The North Carolina Social Services Consortium Legislative Report March 12, 2015

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1 The North Carolina Social Services Consortium Legislative Report March 12, 2015 Burr Shows Willingness to Work with Coalition on Child Care Subsidy Policy Revisions A meeting was held on March 4 with Health Committee Chairman, Justin Burr, and representatives from the County Directors of Social Services, NC Child, NC Child Care Coalition, Smart Start and the NC Partnership for Children. The purpose of the meeting was to discuss revisions to the child care subsidy initiative enacted in last year s budget. The specific issues/goals and Burrs s position are as follows: Family Income Unit: Exclude the income of a nonparent relative caretaker from the definition of family income unit so that grandparents (and other extended family members) can continue to care for the children. Burr s position: Rep. Burr was still worried about abuse of the system and was curious if there was another way to address the issue. While he is supportive of the change in concept, he challenged to group to look at the data in an effort to find the breaking point. Ex: Using 400% poverty rate to determination of family income unit. Income Eligibility: Establish universal income eligibility at 200% of Federal Poverty Level (FPL) for all children ages Burr s position: Establish universal income eligibility at 200% of Federal Poverty Level (FPL) for all children ages 0-9. Prorating of Parent Co-Pay: To establish a consistent method of implementing parent copay fees for child care subsidies that recognizes and supports the child s plan of care and parent s work schedule, which may include the need for part-time care. Burr s position: Agrees with recommended changes. Chairman Burr expressed his understanding for the needed changes to the child care subsidy law and a willingness to help the Coalition in developing an appropriate strategy going forward. Suggested action: If approved by the Association, revise language according to Burr s suggestions and look for champions in the House and Senate: Rep. Lambeth, Rep. Dollar, Senator Hise. Meeting Scheduled with Senator Barringer March 18 The Child Care Coalition has a meeting with Sen. Barringer on March 18th at 11:45 to discuss their overall early education agenda, but of will also be talking to talking to her about child care subsidy policy. John Metcalf from the NCACDSS has been asked to join the meeting and will report back to the Association accordingly. Language Needed for Lambeth Amendment to S14 Regarding S14 and Chairman Lambeth s amendment to require an audit of county DSS departments; as expected the bill is now in conference committee and Senator Hise has shown a willingness to accept language proposed by the Association to replace the Lambeth amendment. Senator Hise also mentioned that he believes DHHS would prefer PED to study the issue in hopes of taking away county s ability to recertify Medicaid eligibility and allow the DHHS to establish regional boards to oversee the eligibility process.

2 Action Needed: Need to get Senator Hise proposed language as soon as possible, and follow-up with Lambeth 1330 ST. MARY S ST., SUITE 140, RALEIGH, NC POLICYGROUP.NET Governor Pat McCrory Unveils Budget Proposal Governor Pat McCrory unveiled Thursday a $21 billion budget proposal over the next two years that he said makes significant investments in health care, education and infrastructure; focuses on efficiencies; and helps those who cannot help themselves while encouraging the ones who can. It was a process in which we had to make difficult decisions, McCrory said. We prioritized and worked within the budget we had, just like families have to do. Seventy-six percent of all new, discretionary spending in the governor s budget is directed to Medicaid and increasing teacher pay. Medicaid, the state s health insurance program for the poor, disabled and elderly, accounted for 18 percent of state funding, said State Budget Director Lee Roberts. Medicaid Expansion In related news, Gov. McCrory said his administration is working with the White House, Congress and the state legislature to come up with alternatives in case the United States Supreme Court strikes down the Affordable Care Act, known as Obamacare. We recognize the Supreme Court case could have ramifications on everything related to health care, McCrory said. No one in Washington is preparing any alternatives. The U.S. Supreme Court is currently considering a challenge to President Obama s health care law that could eliminate tax credits used by millions of Americans to pay insurance premiums. That count leave 34 states with unmanageable insurance markets, rising premiums and millions more uninsured citizens, according to USA Today. Gov. McCrory said he directly asked President Obama, as well as North Carolina s congressional delegation, to work with him and other governors in the event the U.S. Supreme Court strikes down the health care law. McCrory said Obama s response was three-fold: the Supreme Court won t strike down the law, the health care law is working, and urged governors to move to a state exchange if the law is struck down. The governor said he and State Health and Human Services Secretary Aldona Wos are exploring a number of alternatives to Medicaid expansions; looking at states such as Indiana, Pennsylvania, Ohio and Tennessee that have expanded; and what waivers North Carolina could get to implement its own plan. Is there an institution (in North Carolina) or pot of money that could cover the extra 10 percent? McCrory said. Also, in the same vein, we re looking at potential scenarios if the Supreme Court rejects the President s argument of the current writing of the bill. Budget Highlights Increases Health and Human Services spending by $10.8 billion over the next biennium, an increase of more than 24 percent annually. Included in the $10.8 billion is an estimated need for $287 million in additional Medicaid funding in the first year of the biennium and $460.6 million in the second year, taking into consideration

3 forecasted changes in enrollment, anticipated costs per recipient, utilization of services, and federal matching funds. Allocates a total of nearly $82 million over the biennium in new funding for mental health and substance abuse services, increased funding for foster care and adoption support, and the collection of child support payments. Streamlines health services for uninsured and under-insured individuals by repurposing $4.5 million in NC Health Net program funds into the Office of Rural Health and Community Care s Community Health Grants and phasing out payments for Community Care of North Carolina case management and enrollment through NC Health Net. As a result, the NC Health Net program will cease and support for safety-net providers will receive funding through the Community Health Grants program. Reduces personal services contracts, with the expectation of saving $1.2 million over the next two years. Medicaid The governor recommends $175 million over the next two years for a Medicaid Risk Reserve to mitigate possible cost overruns. Adjusts the Health Choice funding by adding $5.5 million this year and $6.2 million next year to continue the program at the current level of service. Each year the Health Choice program is evaluated to estimate the funding required to continue services and benefits without changes to state policy, which is referred to as the Health Choice "rebase." Medicaid Reform Spends $1.1 million each year to implement ongoing Medicaid reform efforts. The money will be used for Medicaid administrative expenses and to hire 22 new employees to develop, support and monitor the transition of the Medicaid program to an accountable care organization (ACO) delivery model. The additional staff will bolster the agency s capabilities to perform functions related to the startup and ongoing administration of ACO service delivery. The recommendation assumes contract needs for actuarial analysis, ongoing reform consultation, information technology system changes, and quality measurement will be covered by existing Medicaid contract availability. Mental Health, Substance Abuse, Developmental Disabilities Allocates $23.4 million to help persons with mental disabilities transition to community-based services, if that s their choice, as per the state s settlement with the U.S. Department of Justice. Spends $16.5 million this year to open a new Broughton Hospital. Appropriates more than $16.8 million over the next two years to address chronic budget shortfalls in state mental health facilities. Invests nearly $10.1 million to continue the development of the local crisis services system by purchasing local inpatient bed capacity. (Three-way psychiatric bed contracts) Spends Creates a fourth NC START team and expands services to children and adolescents. NC START is a best practice, crisis prevention and intervention program for adults with co-occurring development disabilities and mental illness. Three START Teams across the state provide crisis

4 respite and service integration and support. When the earnest money from the sale of the Dorothea Dix Hospital property is realized during FY , the receipts will be used to initiate this effort in the first year of the biennium. If the receipts are not realized by March 1, 2016, the department may stop allocating community- based funding to initiate a fourth START team in order for it to be fully operational by July 1, Allocates $1.8 million each year to expand Treatment Alternatives for Safer Communities (TASC), a care management model that integrates community mental health and substance abuse services and criminal justice systems with the goal of improved treatment outcomes. Provides $2 million in 2016 to support Behavioral Urgent Care Centers and Facility-Based Crisis Units for adults, children and adolescents. The Crisis Services Solutions Initiative seeks to develop a comprehensive continuum of community-based crisis services, to reduce the overutilization of hospital emergency departments (EDs) and inpatient admissions, and to increase access to and availability of assessment, stabilization and treatment services. Spend $618,000 over the next two years to support a real-time bed registry system and data base integration to provide more responsive service and collect utilization and client data for placing patients in crisis beds. Among the Social Services budget highlights: Increases funds for foster care assistance payments by $12 million over the next two years to address the support in increased volume of children in foster care. Provides $2.9 million in 2016 for adoption assistance based on participation. Reduces the State and County Special Assistance expenditures by $9.7 million in the next biennium. The program provides a cash supplement to help low income, elderly or disabled individuals to remain in their home or live-in licensed adult care home. Focuses federal Child Enforcement incentive funds on performance. Federal funds have been awarded to states based on performance relative to other states in meeting current federal performance benchmarks. North Carolina receives approximately $14 million dollars a year. The State will retain 15% ($2.1 million) and distribute the remaining 85% ($11.9 million) to the counties. Funds retained by the state will support several IT projects including upgrades and enhancements for the Automated Collection and Tracking System, Document Generation Solution and Modernize echild Support and customer service tracking systems. The funds distributed to the counties will be used towards their specific performance improvement efforts. The reinvestment of these resources will result in North Carolina providing the highest-quality services to its children and families in need. Committee Considers LME/MCO Managed Substance Abuse Programs The Joint Appropriations Committee on Health and Human Services considered a proposal to integrate publicly-funded substance abuse programs into the state s existing community-based mental health service delivery system managed by LME/MCOs. Staff from the Legislative Program Evaluation Division recommended the proposal based on their report, in which they found that LME/MCOs have greater financial incentive to recommend patients to Alcohol

5 and Drug Abuse Treatment Centers (ADATCs) because the state currently pays for those services. This leads to overuse of ADATCs at a higher cost to the state. The proposal called for a gradual transfer of direct state money from the state DHHS division that operated ADATCs to LME/MCOs over a four-year period so that LME/MCOs could use the money to either build more community capacity or to contract with ADATCs for patients requiring more intense levels of care. However, the proposal ran into a road block of committee members questions regarding: effectiveness, treatment setting and modalities, data tracking and analysis, and costs. No legislative action was taken during the meeting. It is expected the committee will continue to discuss the issue in future meetings. Program Evaluation Committee Report & Findings In 2014, the North Carolina General Assembly directed the Legislative Program Evaluation Division (PED) to study the effectiveness of the state s Alcohol and Drug Abuse Treatment Centers (ADATCs). State lawmakers, particularly Senate budget writers, questioned in 2013 the effectiveness of the centers and recommended closing them altogether. A budget compromise resulted in state funding cuts rather than facility closings. The presentation, including the report and recommendations, can be found here. Below is a summary: Key Findings The three Alcohol and Drug Abuse Treatment Centers operate with a high degree of autonomy, resulting in operational and treatment differences. Under the current system, LME/MCOs have no financial incentive to manage and/or restrict utilization of ADATCs. Nor do they have an incentive to invest in expanded community-based treatment options that would serve as a substitute for ADATC services because the state pays for those services. Separation of the ADATCs from the community-based system limits North Carolina s ability to address service gaps, provide a seamless continuum of care, and manage costs. Many of the state dollars for substance abuse treatment is outside of the managed care system. Having gaps in the community mean individuals going to ADATCs even though they don t need it. The community based system doesn t have access to the money (state funds) on those services because they go to ADATCs. North Carolina lacks a performance management system that tracks long-term outcomes of public substance abuse treatment North Carolina does not have reliable encounter-level data due to problems with NC Tracks since July When encounter-level data was available, performance management emphasized processes and outputs rather than outcomes. It doesn t show whether a person improved over time because of treatment.

6 Recommendations The General Assembly should integrate the Alcohol and Drug Abuse Treatment Centers into North Carolina s community-based substance abuse treatment system. The General Assembly should direct DMH/DD/SAS to strengthen its performance management system for substance abuse treatment by improving data collection and tracking long-term outcomes. The Process One year of planning for transition. Plans should include: specific long-term outcome measures the division will begin tracking; steps for incorporating outcomes into performance management system to assess the performance of providers, LME/MCOs, and the system as a whole; data elements to improve the process of analyzing gaps in the community-based system; and timelines. Reduce funding to ADATCs in 25% increments over a three-year transition period, while funding to LME/MCOs is increased by a corresponding amount. By the fourth year, LME/MCOs would receive 100% of state appropriations previously going to ADATCs. LME/MCOs would have to pay a portion of the cost of ADATC treatment and pay the full cost of ADATC when they contract with them. The LME can determine how much in-patient services they need to service compared to other levels of care. LME/MCOs would be able to use reallocated funding to increase capacity in the communitybased system and/or purchase services from ADATCs. By the end of the transition period, ADATCs would be providers in a LME/MCO network and would be receipt-supported based upon demand for services. Timeline January 15, DMH/DD/SAS should submit a plan to the Joint Legislative Oversight Committee on Health and Human Services. February 1, LME/MCOs develop plans on how to use reallocated funding. April 1, DHHS submits an ADATC business plan for the transition to the Joint Legislative Oversight Committee on Health and Human Services until DHHS annually submits report on integration of ADATCs into the community based system and LME/MCO use of reallocated funding.

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