The committee met to hear testimony from the Legislative Budget Board and Sunset Advisory Commission. This report focuses only on discussion regarding Medicaid funding, mental health funding and Sunset recommendations.
 
Leora Rodell, Analyst, legislative Budget Board

  • Medicaid is a jointly funded state/federal program providing insurance primarily to low income families, non-disabled children, pregnant women, the elderly and persons with disabilities
  • Distribution between federal and state funds is primarily based on the Federal Medical Assistance Percentage (FMAP)
  • HB 1 assumes FMAPs of 52.1% in FY16 and 57% in FY 17
  • The closing gap between Texas per capita income and federal per capita income is driving a decline in Texas’ FMAP
  • Rep. Sylvester Turner asked what lost percentage points on the FMAP means in dollars
    • 1% change in FMAP is about $250-300 million in GR each fiscal year
  • Turner asked what the FMAP change for this biennium means
    • $750 million in FMAP specifically but there are some enhancements for certain things which bring the change to about $500 million
  • Rep. Dawnna Dukes asked if Texas is about in the middle of the nation in FMAP
    • Yes
  • Chairman John Otto asked if FMAP is ever affected by the number of qualified Medicaid applicants in a state
    • Historically, no
  • Medicaid expenditures are a function of caseload and cost
  • Cost changes are affected by rate changes, medical inflation, utilization, increased acuity by clients, etc.
  • Rep. Sergio Munoz asked for information about rate increases MCOs have asked for in the past few years; would also like information on whether MCOs have seen rate increases above what was put into contracts; would also like to know if utilization has increased or decreased because of managed care
  • Caseload is predicted to grow over the biennium; much growth is due to transition of children into Medicaid
  • DADS long term care caseloads are decreasing because of STAR+PLUS expansion; projected to continue declining into next biennium because of the nursing facility carve-in
  • HB 1 assumes $25 billion in GR related funds and $60.1 billion in all funds for FY16-17; a net increase of $1.8 billion in GR related and $1.2 billion in all funds
  • Major differences in the budget between biennia include
    • An increase of $1.4 billion in GR and $1.9 billion in federal funds related to caseload growth and maintaining FY15 costs
    • An increase to GR and a decrease to federal funds of about $500 million related to the matching rate
    • A $1.1 billion decrease to federal funds due to discontinuing a FY14-15 PCP rate increase
  • Turner asked about the provider rates going down
    • The Affordable Care Act included a provision increasing PCP Medicaid rates up to the Medicare level; the expiration of those rates causes a reduction in federal funds because those rates were federally funded
  • Turner asked if provider rates are going down as far as what Texas chooses to do, what impact is that having on PCPs serving Medicaid clients
    • Will get that info
  • Turner asked about caseload and cost growth being funded
    • Caseload growth is being funded but not cost growth
  • Turner asked what projected cost growth is not being funded
    • For HHSC projecting $679 million in GR cost growth, $1.6 billion in all funds
  • Turner asked what type of clients that cost growth is for
    • All acute care Medicaid clients
  • Dukes noted there is a problem with reduction in PCPs that take Medicaid and also a problem with PCPs who do take Medicaid but do not take new clients; how much GR will be required to receive the $1.1 billion additional FMAP
    • In order to get the additional $1.1 billion it would take about $500 million in GR increase in provider rates
  • Bonnen asked what percentage decrease in provider rates that will be causing
    • Not sure, probably somewhere around 40%
  • HB 1 includes $2.6 billion in GR and $3.4 billion in all funds for behavioral health and substance abuse services
  • The estimated wait list for DSHS behavioral health services is estimated to be around 900 clients for next biennium
  • Rep. Four Price asked why there is an all funds decrease in mental health funding from last biennium
    • Related to capital funding that was included in the last budget for repairs to facilities
  • Turner asked what the change is from last biennium in total mental health funding
    • Relatively flat aside from the facility funding decrease
  • Turner asked if last session the wait list was fully funded
    • Yes
  • Turner asked what the cost would be to again fully fund the estimated wait list
    • $13 million to fund the adult wait list; for children the cost is minimal and the agency could absorb that cost
  • Turner asked if the system put in place last session is being maintained or not
    • What the agency was able to do in 14-15 is being maintained and in some cases that is less than what was appropriated
  • Turner asked if there is a wait list for IDD
    • Not sure; there usually is
  • Rep. Cindy Burkett asked how funding is different for NorthSTAR; can they not participate in DSRIP funds
    • There are funds from Dallas County being used in the 1115 waiver

 
Ken Levine, Director, Sunset Advisory Commission

  • Some Sunset recommendations have a significant fiscal impact, going to discuss those
  • For DADS, there was a recommendation to close the Austin SSLC. That will be a savings; that recommendation also includes increasing crisis services for people with IDD living in the community, that will be an expenditure
  • For HHSC, there was a recommendation to consolidate the two women’s health programs; will provide about $1.8 million over the biennium
  • For NorthSTAR, there will be savings by transitioning to managed care; also there is a recommendation to change the funding method for NorthSTAR which will allow the area to draw down about $40 million in federal DSRIP dollars
  • Sarah Kirkle, Sunset staff, noted that currently for NorthSTAR, DSHS puts out a competitive bid to a private entity to administer the program; federal law states that those funds are not match-able for the DSRIP program
  • For OIG, there is a recommendation that would save $1.2 million by narrowing the focus of the OIG from everything to just Medicaid fraud and larger dollar issues
  • For DSHS, there is a loss because Sunset is recommending to deregulate 10 occupations/license services; this would cost the state money because there is a revenue stream to GR from license fees
  • For TWC, the recommendation to participate in the federal treasury offset program could provide the state about $500 million in a five year term; would allow the federal government to tap into tax returns to pay back the unemployment trust fund
  • For DARS, there is a recommendation to integrate administration and management of the DARS vocational rehab program to TWC; there would be savings but because this was a recent recommendation the exact fiscal impact has not been determined yet