COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         0458-01

Bill No.:          HB 39

Subject:           Disabilities; Public Assistance; Social Services, Department

Type:              Original

Date:               January 30, 2007

Bill Summary:            This proposal establishes the eligibility for medical assistance under the federal Ticket to Work and Work Incentives Improvement Act of 1999.

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 16 pages.

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☒ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

FISCAL ANALYSIS

ASSUMPTION

Officials from the Office of the Attorney General assume any potential costs arising from this proposal can be absorbed with existing resources.

Officials from the Office of Secretary of State (SOS) state many bills considered by the General Assembly include provisions allowing or requiring agencies to submit rules and regulations to implement the act. The SOS is provided with core funding to handle a certain amount of normal activity resulting from each year’s legislative session. The fiscal impact for this fiscal note to the SOS for Administrative Rules is less than $2,500. The SOS recognizes that this is a small amount and does not expect that additional funding would be required to meet these costs. However, the SOS also recognizes that many such bills may be passed by the General Assembly in a given year and that collectively the costs may be in excess of what the office can sustain with the core budget. Therefore, the SOS reserves the right to request funding for the cost of supporting administrative rules requirements should the need arise based on a review of the finally approved bills signed by the governor.

Oversight assumes the SOS could absorb the costs of printing and distributing regulations related to this proposal. If multiple bills pass which require the printing and distribution of regulations at substantial costs, the SOS could request funding through the appropriation process. Any decisions to raise fees to defray costs would likely be made in subsequent fiscal years.

Officials from the Department of Elementary and Secondary Education (DESE) state DESE does not have the data required to make a fiscal determination regarding this proposal. DESE defers to the Department of Social Services.

Officials from the Department of Mental Health (DMH) assume persons served by DMH and who are employees of sheltered workshop will benefit from the exclusion of their workshop earnings from Medicaid eligibility determinations. The client working at a sheltered workshop would have increased personal benefits as a result of this proposal.

DMH states it serves a portion of the 1,337 sheltered workshop clients that are included in the Department of Social Services (DOS) fiscal note, but the actual number served is unknown. DMH is unable to validate the number of clients working in sheltered workshops with DESE Vocational Rehabilitation records due to confidentiality issues. Any increase in personal benefits for DMH clients employed by the sheltered workshops would be applied toward the cost of their care and services.

ASSUMPTION (continued)

DMH assumes that 5,334 eligibles (as determined by DSS) will be eligible under Section 208.146 and a portion of theses eligibles will be served by DMH. The estimated impact is unknown. However, DMH assumes that the DMH costs are included in DSS costs. Should a larger fiscal impact result than that which is estimated by DSS, DMH would seek additional funds through the appropriation process.

Officials from the Department of Health and Senior Services (DHSS) states there is a potential savings to the Hope Program, though the amount of savings is unknown, it is believed to be less than $100,000.

In determining the fiscal impact of this bill, the DHSS has made the following assumptions.

The Department of Social Services (DSS) will calculate the fiscal impact associated with determining eligibility under the new requirements, the cost of services for the new group of eligible recipients, and the cost of any administrative hearings regarding denial of eligibility.

The DSS, Family Support Division (FSD) has provided information that this legislation would result in an estimated 5,334 Medical Assistance for the Working Disabled (MA-WD) eligibles for purposes of determining eligibility for Medicaid (public assistance) as a result of the proposed legislation. (664 old MA-WD clients + 2,385 who met spenddown + 2,024 who didn’t meet spenddown + 261 new eligibles due to disregard of 250-350% of disabled workers income.)

Of these eligibles, 2,385 are currently receiving Medicaid through spend-down and thus would already be included in the 5,334 clients. Therefore, the number of additional eligibles is estimated to be 2,949 (5,334-2,385).

In FY05 the Division of Senior and Disability Services (DSDS) served 1,071 MA-WD clients in its in-home services program and 719 MA-WD clients in its consumer directed services program (transferred under Executive Order from the Department of Elementary and Secondary Education, Division of Vocational Rehabilitation to the DHSS, DSDS) for a total of 1,790 clients out of the total 16,962 total MA-WD population (number of eligibles when the program was discontinued in FY 06 as reported by the FSD) giving the division a participation rate of 10.6% of all MA-WD clients that are served by the division and who need either in-home services or consumer directed services.

ASSUMPTION (continued)

The DADS has a participation rate of 10.6% of all MA-WD clients who need either in-home services or consumer directed services. Applying the Division’s participation rate of 10.6% to the 2,949 additional eligibles will result in 312 additional Medicaid recipients that will access home care or consumer directed care (2,949 X 10.6%). The DHSS will need to provide case management for new clients participating in the in-home services or consumer directed services program. (Please note the DSS will include costs for services for the new eligibles including the cost of in-home services or consumer directed services.)

Additionally, the FSD has provided information that this legislation would result in an estimated 1,337 eligibles for the purposes of determining eligibility for Medicaid (public assistance) as a result of exempting sheltered workshop employment income. Of these eligibles, 362 are currently receiving Medicaid through spend-down and 178 are non-spenddown and would remain non-spenddown due to earning less than $65. These two groups would already be included in the 1,337 clients. Therefore, the number of new eligibles is estimated to be 797 (1,337-362-178).

The number of individuals age 18-59 who receive some type of in-home care (Agency provided or Consumer-Directed Services) through DSDS is approximately 21,145. Based on census population estimates, DSDS estimates approximately 18.6% of the population of Missouri who is age 18-59, considered disabled and living below 250% of poverty would utilize some type of in-home services. ((12,340 In-home clients + 8,805 Consumer-Directed Services clients)/113,577 disabled ages 18-59 at 250% of poverty or lower = .1862)

Based on the estimated 18.6% participation rate of individuals age 18-59, for in-home services, approximately 148 additional Medicaid recipients will access in-home care. (797 X 18.6% = 148.24)

As of June 30, 2006, caseloads for Division’s Social Services Workers average approximately 174 per FTE ((46,428 In-Home + 8,805 Consumer Directed)/318.04). Pursuant to 660.021 RSMo, the Caseload Standards Advisory Committee recommended that caseloads should be no more than a recommended 80 per worker. The division would request additional staff in an effort to reduce average caseloads to at least 100 per Social Service worker.

Keeping with the previous request to reduce caseloads to 100 per worker, the division will require 5.00 Social Service Worker positions to case manage the new MA-WD eligibles and the new Medicaid eligibles as a result of exempting sheltered workshop income ((312+148)/100=4.60).

ASSUMPTION (continued)

Social Service Worker duties include the responsibility for the investigation of hotlines, eligibility determination and authorization of state-funded in-home services; care plan management, and provide oversight and accountability for the performance of the Social Service Workers including case review, evaluation, and guidance.

Currently, the ratio of Home and Community Area Supervisor is one supervisor for every ten Social Service Worker FTE. Therefore, since this legislation will only require 5.00 SSW FTE we will not request any additional Supervisor’s or clerical staff and will absorb those duties with existing staff.

Oversight has, for fiscal note purposes only, changed the starting salary for the DHSS positions to correspond to the first step above minimum for comparable positions in the state’s merit system pay grid. This decision reflects a study of actual starting salaries for new state employees for a six month period and the policy of the Oversight Subcommittee of the Joint Committee on Legislative Research.

Officials from the Department of Social Services (DSS) - Information Technology Services Division (ITSD) assume this proposal would have a fiscal impact on their agency. The fiscal impact estimate includes analysis, code, and test and implementation efforts in the Income Maintenance and Medicaid systems. The following changes would be required:

1) Reactivate Medical Assistance—Workers with Disabilities (MA-WD) Program in the Income Maintenance system. This includes modification of daily job that currently closes back-dated MA-WD eligibility, reactivate generation of applicable report listings, updating the eligibility income limits at 150%/250% (non-premium/premium), removing date blocks in the system that prevent application and begin dates after 06/30/05 and on-line edit changes to sanction reason codes. These modifications require one Income Maintenance programmer for 80 hours.

2) Modify case structure programming in system to allow payee and spouse to be on a single case. Current case structure requires two cases and if only one individual is eligible, the system contains no income information for the spouse that is considered when determining eligibility (it is kept in the paper files maintained by caseworkers). Modifications require one Income Maintenance programmer for 40 hours and one Medicaid programmer for 80 hours.

Total Fiscal Estimate: 200 hours X $84.15/hr loaded staff rate = $16,830.

Existing staff would be used to design, code, test and implement this requirement.

ASSUMPTION (continued)

Officials from the Department of Social Services (DSS) - Legal Services assume the proposal would have no fiscal impact on their agency.

Officials from the Department of Social Services (DSS) - Family Support Division (FSD) state this proposal would restore a portion of persons who qualified for the Medical Assistance—Workers with Disabilities (MA-WD) Program, with specific criteria pertaining to disabled person's earned income. To qualify for the new program, persons receiving Social Security Disabilities Income would have to earn at least twice what their spenddown, minus $250, would be for the regular Medicaid program for persons with disabilities.

MA-WD:

Essentially, there are four (4) different sub-populations impacted by the proposed legislation:

·          Old MA-WD only;

·          Spenddown Met;

·          Spenddown Not Met;

·          New Eligibles

If this bill is passed, FSD estimates the following would occur:

·           664 persons–Old MA-WD only*

·          2,385 persons--Spenddown Met

·          2,024 persons--Spenddown Not Met

·           261 New Eligibles**

___________________________

            5,334 Total Eligibles

*This is the old population that was eligible for MA-WD and above the Substantial Gain Allowance (SGA).

**Due to the increase of disregarding 250% to 350% of the disabled workers income. This is based on MO Census information from 2005. The total population of people earning 250% to 350% of the FPL divided by the total population of people from 0% to 350% of the FPL. This % (31%) was used to project 261 new eligibles from the old MA-WD participants (664) with earnings over the SGA, plus people currently receiving Medicaid earning over the SGA.

ASSUMPTION (continued)

ELIGIBLES DUE TO FSD DISREGARDING SHELTERED WORKSHOP INCOME:

Based on available information, it is FSD's contention that if sheltered workshop income were to be disregarded from consideration as income for purposes of eligibility for Medicaid that approximately 1,337 Missourians could be potentially eligible. These eligibles comprised of three (3) sub-groups of the Medicaid population: 1) Individuals moving from spenddown to nonspenddown; 2) Individuals who are nonspenddown and earn less than $65; and, 3) Individuals who have a reduced spenddown.

1)Individuals moving from spenddown to nonspenddown: Of this population, approximately 362 are expected to move from spenddown to nonspenddown.

2)Individuals who are nonspenddown and earn less than $65: This population contains 178 individuals. These are current eligibles that will remain eligible. There is no impact for this sub-group.

3)Individuals who have a reduced spenddown: It is estimated that 797 individuals will have a reduction in spenddown. Of the 797 individuals impacted, 597 were already meeting spenddown. Of the 200 individuals remaining, 33 will meet a reduced spenddown and the other 167 did not previously meet spenddown and are not projected to meet spenddown with this change.

According to personnel from the Information Technology Services Division (ITSD) additional systems changes would be needed to accommodate the required program changes. ITSD will be including the programming costs in their fiscal response. Any additional staffing needs will be absorbed by FSD.

Officials from the Department of Social Services (DSS) - Division of Medical Services (DMS) assume this proposal would have a fiscal impact on the DMS.

Count of eligibles provided by the Family Support Division. The FSD combined the Medical Assistance—Workers with Disabilities (MA-WD) Program eligibles with the sheltered workshop eligibles in estimating the fiscal impact. There will be some overlap of individuals between the two programs. However, at this time the FSD can not determine who those individuals are. As a result, the two groups were combined so as not to underestimate the fiscal impact.

ASSUMPTION (continued)

The average cost per eligible is based on the FY ‘05 expenditures for the MA-WD category of eligibles reported on Table 23 – Missouri Medicaid Recipients and Payments. This cost includes nursing facilities, hospital, dental (limited services), pharmacy, physician, in-home services, rehabilitation & specialty services and mental health services. The pharmacy costs have been adjusted to account for the Medicare Part D program.

A 4.5% inflation adjustment was made for each fiscal year.

Fiscal impact for all years is based on 12 months of costs. Legislation contains emergency act – assume effective date July 1, 2007.

Section 208.146 – Ticket to Work (Medical Assistance—Workers with Disabilities (MA-WD) Program:

It was assumed individuals would be eligible for this program under one of four scenarios/groups if this legislation passes.

Group 1: Old MA-WD Only – 664 individuals:

The DMS assumes individuals are not currently participating in the Medicaid program. The cost is equal to the average cost per eligible. The cost is 664 x $1,183.06 = $785,551.84 per month or $9,426,622 annually.

However, the cost will be offset by the premium. The average premium for this group is expected to be $61. Premium collections total 664 x $61 = $40,504 per month or $486,048 annually.

Group 2: Currently meeting spenddown but their premium will be lower than current spenddown. – 2,385 individuals:

Assume currently in the Medicaid program and meeting spenddown. The cost for this group will be the loss of the spenddown. Spenddown can be met in one of two ways: pay-in or meet with medical bills. The last 3-month average of those meeting spenddown 33% met with bills and 67% met by pay-in.

Assume higher cost to Medicaid for those now meeting spenddown with medical bills. The average spenddown for this group is $218.27. Cost calculation - 2,385 x 33% = 787 individuals. 787 x $218.27 = $171,778.49 per month or $2,061,342 annually.

The cost will be offset by the premium. The average premium for this group is $67.02 The cost is 787 x $67.02 = $52,744.74 per month or $632,937 annually.

ASSUMPTION (continued)

For individuals who currently pay-in, the DMS will experience a cost because their current average spenddown is more than the average premium. The average spenddown is $218.27 while the average premium is $67.02 a difference of $151.25. 2,385 x 67% = 1,598 x $151.25 = $241,697.50 per month or $2,900,370.

Group 3: Currently not meeting spenddown but their premium will be lower than current spenddown – 2,024 individuals:

Assumption is the individuals in this group will participate in Medicaid because their premiums will be lower than their current spenddown amount. The cost is equal to the average cost per eligible. The cost is 2,024 x $1,183.06 = $2,394,513.44 per month or $28,734,161 annually.

The cost will be offset by the premiums collected. The average premium for this group is $67.19. The collections is 2,024 x $67.19 = $135,992.56 per month or $1,631,911 annually.

Group 4: New Eligibles – 261 individuals:

The DMS assumes individuals are not currently participating in the Medicaid program. The cost is equal to the average cost per eligible. The cost is 261 x $1,183.06 = $308,778.66 per month or $3,705,344 annually.

However, the cost will be offset by the premium. The average premium for this group is expected to be $122.55. Premium collections total 261 x $122.55 = $31,985.55 per month or $383,827 annually.

The fiscal impact for Section 208.146 is $43.7 million for FY ‘08, $45.7 million for FY ‘09 and $47.7 million for FY ‘10 (See summary chart following DMS assumptions). Program sunsets three years after the effective date of this legislation.

Section 208.151 – Sheltered Workshop Income Disregard:

It is estimated that 1,337 individuals will have their income from working at a sheltered workshop disregarded as income for determining Medicaid eligibility. This will reduce their spenddown. These individuals will fall into one of three groups:

Group 1: Currently spenddown but will move to non-spenddown – 362:

This group is divided into two groups – those participating/meeting spenddown and those not meeting spenddown.

ASSUMPTION (continued)

            Subgroup 1a: Current spenddown and meeting spenddown – 271:

Assume currently meeting spenddown but will move to non-spenddown. The cost will be their spenddown. Current average spenddown is $111.84. 271 x $111.84 = $30,308.64 per month or $363,704 annually.

            Subgroup 1b: Current spenddown but not meeting spenddown – 91:

Assumption is although currently not participating in Medicaid because they haven't met their spenddown but individual will participate if no spenddown. The cost is the average cost per eligible - $1,183.06 x 91 = $107,658.46 per month or $1,291,902 annually.

Group 2: No change in spenddown – 178:

Assumes individuals in this group will not be impacted by changes. No fiscal impact.

Group 3: Currently spenddown and will see a reduction in spenddown – 797:

            Subgroup 3a: Current spenddown and meeting spenddown – 597:

The cost will be the amount of the reduction in spenddown. The average spenddown is expected to decrease by $69.38 per month. 597 x $69.38 = $41,419.86 per month or $497,038 annually.

            Subgroup 3b: Current spenddown but not meeting spenddown but will participate             because of lower spenddown amount – 33:

Assumes individuals currently are not participating in the Medicaid program and haven't met spenddown but will if they have a lower spenddown. The cost is the average cost per eligible. $1,183.06 x 33 = $39,040.98 per month or $468,492 annually.

The cost will be offset by the spenddown. 33 x $69.38 = $2,289.54 per month or $27,474 annually.

            Group 3c: Current spenddown but not meeting spenddown – 167:

This group is currently not participating and it is assumed they will not meet spenddown if lowered. No fiscal impact.

The fiscal impact for Section 208.151 is $2.6 million for FY ‘08, $2.7 million for FY ‘09, and $2.8 million for FY ‘10 (See summary chart following DMS assumptions). Program sunsets three years after the effective date of this legislation.

ASSUMPTION (continued)

Total Fiscal Impact (Includes Section 208.146 and 208.151):

The total fiscal impact for Section 208.146 and Section 208.151 is $46.3 million for FY ‘08, $48.4 million for FY ‘09 and $50.5 million for FY ‘10.

When Section 208.146 and Section 208.151 costs are added together the total includes duplicate costs.