proposals across the department and expansion is a euphemism for positive change. In some case it's building on something we're already doing. It's making positive adjustments to programs but the total of all the positives is $145.8 million. It will leverage receipts of $50.5 million and a change of a positive $95.3 million offsetting those increases in total DHHS budget are the caseload adjustment for adoption assistance payments. Again when we do this there is a slight decline in the number of payments that are being made throughout the year and forecast for the next year Compared to the level of payments that were planned for and budgeted in next year, so that's what that recommended increment of change
means. Medicaid and health choice rebasis are the next column. They total up to $318.2 million. That is a lower number when we talk about the $318.5 million medicaid rebase return because the health choice program has a very small increment of increase in state appropriations that's being proposed to right size that budget to match to the medicaid health choice forecasts. So the net change reconciles to what you'll find in the governor's budget, it's an overall adjustment of $223.9 million and it produces a revised recommended state appropriation of just over $5 billion. On the top of that column you'll see that leverages just under $20 billion in total Spending [BLANK_AUDIO] I would say at this point I'm not gonna go through every single item that's in the governor's recommended budget, so you do have the budgets and if you have any questions about individual items in that budget I'd be more than happy to answer those. So moving in to what we'd like to highlight as investments in the governor's recommended budget there has been a process over the last couple of weeks of taking the opportunity to publicly share some of this priorities where the secretary the governor and legislative leaders as well as chief justice Martin have been able to come forward and talk very proactively about the investments that are being recommended as a result of the joints of the governor's task force around middle illness and substance abuse disorders, the budget will propose recommended recurring investments at $30 million in the areas that you see bulleted here in addition the governors budget will recommend expanding medicate and state services to our older adults particularly with acknowledgement to the increasing member of North Carolinian's who are experiencing Alzheimer's disease the budget will invest $3 million and add 320 slots for the community alternatives program or cap DA in addition there is a million dollar very significant investment in services around aging Alzheimer's and dementia with a million dollars set aside for the care givers of people with Alzheimer's through project care. Expanding medicaid services to people with developmental disabilities. The Governor's budget will invest $2.5 million and add 250 slots. I would note that this is one of the few recommendations where we are proposing this would start January first, so ultimately this investment would grow to $5 million and it would provide the matching funds that are needed in order to reduce waiting lists for these important services and help people live more independently. This budget will invest in education and the safety of children. It continues increasing the state's ongoing investment in NC Pre-K which each year has had incremental growth in the number of slots. The Governor's budget sets aside $4 million from the lottery proceeds which would bring the total budget for [UNKNOWN] to approximately $148 million and add as many as 800 slots. And we're investing $8.6 million to implement what is an evolving and dynamic Response to the federal child welfare review, to the state review of the system and implement federal improvement in the overall system for the protection of our children. [BLANK_AUDIO] In addition we mentioned that zika virus is before us. So the Governor's budget is recommending to put in place an infrastructure that will help the state address zika and other vector borne diseases as they arise. I'd like to go into a little bit deeper dive at this point. Following those highlights that the governor's recommended budget and talk more about the mental health task force, mental health and substance use task force. The task force was created by Governor McCoy's executive order 76. It's aim is to better serve those who are living with mental illness and substance Is disorders, a 24 member committee chaired by secretary Frazier and Chief Justice Martin included also members of this body who
were very active participants as well as members from the provider community and the public. The task force has made The following recommendations setting aside three million dollars in recurring funds for emergency and transitional housing, this would involve a master leasing agreement held by Elemy/g and COs or by a contractor to create vital housing capacity, it would provide Right housing for those with mental illness transitioning from emergency settings to and from correctional settings. It is anticipated that the cost per unit is approximately $10,000 this would add 280 units and ultimately serve And forty people in need, 13 million dollars is recommended for case management for use in adults, comprehensive case management for clients complex behavioral issues will be provided and supportive case management for those less complex Like clients with short needs depending on the time of their transitioning. I think the number of clients the would be served would be variable you see a range of 18,000 to 23, 000 I think that depending on the complexity and acuity of their needs. Substance abuse initiatives, the task force has recommended that $9 million dollars be set aside to deal with this issue. This would help with out patient and residential treatment including medication assisted therapy which combines behavioral therapy and drug investments . Also includes Training on controlled substances reporting system and safe prescribing an alternative methods for pain management. $5 millions is recommended by task force for therapeutic courts and diversion. These funds for therapeutic courts , mental health courts Courts, veterans courts and would also fund community services, lead is proposed with would allow for pre booking jail diversion so that folks could get services rather than jail time. And this would be on application basis. There is a large investment in the governors budget which is informed by the task force on mental health and substance use disorder. A total of $ 20.2 million is ultimately being proposed in non recurring investments. The [UNKNOWN] addicts Fund was set up upon the sale of the Dorothy addicts property, it was created in session law 2015, 241. We've given section references in this document for where in the appropriation act the authorizing legislation occurs . There was a There was expressed legislative intent to use the proceeds to increase the availability of short term behavioral health beds. And the funds may only be dispensed by an act of the North Carolina general assembly. Finally the net proceeds available for consideration and appropriation are Approximately $49 million. The Governor's budget recommended seven initiatives investing in a total of $20.2 million from the Dorothy addicts trust fund for community mental health initiatives. I'd like to walk through what those are and a summary of the recommendation And then if I may, with permission of the chair's pause since there are may be an opportunity to provide an update on what those recommendation we coming out of the legislative required report. So the mental health trust fund recommendation would add rural bed capacity $20 million non recurring, base on an RFP process this would be new beds or they conversion of existing hospital beds for in-patient care. It would increase bed capacity by approximately 64 to 150 beds depending on which way the capacity is created. psychiatric advanced directives would require $300,000 in non recurring funding. This would allow for education and training efforts for consumers and providers to develop individual treatment preferences. It also eases clinical decision making and allows for more effective treatment. Mental health first aid,
there's a proposal to allocate $2.5 million in non-recurring funding. This would allow for training for the community to see and react to the symptoms of mental health and provide assistance. $170 per trainee would equate to about 14700 mental health first aiders. Diversion grants is recommended at the amount of $3 million non recurring. Again, all of the items non-recurring since that is a non-recurring source of funding from the trust fund. These would provide for grants to counties participating in stepping up initiative, a national effort of a national association of counties, to divert those with mental illness from jails to treatment. Grants would encourage community collaboration of local mental health and justice systems. [BLANK_AUDIO] Work force capacity to serve deaf and hard of hearing with mental illness and substance use issues would require $150,000, it would allow for scholarships for graduate education for individuals proficient in ASL. The recipients would be required to agree to a service commitment. Facility based crisis feds is proposed at $2 million non occurring. The lack of child health inpatient treatment capacity results in emergency department visits. Families travel increased distance and it's associated with longer lengths of stay. An RFP process to provide start-up funding for two 16-bed facilities for child crisis in patient services is proposed here, and finally veterans' housing. $250,000 is set aside for the department to collaborate with the division of military and veterans' affairs and the institute of rapid rehousing, to train teams to help our veterans, and homelessness. [BLANK_AUDIO] Slide 13 is a summary of the items that we have just walked through. We've listed each of the different initiatives. The grand total investment being informed by this task force is $50.2 million recedes represent the dick land fund proceeds which the governor is recommending to this body and the appropriations would be recurring new general fund investments to address this issues. Mr. Chairman may I Right ask if the department could provide a brief summary of the report on the bed capacities for the dicks trust fund. >> Please looking forward to it. >> Thank you Mr Chairman. >> Thank you [INAUDIBLE] Deputy Director of the [INAUDIBLE] mental health developmental disabilities and substance abuse services We forwarded the report that was required about the proposal for the 150 beds, we identified counties across North Carolina that are adjacent to large counties that have over use of their emergency departments we also look to see where most referrals would come Coming from so smaller counties with rural or small hospitals that have that capacity and might need to use this kinds of funds so we are proposing to put an RFP to find out which counties are interested and have the capacity to do this, the RP allows for either These are up-fitting of the existing amount of beds or construction of new beds if that will be required. The RP would also allow those counties to either do in-patient beds or facility based crisis beds for either adults or children and And or mental health and substance issues disorders. So that's what we're proposed to you in the report and we're really looking forward to going ahead. >> Thank you very much. >> Thank you, Mr. Chairman. So we have one last slide on On our investments in mental health, and this relates to the opening of the new Broughton Hospital and essentially this recommendation would provide funding, part payable funding is what the budget people refer to it. They start with a less than fully annualized value next year and then would be annualized to a $2.37 million Appropriations to add 36 positions. The hospital is expected to be completed the construction in June of 2017.
This staff would help with the staffing transition and training from the old hospital to the new hospital with that work Occurring between July and September of 2017 which would enable clients to be transitioned to the hospital in October of 2017. That's the department's latest outlook for Broughton Hospital. Again, by opening the new facility bed, capacity is increased To 382 beds and the staff here include IT, clinical and technicians that are needed really to again train and provide for the patients to be able to be moved in October of 2017. Moving into public health, we mentioned zika virus Virus, I think that's well know to many. We took the opportunity to share our understanding of what zika virus is. The department through the State Health Director and the Division of Public Health has been very, very proactive, providing weekly updates on the status of zika, setting up a website On their webpage for any and everybody to go and to get the latest information about what's happening. We've just captured a few bullets here to put in context why the governor has made this a priority in his recommended budget. So Zika is a virus that's mosquito-borne and it's causing outbreaks in many countries. The virus Virus is spread primarily through the bite of a particular species of mosquito. CDC reports the Zika infection during pregnancy is related and can cause serious birth defect called microincephaly/g as well as other fatal brain defects. DHH Immediately went into action. There's a website again where you can find the information as of April 26. There have been 11 travel associated cases of Zika in our state but no locally acquired vector-borne cases in either our state or in the nation. What did the department through state health director and the secretary did? Well, they began working with their university partners to get mosquito experts on the job. They established a coordinated response, implementing the public health incident management team starting in Early February. $50,000 has been hobble together and shared with counties for aid and assistance in their local responses. They have looked at existing opportunities, work against just to immediately try to hire some entomologists to get on board with the division of Public Health to get the work started on surveillance and assessment of the situation. And of course they have been having their state public health lab geared up for the capacity to do clinical testing around the Zika virus. So what is the governor recommending that we do for the year starting 2016/17? A $750,000 item is recommended here to create the infrastructure for vector borne surveillance which means really trapping and testing the mosquitoes, evaluating what they are, control and education. The expansion would aid our counties in designing consultation with the health director a local response to Zika concerns as well as provide for FTEs. What they would be would be three entomologists, the East the Central and the West, and a person working at the public health lab to be devoted to the lab testing work associated with vector borne disease surveillance. This builds on the state infrastructure to respond to the Zika and vector borne diseases and is a core public health function. The next three items are really financing issues, but they also make critical investments in those organizations that directly serve people across the state. The first one is the local health departments 85. Health departments serve 550,000 North Carolinians every year, many of whom don't have other alternatives to healthcare. What has occurred here is a change in the methodology in for Medicaid Cost settlements as a result we are proposing to restore lost federal funds as a result of the change in medicate financing so that the health departments its non-recurring so that they can adjust to this and plan budgets accordingly with their new Level of medicate cost settlement revenues going forward after next year. Similarly the Children's Developmental Service Agencies I'm also provide services which are eligible to be cost settled by the medicate
program, the change in the methodology also applied to the billings that were coming out of the CDFA This are owned or operated by the division of public health, this is also none recurring you might ask why this would be none recurring if it's our responsibility to fund the CDSAs and the answer to that is that the CDSAs have undergone a certain amount of transition over the last few years We've been right sizing them, we've been closing them, we've been trying to consolidate and combine the medicate cost settlements have been a very large source of their cash and they've actually been able to return the seats to the states general fund with those changes with those consolidations we are not yet confident what the ongoing out look is or that that so we're asking for the bridge/g funding to keep that going with the opportunity to come back and evaluate and make the recommendation to this body whether a continued investigation is needed or whether the permanent funding for th CDS stays as adequate as it is. Finally the state public health lab performs many, many tests, it's state of the art nationally renowned certified state public health lab. One of the tasks that are provided by the public health lab is the new born screening fee. the legislature set the fee for new born screens $24 per screen because the governors budget is proposing that that fee stay set at $24, the actual cost of doing the fee is somewhat higher. So the recommendation of restoring state appropriations to the public health lab would enable those fees to stay where they are for families with newborns, and it would essentially replace lost federal receipts which over the years by the way if we loo at past budgets have been invested over and over again to replace state appropriations. So essentially we would be storing that state investment now that we've had the change in the reimbursement methodology. Child welfare services there's been a great deal of interest in this and this particular committee, this particular general assembly and of course this governor and this secretary in the welfare of our children. We've listed what welfare services are it's essentially a continuum of service protecting children when necessary for out of home placement foster care. Adoption if that is required and then of course family preservation and support. Recently North Carolina had a federal review by the US department of Health and Human Services Administration for children and families. this was conducted in collaboration with the division of social services child welfare staff. And it is the third such review that North Carolina has had. The final report was received by the department in February of this year and it's review focused on performance data, conducting statewide assessment, case level review and interviews with tribal representative stakeholders and partners. Our report indicated that North Carolina was not substantially in compliance and requires the state to enter into a two year program improvement plan. So this is one of the items in the governor's recommended budget that is very clearly still in progress and still under development. What we have done here is made three recommendations. We recognize that this is an iterative process and an ongoing process. Sherry Bradsher/g her team are working with the federal partners. They are convening stakeholders, they are getting by and they are going back to the federal stakeholders and making sure that at each step of the way what our goals are, what our strategies are and what our activities are that our federal partners and we agree that those things will actually make a difference and enable us to start seeing improvement. With that the governor's budget and that plan let me add, is expected to be completed very soon and May 2nd is just a few days away, but it was not in time for all of the recommendation to be included in the governors budget. So what we do have in the governors budget is tree extension items. That are focused primarily on building capacity around data analytics, training child welfare staff, their leaders. Increasing funding for in-home services to keep children and their families in their homes and together. Technical assistance to the counties in the area of foster care and increased capacity for more timely child fatality reviews.
A summary of the three recommendations is provided in this slide. So the first is the child fatality reviews. This would not only catch up a backlog of reviews, it would enable the agency to keep those reviews timely and by timely drive the results and information from that right back in to the child welfare system to help them know what's occurring and to take more immediate actions, it adds 5 STE. The second item strengthened oversight and accountability I summarize this and I will over summarize but we can discuss further it's really the investment in state agency so that they have the right staff in the right places to provide the over site to lead this transformation if you will at the local level. And finally the investment of the federal improvement plan and we just walked through what the major areas of investment there were $ 8.6 million, so in some of the press releases around that you would see a number 8.6, that's the federal improvement plan, you might see 9.3, that's the federal improvement plan with the states here, and then of course the governors recommending the additional hundred thousand dollar investment in the child fatality review. NC3K our governors budget is putting in, we mentioned in the highlights a proposal to this body to add $ 4 million and increase lottery receipts. If use the calculation that a flat is approximately $500 school year is 10 months then we're using the calculation that a slot on average is valued $5,000 using that assumption that would enable as many as 800 more at risk four year old to be served through NCPK. We certainly understand HHS is complex so is it's financing, and so is it's allocation process. There's braiding of head start smart start and other dollars at the local level that actually produce and regional costs that actually produce what a final pre case slat would cost, but this continues the investment and enables more four year old's to access high quality pre care Investment in accessing health care, $3.5 million is proposed to essentially start a transitioning from funding graduate medical expense through the medicaid program, DRG payment methodology and and ultimately, as that process evolves, looking at ways where we can address the state's 72 counties that are geographically or population-based will qualify as health provider shortage areas and address the fact that less than half residents remain in our state and very small numbers will stay in primary care. This is led by the office of rural health leadership by the State Health Director on how to craft this program going forward. It's recommended that we address these physician shortages in primary care, general surgery and psychiatry and we're proposing to support rural residency programs. So moving into medicaid, this could take days or we could try to do this in a few minutes. Next week And the department are going to come over and do a fuller presentation on how we have arrived at some of the items you're seeing here on medicaid. So I'll try to move through this and make it as painless as we can. This is the total medicaid budget that's recommended by the Governor For 2016/17. Again our format refers to total requirements, which in other vernacular is expenditure, total spending. Receipts would be the offsets primarily through federal participation called Fmap but also not insignificant offsets from Assessments and other receipts coming into the medicaid industry and the appropriation currently of $3.9 million, 400 positions in the agency. We're recommending in the middle column a net adjustment of $307, almost $308 million and investing in 45 new Positions for the high quality administration of a medicaid agency in transition trying to run fee for service and moving into a new environment and an improved environment that will take a different set of skill sets.
So revised recommended budget is Totaling $3.6 billion and 445.51 positions rates have changed are reflected in the far left hand column so what are the items and the moving parts in the medicate budget, well it's really investing and extending medicate services, his budget will Propose adding the three million dollars we mentioned for cap DA slots 320 slots serving disabled adults and focusing to the extent we can on folks suffering from Alzheimer's disease also expanding the cap DD slots by 250, this Budget invests in the program performance of medicate by adding two million dollars to retain and train the medicate agencies worth for us and two million dollars to add the critical staff that we mentioned for moving forward from our fee for servicing environment, maintaining that that it's as high as quality and level of service While we also move forward for into what we are referring to our division of health benefits environment and finally they are the largest number in this recommended budget is the re-base which is returning 318.6 million dollars to the states general fund. So the rebase it might help just to set level what it means to do a Medicaid rebase. The rebase adjustment is actually something that's done annually and it's an increment of budget change really. What happens is we always have an To base budget, we are continually in the process of trying to estimate where the program will end up relative to that budget and look into the future and see based on where we are today using a lot of good information and know how to try to anticipate where we are gonna be in the future. So when When we refer to the rebase it is that incrementive change that is proposed when you take the budget that is enacted, and the forecast for where you think you will be subtracted to and it's positive or it's negative. The factors taken into consideration in developing the forecast would include enrollment Enrollment costs per person or a recipient, how much, how many of our folks who're enrolled actually will use a service? That's referred to utilization of service, as well as how does the enrollment, the program aid categories, who comes, what services that they will actually get. What kinda Math, what kinda matching funds is that going to earn. The governor's budget is recommending, let me point out to him sorry, that the rebase applies to the medicate payment funds. We do not rebase staffing and we don't rebase administrative expenses. Consequently you see the discrete recommendation for augmenting the administrative budget and adding staff in the medicate agency. so essentially why you try to doing the release, is say here we are and here are our policies before we make new decisions about policies and medicate, what are we need to continue our program the way we had it configured today. That's our rebase. The governor's budget has made recommendations based on the forecasting and analysis by the department of health and human services, and we'd like to clarify that that forecasting is based on actual expenditures through February 29, 2016, and in roman data that was updated through March 31st. 2016 by comparison just to understand the last witness budget was enacted that we are seeking to amend, it was based on a focused on August of 2015, so it's the update of what you received at that point. Putting it in context over the past three years North Carolina has invested just over a billion dollars of State money into the Medicaid program. When the 2012, 2013 budget was originally enacted in the biennial budget for 1113, Medicaid appropriations were $2.9 billion. In the budget that we are seeking to amend today, State appropriation are $3.9 billion, that demonstrates a very large commitment and willingness to sure up this Medicaid budget. In fact 23rd to 1213 was the last year that the Medicaid experienced a short fall. For the past three years, Medicaid has had had a positive year ending balance. This is reflective again, tremendous investments of the public resources into the program and improve forecasting, planning and management in the Medicaid Agency. It's not insignificant that in addition to those investments, in
the Medicaid budget itself, that $186 million is continuing to be reserved in state cash. Each week when the state controller send out a cash position of the state, there's the $186 million, set aside in the event that it's needed for unforeseen circumstances in the medicaid program. So we mentioned that the medicaid rebase what it is, we try to describe what it is, it applies to certain funds. This slide is to show you which funds to which it has the application. How much we are recommending to change and to tie back for you that net adjustment of the %318.5 million proposed return to the general fund. The funds that get re-based and that most folks like to focus on are the funds, that's where we talk about cheque rights, that's where we talk about provider payments and buy-ins and other things. It's by in large the largest fund in the medicaid budget at about $12 billion but by no means the only fund. And not insignificant are the other 2 billion that are tied up in other payments that go out for Medicaid in terms of through CCNC cost settlements adjustments. Rebase actually offset expenditures in the area of drugs and supplemental payments would include the GAP, MRI, dish and the state's dish gain which is transferred to non tax revenue. So again in summary the rebase route is proposing to return 318.5 million major variable is lower than budgeted overall enrollment, which produces a lower than budgeted cost for claims. The state share is reflected as the first line in that schedule at $220.5 million, the five remaining funds below that are what combine to make up the difference to produce the 318.5. So just to put this in perspective when we say that enrollment is -probably the most important variable to what's driving the proposal here on the rebase. When the budget was enacted for 2015/16 the budgetary basis of enrollment we were projecting a base plus forecast of 8.9% enrollment growth overall in the Medicaid program and I think that was a supremely conservative approach that we took after we had been through a number of years of implementing a new NC fas system, managing and navigating the impacts of the Affordable Care act, wood working and other things. So we went with a very comfortable margin in the in the Medicaid budget on our enrollment forecast where it was built at 8.9% we're currently at 3.2% and we're projecting the year to end at 3.8. That is significantly lower than how we funded the Medicaid budget. Going in to the next year, so if we're starting with a base enrollment that is lower. We built next year's budget collectively assuming that 4% growth, we're actually upgrading that to a 4.5% growth for next year's Medicaid enrollment which is pretty consistent with what we've seen over many, many years that we've tried to look back at the trends in enrollment, so again because this year we are starting from a lower base, we are upgrading our outlook for next year but even when those factors combined, able to return what we're proposing in the medicare rebase. >> Mr. Copatrick/g. >> [COUGH] Excuse me. We have a voting session at10 O'clock. So, if we can just - >> I'll get through the next slide quickly . >> Thank you. >> So the next few slides I will just leave with you to look at, enrollment being the biggest variable. I think what the takeaway from this slide to orient you we've got the enrollment numbers on the left hand side we have the months on the bottom, and what you can see is that actual enrollment is running pretty well below both the enacted budget forecast and the revised budget forecast is showing that continued gradual upward growth in overall medicated enrollment. The largest category Bory/g move quickly. Aged, blind and disabled. The state budget office has used DMAs enrollment data. I know there was some question about changes that occurred in enrollment from March to April. We updated with April enrollment numbers and you can see some changes in the aged, blind and disabled category. And I think if this if anything highlights that we look forward
to continuing to add more months of expenditure and more months of enrollment to see where those trends are taking us a little bit closer in the fiscal year. The adult in Roma forecast is also presented on this Slide and the last enrollment peace that we should our 19 program eight categories so we are not going to show you all 19 the first was the total and this are selected categories, this slide gets a little bit wanky but what it does is try to do a fore cast to fore cast comparison. Is budget to forecast, forth cast to forecast answer some of the questions about what has changed since the last time we fore cast the budget to the current outlook for the medicate budget and I will summarize by saying that again in Roma is the largest driver of change in this numbers Manifests itself second item is in Rome at 80 million dollars state impact estimated and ask map because those program made categories are in their own particular matching funds I won't walk through each one but this accounts for about 215 million dollars of that budget increment of 224. I think we kind of like it, we think that you really like it or hate it, but this is an attempt to put on a piece of paper for the reader. If who does medicate serve and generally speaking what does it cost to serve those populations So on the left side we have people numbers, we have numbers of individuals on the bottom we have the 17 program aid category,the blue bar is meant to give you a relative sense of how many of this folks are in our program, for example if you look at the First aged, blind and disabled, those three appear by looking at it not my cheat notes, that they are about 430,000 people, and their PMP costs are represented by a red Their fairly expensive population. The next grouping is children. They're pretty, inexpensive populations and there sure are a lot of them. In the Medicaid program, other children are foster care children, and they're recently expensive in the context of overall children. And then you can see the remaining categories A couple of them catch your attention. Breast and cervical cancer, less than 400 people are receiving that service and they're per member, per month. Cost is very expensive because they're being treated for cancer. Illegal aliens on the end, very, very few. They're expensive because they're accessing care through EDs. So that is Who Medicaid serves by those program aid categories and the next one is a visual of who does Medicaid pay. And again this focuses on the claims payment fund, we're working on an iterative presentation of this. You can see that the largest receiver of funding through the claims Payment fund for largest piece of medicaid budget is the HMO premiums which LMENCO pays and high cost imaging but there's also very large investment in prescribed drugs. That's a $2 billion line item. We've noted in the footnote that it leverages an offset of drug rebates of about billion dollars. Again we'd love to come back in and show an overlight of all the other payments because it would increase in that visual of supplemental payments to hospitals and to nursing homes and to others who are cost settled and have the opportunity for enhanced federal payments through [UNKNOWN] and MRI. Finally in summary, this is the grand total of the recommended budget for the Department of Health and Human Services. With these recommendations that the Governor and the administration have placed before you, the enacted budget would be modified and would produce a final recommended budget of total spending of $19.6 billion just over five billion in receipts and would employ through the department their direct services across the state and in facilities 17,162 employees. So this budget refines the base and invests in what would in what we hope are shared priorities in public health, mental health and child welfare. Happy to take your questions. >> Thank you great job Mr Copatrick/g. Representative Pendleton I already ahead you written down by the way but go ahead. [BLANK_AUDIO] >> Thank you Mr Chairman. If people could flip over to page ten please. This concerns the Dorothea Dix Trust Fund.
This proposal from the governor calls for spending 40 percent of what we've got and there are some things here, this my opinion I'm just one vote on the committee but I would like to see a stick with things and not spend more than 30% this year. And the ones I would be in favor of on page 11 is the $12 million that allows rural hospitals to be able to create site beds. Page 12, child facility based crisis, $2 million And non-recurring and veterans' housing, quarter of a million non-recurring. That's about 30 percent. The rest of them I think should belong in the budget that we do next year. Follow up? >> You have a follow up go ahead. >> All right. If people could please. Well there's a slide on page 27 and the grab and total Medicaid enrollment forecast. And I wanted to ask you folks, either you or the department, to give us a slide, it would be separate than this in addition to this. And it would show from 2010 the growth in covered lives one line with growth and covered lives the other one would be growth in the North Carolina population, I think that's information we need when our constituents college that's all I have Mr Chairman. >> Thank you Representative Pendelton. Representaive Earl. >> Thank you. My question is if the funds that will be returning to the general fund from Medicaid, right? >> Yes ma'am. >> Does that take into consideration the outstanding payments to providers or will that be coming out, or is this just a snapshot at this particular time, or can you explain to me if- >> Yes ma'am. >> [INAUDIBLE] Yes Ma'am and I will ask the department if they want to update on anything that I say in this response, but generally speaking we've been though a few years where we've had a lot of discussion about year ending liabilities, pen up claims, lag in the timing Processing of payment from data service to data payment. It is our belief and understanding that the Medicaid program is caught up in this area and that there is the normal lag between when a service is billed since we operate on a modified cash, on Modified cash or modified accrual whichever way you prefer to approach it, budgetary basis that we always enter year knowing that the first payments we make in July are services that were provided in June and prior and in the prior method. There is no anticipation on our part that there will be usual liabilities occur Occurring in the Medicaid Agency. Our practice has been when there has been any recoupment where the disposition back to the federal government was unknown, we remove that from the cash and we carry it forward in an abandoned of caution. We make provision for anything that's cash in the general fund that we know Doesn't belong to the general fund or will not share show who's share of that is in the general fund. I know that there was a lot of discussion about where Medicaid stands at June 20 at any point in time, the State auditor did and audit and took a look at that and if we try to recall broadly from memory it was a random Around in $900 million outstanding liability and they concluded that there will be receivable of federal funds without 66% of that which is half math, and about a third of that will be required from State fund. The legislature prudently, set aside money from savings in this Budget that we are in that will as Medicaid transitions from fee for service into a capitation model, setting a side that transformation resolved for the run out of those claims to account for the timing and service and data payment. But this budget assumes that, Medicaid will bring to our attention if there is any Any extraordinary liability a year in which is unknown today and we assume no such burden exists. >> You're good all right, thank you, thank you very much. Representative Innosco/g you have a question >> Thank you, Have more than one. >> I know.
>> [LAUGH] >> On page sorry, page four under the mental health line, the $58 million Reduction, I'm assuming that the non recurring cut in the San balance that was $110 million this year and it was schedule to be 152 million this year that, that cut is being taken. Yes ma'am there is no proposed modification to that in the budget. >> And then, this is a comment. So next year that won't appear in the budget any place. And you won't know that 152 million has been cut. When you have non-recurring cuts they go away without anybody knowing about it. So that- >> I say a comment >> That's concern to me, because we have some many unmet needs in mental health. There is the homestead decision in 1999 that required a supreme court decision that say we can't house people institutions if they can live in the community. We are now housing our mental ill in prisons, in jails. And with that kind of need I want you all to go back to the big shares and tell them that we need more money for this. They've got money, go back and tell them that this is not okay. Thank you. I've gotta get- >> You have You have a follow up? >> Yes. [LAUGH] >> Okay. >> On page, let's see, 11. This is also a follow up to Representative Pendleton's comments. I agree with him that we ought to be using this money for one-time expenditures. This is one-time So we've got a lot of items in here that ere recurring costs like theatric advanced direction, that's education and training, that's a recurring cost. You know it's been one time may train people, when that training goes away, then you won't be able to train future people, so that better in terms if he mentioned Training which is a one time. >> So you wanna reduce or get rid of the training? >> Well I would just use that fund for one time and that's like beds. There's a recurring cost that goes with it. You said that there was some recurring Creation that goes along with some of this. But the training it will be one time and then we won't get it again. >> Go ahead. >> Okay on page. >> Is thsi a new question? >> Yes, thank you. >> Follow up then. >> Page 15 follow up. >> You can stop saying all right. >> I just. >> You're running out of follow ups buy the way [INAUDIBLE] >> I just wanna make a comment here. I'm really very concern about the zika virus i think we are not really yet understand how dangerous that can be. I was asking a question I would ask is the department thinks it's enough money. But I would just flag that and say Someone can get back to her with an email on that I appreciate it. >> Another follow up? >> Yes I'll just get that one. >> Last one okay. >> I need to make this if it;s the last one I need to pick out here what's the most important. >> It's a three part last question Go ahead. >> Somebody else and I'll come back. >> Are you sure? >> Sure. >> All right. >> Mr Chairman I have a ->> I just have a question I not sure I missed it in your description when you were slide 28 with forecast for age fund and the disabled there's a significant drop in the actual enrollment, where did that come from and what's going on? >> right there. >> I thought there might be a staff request. Well yes Chairman [INAUDIBLE] so we have received the updated enrollment files. And we agree with you we thought it was a lot [INAUDIBLE] to show the drop down in the age, blind and disabled it's our understanding that the medicaid agent agency has been in a continual process of evaluating their enrollment data. Looking back over that data this partially reflects a correction in how enrolls are being counted in the program, and in improvement and in update. And we actually think in our conversation with the department. Bony Kleen who has been evaluating the forecasting information and doing some analysis to try and help dissect this works very closely
with the Medicaid agency. She has shared with me that even the department is expecting to see some right sizing of this number, having this number to come down. But again it's correcting for erroneous enrollment, maybe where there had been certain movements out of state or other changes in the population. Thank you. >> Any followers? Okay. Representative are you ready? >> Yes I think I can. On page 20 on the child welfare, thee expansion items. What's happened to the child fatality task force? Is it still funded and does it still exist? We're still getting recommendations from that group? Are they meeting? And then on my last question is on page 21. So could we get information on the waiting list for pre K? Mr. Chair >> You have one more follow. You're done? Okay. >> I do not think that we have the waiting list information with us today, but we will certainly respond very promptly when we have that. We'll respond very promptly yes ma'am. >> Thank you. We have one last question from Representative Pendleton. >> Representative [INAUDIBLE] >> [LAUGH] >> We'll send it back to your office in a moment Pendleton. All right. Thank you very much. I don't think anybody else has any questions so we will appreciate, thank you everybody. >> Thanks for having us. >> This meting is closed. [BLANK_AUDIO] [BLANK_AUDIO] [BLANK_AUDIO] [BLANK_AUDIO] [BLANK_AUDIO]