SB 0339 - Fiscal Note

Fiscal Note - SB 0339 - Modifies the duties of the Division of Aging

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 1299-09

BILL NO.: SCS for SB 339

SUBJECT: Concerns the Duties of the Division of Aging

TYPE: # Revised

DATE: March 22, 1999

# Revised by vote of the Oversight Subcommittee on March 11, 1999.

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
# General Revenue	($310,516) to ($410,516)	($1,329,525) to ($1,429,525)	($1,268,784) to ($7,652,878)
Nursing Facility Quality Care	$6,042	$7,250	$604
#Total Estimated #Net Effect on All #State Funds	($304,474) to ($404,474)	($1,322,275) to ($1,422,275)	($1,268,180) to ($7,652,274)*

*Theoretical maximum amount. Cost likely to be $4,612,831 or less.

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
# Federal	($479,483) to ($579,483)	($1,975,982) to ($2,075,982)	($1,966,758) to ($11,689,763)
#Total Estimated #Net Effect on All #Federal Funds	($479,483) to ($579,483)	($1,975,982) to ($2,075,982)	($1,966,758) to ($11,689,763)*

*Theoretical maximum amount. Cost likely to be $6,878,260 or less.

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 18 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Mental Health assume that this proposal will not fiscally affect their agency.

Officials from the Department of Health (DOH) stated that this proposal, if enacted, would result in an overall net gain to the General Revenue Fund of $51,000 in FY 00, FY 01, and FY 02. This gain was calculated based on application fees of $272,000 annually (based on FY 98) and the Certificate of Need (CON) appropriation of $323,000. The difference between the revenues and appropriation totals $51,000.

Oversight assumes that this potential net gain would not occur until FY 2002 as the language in the proposal {Section 660.050.6 (5)} states that the CON laws will be phased out beginning August 28, 1999 and ending on August 28, 2001. Oversight assumes the application fees as well as the CON appropriations will remain in full effect until FY 2001. Therefore, Oversight has shown the loss of application fees and the savings from the approximately 8 FTE positions no longer needed, in FY 02 only. The savings and loss apply to the General Revenue Fund.

The DOH stated this proposal could have long-term implications as well. The DOH stated the potential proliferation of additional long-term care beds could reduce the statewide occupancy to even lower levels (82% currently, compared to 94% nationwide). The impact to the Medicaid program for intermediate and skilled nursing care beds alone, could exceed $10,000,000 compounded annually.

Officials from the Joint Committee on Legislative Research - Legislative Research Division (LR) stated that the direction to the revisor of statutes is unclear in that it may imply but it does not state that the references are to be removed from RSMo. If that is the case, this proposal would impose no costs on the revisor of statutes as the revisor is not constitutionally permitted to make the changes called for in the proposed legislation. The LR cited State ex. rel. McNary v. Stussie, 518 S.W.2d 630 (1974) for the court case which prohibits the revisor of statutes to remove the citations.

Oversight assumes this proposal will not fiscally affect the LR.

ASSUMPTION (continued)

Officials from the Department of Social Services - Division of Family Services (DFS) stated

that this proposal will affect their division by an unknown amount expected to exceed $100,000 annually. Their assumptions are as follows:

Residential Care Facility I (RCF) is not considered in these assumptions as people qualifying for nursing funds are not likely to choose RCF-I care. The average RCF II payment is $270 per month. Seventy-one percent of RCF recipients get a personal-needs payment of $25 every month. Therefore, the total payment would be $295 per month per person.

According to the DA, only 20% of currently licensed RCF's meet the most recent life safety codes requirements of this proposal. There are 15,200 licensed RCF-II beds and at any time there are 27 % or 4,210 bed unoccupied. There are 842 RCF-II beds that could be filled in facilities meeting the most recent life safety codes for existing health care occupancy requirements of this proposal.

Information from "Aging in America" indicates that only one-half of the people in nursing facilities have dementia. Thus, we reduced the number of available beds by half. Currently 46% of occupied RCF-II beds are eligible for the Supplemental Nursing Care cash grant. Thus, of the 46% of 421 (half of 842) potential new occupants, or 194, may be eligible for a cash grant.

The DFS stated it was unknown how many persons would move to the RCF under these provisions. State cost to implement this program would be ranged from a low of $0 to an average of $295 per month per new eligible person. The annual cost per person is $5,540 ($245 X 12 months). If 30 people moved to RCFs under these provision, the annual cost to the General Revenue Fund would be $106,200. Therefore, the DFS has shown an unknown cost of greater than $100,000 annually.

Oversight has ranged the costs for the DFS from a low of $0 (assuming no person moves to RCF- II) to a high of $686,760 (assuming the maximum of 194 new occupants at $295 per month). These costs are charged to the General Revenue Fund. Costs for FY 00 were pro-rated to 10 months.

ASSUMPTION (continued)

Officials from the Department of Social Services - Division of Aging (DA) stated this proposal will fiscally impact their division.

CERTIFICATE OF NEED TERMINATION, ALLOWABLE BED INCREASE CRITERIA & ESTABLISHMENT OF A MANAGED SYSTEM:

Revenue

During the period beginning August 28, 1999 and continuing through August 28, 2001 (when section 198.318 would terminate), facilities will be allowed to increase their licensed bed capacity by up to twenty-five percent of their currently licensed capacity, if they have experienced an average occupancy rate of at least ninety percent for at least four of the most recent consecutive calendar quarters. Currently 194 facilities meet this criteria. DA staff familiar with licensing processes and trends estimate that approximately 75% or 145 (194 x 75%) of these facilities may desire to increase their licensed bed capacity. The election to increase the licensed bed capacity by 145 facilities would result in increased state revenues of $7,250 per year. The fees are deposited into the Nursing Facility Quality Care Fund.

Costs

This legislation requires the Division of Aging (DA) to establish a managed system and to develop criteria for a needs-based assessment procedure for new facilities. DA will utilize the services of a contractor with expertise in the area of health care services to conduct research and develop a system to implement the needs-based assessment procedure. (Refer to Planning functions and long-term care functions for details regarding the costs for the needs-based assessment procedure.)

RCFs CARING FOR RESIDENTS WHO ARE MENTALLY INCAPABLE OF NEGOTIATING A PATH TO SAFETY:

It is unknown how many residential care providers may choose to admit residents mentally unable to negotiate a pathway to safety. The cost of installing sufficient systems and equipment to comply with the current life safety code for existing health care occupancy may be prohibitive for smaller facilities not currently meeting these requirements. Only facilities presently in compliance with the majority of these requirements may be interested in meeting the remaining requirements to admit this type of resident.

ASSUMPTION (continued)

Based upon a review of individual facility profiles and dates of licensure, DA estimates that 146 (approximately 40%) of the 365 RCF II providers (1/31/99) would be able to meet these additional requirements to offer services to individuals mentally incapable of negotiating a pathway to safety without costly renovations. Due to the costs of installing sufficient systems, equipment and additional required staffing, DA estimates that the 323 RCF I providers will not elect to modify their facility to accept residents mentally unable to negotiate a pathway to safety.

FUNCTIONS OF THE DIVISION OF AGING:

Information Functions:

This legislation requires the division to include the posting of facility inspection results on the division's web-site. To enable the division to include inspection results of over 1,200 long-term care facilities inspected twice per year on a web-site, DA will contract for development of a web-site to provide information on a continual basis to ensure the most recent facility inspection results are available. This contract and the required software is anticipated to cost $15,000 and $38,000 respectively. The other information functions in the proposed legislation outline functions identical to the current statute; therefore, no additional fiscal impact for those functions is anticipated.

Planning Functions:

This legislation requires the division to develop performance based goals and outline strategic outcomes to enable the state to more flexibly meet the complex needs of its growing elderly population and to solicit input from consumers, providers, advocates, families, state and local agencies, legislators, the governor's advisory council on aging, and the commission on the special health, psychological and social needs of older minority individuals on how best to plan for the future needs of the elderly. DA currently does strategic planning and some performance based goal assessments; however, in the first year the tasks associated with this non statutory function have been spread over existing personnel. At the point in time that a statutory strategic planning and reporting requirement becomes effective, the division will need to ensure its ability to meet these expanded planning, analysis and reporting requirements through a centralized coordinator and analyst position whose functions will include: work with other state agencies, work with consumers and local agencies including government and other interested parties to gather data from the various program units and consolidate such information into a single format for consistent presentation, ensure other state agencies have access to data to include in their plans related to aging needs, attend meetings to collect input, analyze needs assessment data (see long-term care functions - needs assessment) and provide feedback related to the needs

ASSUMPTION (continued)

assessment and strategic plan activities. These duties would require one (1) Management Analysis Specialist II FTE ($36,888).

This legislation also requires the division to collaborate with the division of medical services to establish six pilot projects to test the cost effectiveness, quality and overall resident satisfaction of aging in place long-term care delivery models for the elderly and disabled. These pilot projects shall be operated by, or in conjunction with, universities and colleges throughout the state. The division is to establish guidelines to ensure the independence, autonomy and safety of residents served and shall annually report to the general assembly on the progress and findings of these pilot projects. DA assumed the pilot projects are intended to be Medicaid services as such costs related to provision of services would be estimated by the division of medical services. DA staff will make referrals to such pilot projects after client assessments that determine eligibility and individual service needs. This referral function is already performed by DA staff; therefore, DA believes that there will be no additional fiscal impact related to referrals for service. As required by the granting authority, DA in collaboration with the division of medical services, and in coordination with consumers, long-term care providers and other interested parties, will develop regulations and associated inspection and monitoring criteria for any new types of providers and services anticipated to be implemented.

The contract for the monitoring and study of the aging in place long-term care delivery model pilot projects and stand alone Alzheimer's pilot treatment unit projects will be combined into a single agreement. It is anticipated that the single agreement contract will cost approximately $48,000. If these pilot projects result in additional providers of service or increased numbers or categories of facilities over and above the six pilot projects, DA anticipates additional staff will be needed to conduct licensure, monitoring and survey activities; however, the number and type of staff will be dependent on the requirements and therefore will have an indeterminate fiscal impact. DA assumed reports for the six pilot projects would not have a significant fiscal impact.

The other planning functions in the proposed legislation outline functions identical to the current statute; therefore, no additional fiscal impact for those functions is anticipated.

Training Functions:

The division assumed the intent of the proposed legislation is to require the division to conduct research and provide technical assistance to long-term care providers in order to promote the development of programs that encourage employment, improve staff retention and lower staff turnover in the long-term care delivery system.

ASSUMPTION (continued)

DA will need an additional Management Analysis Specialist I FTE ($32,628) to conduct this research taking into consideration the results of the needs assessment (see long-term care functions - needs assessment) related to the service providers and the human resources required, with input from the long-term care providers and any organizations specializing in human resource development and management including the department of labor of industrial relations, vocational tech schools, colleges and universities; coordinate efforts to establish and disseminate human resource best practices; and promote provision of training and technical assistance sessions related to these topics.

Long-Term Care Functions:

This legislation requires DA to conduct an annual needs assessment for long-term care facilities and programs which will determine the need for a variety of services. With the growing elderly population and the increased need for flexible, cost effective services, the division will need to have data collected and reports updated on a continual basis due to significant changes in condition that occur in the elderly and adult persons with disabilities requiring modifications to their individualized care plans. Through continuous analysis of such data, the division will be able to present an annual report allowing providers to plan and modify their services to meet the immediate and growing needs of elderly and adult persons with disabilities. Additionally, analysis of data within existing and planned state data systems and collection of needs assessment survey data from consumers in home and community and institutional settings, will require the division to increase the time allocated for analysis activities. To ensure consistency with the strategic planning and human resources training activities and to ensure timely feedback reports including the annual needs assessment report for government policy and planning staff, long-term care providers, consumers and other interested parties, these functions will be a portion of the duties of the Management Analysis Specialist II FTE (see planning functions - strategic plan) and the Management Analysis Specialist I FTE (see training functions). The division will also need to procure data collection services for the portion of the needs assessment requiring direct contact with a sufficient number of individuals to ensure a representative sample of the entire population of elderly and adult persons with disabilities in both the home and community and institutional environments. Due to the physical and mental disabilities of a portion of this population, the data collection services will need to be modified to ensure reasonable accommodation for the needs of the individual.

ASSUMPTION (continued)

This legislation requires DA to move from a system of licensing "long-term care facilities" to a more comprehensive and flexible system of licensing "services". To ensure the division's ability to meet the needs of the ever increasing elderly population through provision of services allowing consumer choices, the division must be vigilant and perform a full review of current regulations and complete modifications to existing regulations related to licensure of long-term care facilities to convert to licensure of categories of services. This will require development of regulations regarding new categories of services such as stand alone Alzheimer's treatment units or free standing facilities for persons with Alzheimer's disease or dementia and those regulations related to aging in place long-term care delivery models. In order to ensure the greatest flexibility in service delivery and to meet the needs of the elderly, the division will increase the time allocated to work with consumers and long-term care providers to ensure timely updates and modifications to the regulations requiring an additional Program Development Specialist FTE ($35,364) (see long-term care functions - GAPS).

DA assumed that the "licensure of services" requirement would not include any presently contracted services (i.e. in-home services and federally mandated area agency on aging contracts) not requiring a license and any category of facility or services under the jurisdiction of another entity (i.e. home health and hospice agencies and hospital-based skilled nursing facilities licensed by the department of health).

This legislation requires DA to license stand-alone Alzheimer's treatment units but limits the number permitted to a maximum of six pilot models. DA must first, in consultation with consumers, long-term care providers and other interested parties, develop regulations and associated inspection criteria for these types of providers and services. It is anticipated that state licensure and inspection functions and federal survey activities related to six or fewer facilities will necessitate a contract for monitoring of residents and study of the model for further implementation. The contract for the monitoring and study of stand alone Alzheimer's pilot treatment unit projects and the aging in place long-term care delivery model pilot projects will be combined into a single agreement. It is anticipated that the single agreement contract will cost approximately $48,000. If licensure of this type of services is expanded in the future then there may be an indeterminate fiscal impact for additional staff to conduct state licensure and inspection functions and federal survey activities related to stand-alone Alzheimer's treatment units.

ASSUMPTION (continued)

This legislation requires DA to investigate any grievance filed with the division of aging against a long-term care provider, regardless of classification or seriousness of such grievance. DA assumed that "long-term care provider" referred only to a "licensed" provider operating a facility and does not refer to services provided under the purview of the home and community services portion of DA (inclusion of these providers would result in additional costs). With regard to the institutional services programs, DA currently investigates reports (complaints) that are suspected violations of regulation or abuse, neglect or exploitation reports. With DA receiving 7,085 reports of complaints related to institutionalized individuals, if DA shall "investigate any grievance", then an estimated 20% increase will occur. This increase in investigations and required written notifications will necessitate an additional three Facility Advisory Nurse II positions ($36,888), one in each of the regions that investigate the largest volume of reports and license the highest number of facilities (St. Louis, Kansas City and Springfield), and an additional Social Service Worker II position at the Central Registry Unit (CRU). The remaining regional offices are anticipated to be able to absorb the increased investigations and required written notifications. DA assumed the requirement related to "Within thirty days of receipt of such complaint, the division shall provide written notification of the investigation to complainants." and references the current requirement to provide notice of the receipt of the report and initiation of an investigation. DA assumed that the majority of the additional grievances would not necessitate the level of hours required for investigations of abuse, neglect or exploitation reports, but rather result in facilitation of issues with or between facilities, consumers and family members. DA assumed that grievances falling under the jurisdiction of another entity would be referred to that entity. Further DA assumed that the requirement for provision of results to all parties was not intended to breach state and federal regulations related to confidentiality.

This legislation requires procurement of services from independent monitoring contractors when necessary to supplement DA staff. DA has requested additional appropriation authority in the FY00 budget to allow expenditures of state and federal civil money penalties for monitoring activities related to facilities cited for substandard quality of care (30 facilities in FY98). DA believes that the state and federal civil money penalties will be sufficient to fund these monitoring activities. However, if the monitoring required by this legislation exceeds the civil money penalty funding sources, there may be an additional indeterminate fiscal impact. DA assumed that the intent of this legislation was to contract for monitoring of facilities cited for substandard care or life issues and not for conducting complaint investigations or monitoring of facilities receiving statements of deficiency (out of compliance with regulations - 941 in FY98).

ASSUMPTION (continued)

This legislation would allow providers licensed for long-term care services to contract with qualified licensed professionals for geriatric assessment programs (GAPS). These professionals would assist families and older adults to identify their functional status, their care needs, available services in the community and sources of financial assistance in paying for the services. This will require development of regulations pertaining to geriatric assessment programs. The Program Development Specialist (see long-term care functions - regulations) will also draft, update and modify regulations related to GAPS requirements. Dependent upon the regulatory requirements, there may be an additional indeterminate fiscal impact.

The other long-term care functions in the proposed legislation outline functions identical or similar to the current statute; therefore, no additional fiscal impact for those functions is anticipated.

Funding Functions:

The proposed legislation outlines funding functions identical to the current statute; therefore, no additional fiscal impact is anticipated.

Program Functions:

The program functions in the proposed legislation outline functions identical or similar to the current statute; therefore, no additional fiscal impact for those functions is anticipated.

Based on previous experience, the following amounts represent the average annual expense of an FTE:

Rent (Cole County) - $1,720 per FTE ($8.60 per sq. ft. x 200 sq. ft.)

Rent (Metro Areas) - $2,540 per FTE ($12.70 per sq. ft. x 200 sq. ft.)

Utilities - $320 per FTE ($1.60 per sq. ft. x 200 sq. ft.)

Janitorial/Trash - $200 per FTE ($1.00 per sq. ft. x 200 sq. ft.)

Other Expenses (Administrative Services) - $6,110 per FTE (includes travel, office supplies, professional development, telephone charges, postage and all other expenses not itemized above.)

Other Expenses (Institutional Services) - $5,136 per FTE (includes travel, office supplies, professional development, telephone charges, postage and all other expenses not itemized above.)

ASSUMPTION (continued)

In addition to the above standard costs, systems furniture for the six (6) new staff to be located in Jefferson City and Kansas City will be needed at a cost of $3,500 per FTE. Notebook PCs will be needed for the Facility Advisory Nurse IIs at a cost of $4,820 each and desktop PCs will be needed for the remaining new staff at a cost of $2,039 each.

FY00 costs are based on the 3 month period April 1 through June 30, 2000. FY01 and FY02 costs include a 3.0% inflation adjustment for expense and equipment costs and a 2.5% inflation adjustment for personal services.

Officials from the Department of Social Services - Division of Medical Services (DMS) assumes this proposal will impact their agency. The following assumptions were used to arrive at their estimated fiscal impact:

The DMS stated today's consumer is demanding and utilizing more non-institutional, community-based services. As a result of this new consumer demand and the availability of a wider array of community services, we believe nursing home utilization trends are changing.

The DMS has taken this trend into account in developing the fiscal note for certificate of need changes. Previous fiscal impact responses prepared for similar proposals reflected substantial costs because of the premise that the new beds would be filled with Medicaid recipients. The number of Medicaid recipients residing in nursing facilities has remained fairly constant since 1992, while at the same time the number of available beds has been increasing. Therefore, for the section of this proposal that addresses the phase-out of the certificate of need process, we recognize a fiscal impact but not to the extent in previous CON fiscal impact responses. We no longer believe that an increase in available beds will increase the number Medicaid is paying for, and in fact the last five years historical trends support this position.

The proposal addresses four areas (as it relates to the DMS):

1) allows nursing facilities to increase bed size if the facility has an average occupancy of at least 90% for four consecutive quarters;

2) allows RCAS to retain residents who cannot mentally and physically negotiate a path to safety (if certain requirements are met); and

3) phases out the certificate of need process.

4) establishes six pilot projects to test the cost effectiveness, quality and overall resident satisfaction of aging in place long-term care delivery models for the elderly and disabled.

ASSUMPTION (continued)

Following is a detail of the impact by section:

1) Fiscal impact from allowing NFS to increase bed size if the facility has an average occupancy of at least 90% for four consecutive quarters:

There are 147 nursing facilities whose average occupancy for the last four consecutive quarters is 90%. (Information from the Department of Health-Certificate of Need Program.) The statewide average number of Medicaid beds per facility is 95 beds. It is estimated that 18% of these facilities or 26 facilities will expand their capacity through this proposal.

The DMS is not assuming that these facilities will fill their "new" beds with Medicaid recipients. It is assumed the facilities will request an increase to their Medicaid per diem. Current regulation allows for a rate increase because of the addition of beds.

Over the past four years the average rate increase granted due to the addition of beds was $.91. Current Medicaid occupancy is 55%.

Cost of increasing rates due to the addition of beds:

95 beds x 55% = 52 Medicaid recipients

52 recipients x $.91 rate increase x 365 days = $17,272

$17,272 x 26 facilities = $449,072

Fiscal impact is as follows:

FY 2000 - $449,072 x 4/12 = $149,691 (allows for 6 months for construction and licensure)

FY 2001 - $449,072

FY2002 - $449,072

These costs were split between state and federal funds at a rate of 40% state and 60 % federal.

2) Fiscal impact to the DMS for allowing RCAS to retain residents who cannot mentally and physically negotiate a path to safety, if certain requirements are met:

A cost avoidance could result from this proposal. If a person with dementia would chose to stay or enter a RCF II level of care instead of a nursing facility (NF), the DMS would cost avoid the NF cost of care. However, the DMS would incur costs for personal care. Personal care is the only Title XIX service that can be provided in a RCF.

ASSUMPTION (continued)

It is believed that few RCF recipients would stay or enter a RCF when they could not safely negotiate a path to safety. However, if as few as 5 recipients would delay entering a nursing facility the cost avoidance would be greater than $100,000. The FY99 YTD average Medicaid payment for NF care is $73,76 (this is net of patient surplus). The annual cost is $26,922 per individual; the cost for 5 recipients is $134,610. The cost of personal care for 5 individuals is $17,737 ($11.37/unit x 26 units/month x 12 months x 5 recipients.) The net impact would be cost avoidance of $116,873. The fiscal impact/cost avoidance is unknown but greater than $100,000 for a combined total of state and federal funds.

Oversight will present a range of cost avoidance from a low of $0 (assuming no one transfers to a residential care facility) to a maximum of $100,000 each for the General Revenue Fund and Federal Fund (assuming 10 clients would transfer to a residential care facility).

3) Phase out of the certificate of need process. After August 28, 2001, the CON process will expire and long term health care providers will apply to the Division of Aging for licensure of services.

The cost is unknown but greater than $100,000. This is based on the assumption that new construction and facilities with new additions receive a higher per diem.

Increased costs are expected from existing facilities who add additional beds. Current regulation allows for a rate adjustment because of the additional of beds. Over the past four years the average rate increase granted due to the addition of beds was $.91. Newly constructed facilities have a higher per diem than the average medicaid per diem.

New facilities entering the Medicaid program receive an interim rate for the first two year of

operation then a rate is set based on their cost report. This rate is retroactive to the first day

of their second fiscal year of operation. The current interim rate is $89.65; the average rate for NFs that recently had their Medicaid rate set is $93.10. The average for NFs excluding NFs with interim rates is $89.46.

The DMS would expect to see an average increase of $.91 per day for facilities with interim rates (for their first fiscal year) and an increase of $3.64 per day when their rate is established.

ASSUMPTION (continued)

# Based on a vote of the Oversight Subcommittee on March 11, 1999, Oversight will reflect a range of costs from $0 to $15,909,099 for FY 02, for the phase-out of the CON process. The proposal states that the CON process will be phased out over a two year span and will expire on August 28, 2001. Therefore, it is assumed that the moratorium on building new facilities/beds would be in effect until September 1, 2001. It is noted that the upper end of the range of costs is a theoretical maximum. Actual costs will likely fall between 0 to 50% of this amount. The costs were split between state and federal funds at a rate of 39.5% state and 60.5% federal funds, based on previous funding streams.

The cost estimate is based on the fact that currently a CON is needed by intermediate care facilities, skilled nursing facilities, and residential care facilities I and II before new facilities/beds could be built. It is estimated that 1000 nursing facility beds are not built each year because of the current CON process. If the CON process is discontinued, 1000 beds could be started each year. Using a certified Medicaid bed rate of 81% and a Medicaid occupancy rate of 59%, it is assumed that 478 of the new beds would be occupied by Medicaid eligible persons. It is assumed that construction would begin on or after September 1, 2001 and that these new facilities would start entering the Medicaid program May 1, 2002. Oversight assumes a nine month time schedule for construction, inspection, and enrollment in the Medicaid program. The current interim rate given to new facilities ($89.65) was inflated by $.91 annually to arrive at the Medicaid interim rate used in the estimates. Projected patient surplus (based on FY 97 data) was subtracted from the interim rate to arrive at the estimated Medicaid payment by DOSS.

4) Cost of six pilot projects to test the cost effectiveness, quality and overall resident satisfaction of aging in place long-term care delivery models.

The cost for the six pilot projects for the aging in place long-term care delivery models is projected to be $2,526,806 for a full fiscal year. The projection is based on a FY 2000 budget request. The pilots will provide case management and in-home services to the elderly. The pilots will be operated by, or in conjunction with, universities and colleges throughout the state. The cost projections are for services only, no personnel costs are included. The DMS provided the following costs by fiscal year:

FY 2000 - $631,952 ($2,527,806 x 3/12) allows for start up time, assume begin in April 2000

FY 2001 - $2,527,806

FY 2002 - $2,527,806

These costs were split between state and federal funds at a rate of 40% state and 60 % federal.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
GENERAL REVENUE FUND
Savings - Department of Health
Personal Service, Fringe Benefits and
Expense and Equipment No Longer Needed	$0	$0	$323,000
Loss - Department of Health
Application Fees for Projects Not Filed	$0	$0	($272,000)
Cost Avoidance -
Department of Social Services (DOSS) -
Division of Medical Services	$0 to	$0 to	$0 to
Persons Living in Lower Cost Facilities	$100,000	$100,000	$100,000
# Costs - DOSS - Division of Medical Services
Increase Medical Assistance Payments	($59,113)	($177,339)	($177,339)
# CON Phase Out - Increase in Services			$0 to
# and Facilities	$0	$0	($6,284,094)
Aging in Place Pilot Project Expenses	($249,558)	($998,231)	($998,231)
			($1,175,570)
			to
# Total Costs - Division of Medical Services	($308,671)	($1,175,570)	($7,459,664)
Costs - DOSS - Division of Aging
Personal Service (3.28 FTE)	($29,177)	($119,626)	($122,616)
Fringe Benefits	($8,721)	($35,756)	($36,650)
Expense and Equipment for FTE	($31,197)	($29,623)	($30,512)
Website Contract and Software	($22,750)	($3,750)	$0
Pilot Projects Monitoring Contract	$0	($24,000)	($12,000)
Data Collection Services Contract	($10,000)	($41,200)	($42,436)
Total Costs - Division of Aging	($101,845)	($253,955)	($244,214)
# ESTIMATED NET			($1,268,784)
# EFFECT ON			to
# GENERAL REVENUE FUND	($410,516)	($1,429,525)	($7,652,878)
FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
(continued)	(10 Mo.)
NURSING FACILITY QUALITY CARE FUND
Revenue - DOSS - Division of Aging
Licensure Fees	$6,042	$7,250	$604
ESTIMATED NET EFFECT ON NURSING
FACILITY QUALITY CARE FUND	$6,042	$7,250	$604
FEDERAL FUNDS
Cost Avoidance -
(DOSS) - Division of Medical Services	$0 to	$0 to	$0 to
Persons Living in Lower Cost Facilities	$100,000	$100,000	$100,000
Costs - DOSS - Division of Aging
Personal Service (3.72 FTE)	($33,165)	($135,977)	($139,378)
Fringe Benefits	($9,913)	($40,644)	($41,660)
Expense and Equipment for FTE	($30,683)	($29,103)	($29,976)
Website Contract and Software	($22,750)	($3,750)	$0
Pilot Projects Monitoring Contract	$0	($24,000)	($12,000)
Data Collection Services Contract	($10,000)	($41,200)	($42,436)
Total Costs - Division of Aging	($106,511)	($274,674)	($265,450)
# Costs - DOSS - Division of Medical Services
Increased Medical Assistance Payments	($90,578)	($271,733)	($271,733)
# CON Phase Out - Increase in Services			$0 to
# and Facilities	$0	$0	($9,623,005)
Aging in Place Pilot Project Expenses	($382,394)	($1,529,575)	($1,529,575)
			($1,801,308) to
# Total Costs - Division of Medical Services	($472,972)	($1,801,308)	($11,424,313)
# TOTAL ESTIMATED	($479,483)	($1,975,982)	($1,966,758)
# NET EFFECT	to	to	to
# ON FEDERAL FUNDS	($579,483)	($2,075,982)	($11,689,763)
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business
Small businesses operating as nursing homes may be fiscally impacted by this proposal. The choice by a residential care facility or a multilevel facility to make any necessary conversions to allow for admission of residents mentally unable to negotiate a pathway to safety is voluntary. The revenues generated from accepting additional residents; conversion costs; and other programmatic costs (including resident assessments) cannot be anticipated. The addition of a requirement for assessment of residents mentally incapable of negotiating a pathway to safety may generate additional revenue for small businesses who provide the licensed professionals to make these assessments. The choice by a small business to contract with the division to provide independent monitoring services could impact the revenues of such a small business.

DESCRIPTION

This proposal concerns the duties of the Division of Aging and the replacement of the Certificate of Need (CON) process with the licensure of long-term care services.

This proposal requires the Division of Aging to establish a managed system of needs-based assessments for new long-term care facilities. This assessment will be developed within non-specific geographic areas where population density or demand dictates additional beds. This procedure should include a hearing and appeals process for those facilities for which the

Division finds no need. After August 28, 2001, the managed system will be implemented and Intermediate Care Facilities, Residential Care Facilities I and II, and Skilled Nursing Facilities will not be required to obtain a certificate of need.

This proposal removes the limitation of thirty new beds for facilities showing ninety percent occupancy over the last year and it removes the provision which allows facilities to transfer, purchase, or sell beds.

The Division is required by this substitute to post facility inspection results on its website. In addition, the Division is required to establish up to six aging in place and stand-alone

Alzheimer's pilot projects.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Social Services

Department of Health

Department of Mental Health

Committee on Legislative Research - Research Division

Jeanne Jarrett, CPA

Director

March 22, 1999