COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3576-02
Bill No.: SB 1123
Subject: Elderly; Medicaid; Nursing and Boarding Homes; Social Services Department
Type: Original
Date: February 3, 2004
FISCAL SUMMARY
FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
General | ($16,245,198 to $16,654,668) | ($37,660,568 to $38,273,553) | ($64,337,587 to $65,043,035) |
Total Estimated
Net Effect on General Revenue Fund |
($16,245,198 to $16,654,668) | ($37,660,568 to $38,273,553) | ($64,337,587 to $65,043,035) |
FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
Total Estimated
Net Effect on All State Funds |
$0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 7 pages.
FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
Federal* | $0 | $0 | $0 |
Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
*Income and costs of approximately $60,000,000 would net to $0.
FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
Local Government | $0 | $0 | $0 |
ASSUMPTION
Officials from the Department of Health and Senior Services assume this proposal would not fiscally impact their agency.
Officials from the Department of Mental Health (DMH) assumes the proposal does not include DMH operated ICF/MRs since their rates are currently recalculated/adjusted annually.
Officials from the Office of Attorney General assume any potential costs arising from this proposal could be absorbed with existing resources.
Officials from the Department of Social Services - Division of Medical Services (DMS) state annually recalculating Medicaid reimbursement rates for the nursing home industry would significantly increase the cost to the Medicaid program. DMS states there is a three year transition period for the recalculated Medicaid rates to be the actual rates paid. By recalculating the rates annually, the DMS would not be able to control program expenditures.
ASSUMPTION (continued)
DMS assumptions used to calculate fiscal impact:
Summary of costs / calculations:
ASSUMPTION (continued)
SFY05:
Cost to Rebase - 2005 (1999 cost trended to 2005) $1,066,432,146
Cost for Current Rates $941,633,384
Annual Rebase Impact - FY05 $124,798,762
One-third effective July 1, 2004, SFY05 fiscal impact $ 41,599,587
SFY06:
Cost to Rebase - 2006 (1999 cost trended to 2006) $ 1,086,647,543
Cost to Rebase - 2005 (1999 cost trended to 2005) $ 1,066,432,146
Rebase Impact - FY 06 (using FY 05 estimated days) $ 20,215,397
Estimated per day impact - FY 05 estimated days 9,160,408 $2.21
Estimated SFY 06 days 9,206,210
Annual Rebase Impact - FY 06 $20,316,474
Annual Rebase Impact - FY 05 $ 124,798,762
Total $ 145,115,236
Two-thirds effective July 1, 2005, SFY06 fiscal impact $ 96,743,490
SFY07:
Cost to Rebase - 2007 (1999 cost trended to 2007) $ 1,106,736,236
Cost to Rebase - 2006 (1999 cost trended to 2006) $ 1,086,647,543
Rebase Impact - FY 07 (using FY 05 estimated days) $ 20,088,693
Estimated per day impact - FY 05 estimated days 9,160,408 $2.19
Estimated SFY 07 days 9,252,241
Annual Rebase Impact - FY 07 $ 20,290,082
Annual Rebase Impact - FY 06 $ 20,316,474
Annual Rebase Impact - FY 05 $ 124,798,762
Total $ 165,405,318
Entire rebase effective July 1, 2006, SFY 07 fiscal impact $ 165,405,318
If the rebase was calculated using reported costs that were not audited, an additional $10 million would be needed.
ASSUMPTION (continued)
Average total per diem audit adjustment made to reported cost $3.39
Estimated 05 days 9,160,408
Additional cost using Reported Costs vs. Audited Costs $31,053,783
One-third effective July 1, 2004 $10,351,261
DMS states the proposal is unclear as to whether the nursing facilities' rates will be held harmless (a facility's rate will not be reduced under the rebase). If a hold harmless provision is assumed, additional funding would be needed - $1,053,979 for FY 05, $1,577,825 in FY 06 and $1,815,826 in FY 07.
Since the bill is unclear on hold harmless, the fiscal impact of the bill will be reported as a range. The DMS believes the fiscal impact of the proposed legislation would be as follows:
FY 05 - $41,776,249 to $42,830,228*
FY 06 - $96,936,591 to $98,514,416*
FY 07 - $165,603,300 to $167,419,126*
* Impact includes funding for 3 additional staff.
FISCAL IMPACT - State Government | FY 2005 | FY 2006 | FY 2007 |
GENERAL REVENUE | |||
Costs - Department of Social Services - Division of Medical Services | |||
Program costs | ($16,161,440 to $16,570,910) | ($37,584,846 to $38,197,831) | ($64,259,966 to $64,965,414) |
Personal Services (3 FTE) | ($51,470) | ($52,756) | ($54,075) |
Fringe Benefits | ($21,309) | ($21,841) | ($22,387) |
Expense and Equipment | ($10,979) | ($1,125) | ($1,159) |
ESTIMATED NET EFFECT TO GENERAL REVENUE | ($16,245,198 to $16,654,668) | ($37,660,568 to $38,273,553) | ($64,337,587 to $65,043,035) |
FEDERAL | |||
Income - Department of Social Services - Division of Medical Services | $25,521,905 to $26,166,414 | $59,234,366 to $60,199,206 | $101,222,973 to $102,333,351 |
Costs - Department of Social Services - Division of Medical Services | |||
Program costs | ($25,438,147 to $26,082,656) | ($59,158,644 to $60,123,484) | ($101,145,352 to $102,255,730) |
Personal Services (3 FTE) | ($51,470) | ($52,756) | ($54,075) |
Fringe Benefits | ($21,309) | ($21,841) | ($22,387) |
Expense and Equipment | ($10,979) | ($1,125) | ($1,159) |
ESTIMATED NET EFFECT TO FEDERAL |
$0 |
$0 |
$0 |
FISCAL IMPACT - Local Government | FY 2005
(10 Mo.) |
FY 2006 | FY 2007 |
$0 | $0 | $0 |
FISCAL IMPACT - Small Business
Small businesses which are nursing homes could be affected by this proposal.
DESCRIPTION
This proposal requires the Division of Medical Services to annually recalculate the Medicaid nursing home reimbursement amount. Medicaid rates shall be recalculated for all Missouri facilities over three state fiscal years in three separate payments beginning July 1, 2004. The Department shall recalculate the class ceilings for patient care (120% of the median), ancillary (120% of the median), and administration (110% of the median), with each facility receiving one-third of the unpaid amount.
For July 1, 2004, the Department, using the adjusted costs in the Medicaid cost report for the fiscal year ending in 2001, shall redetermine the allowable per patient day costs for each facility. Each facility shall receive a rate increase of 1/3 the amount that is underpaid. For July 1, 2005, the Department shall perform the same calculations, but shall use the adjusted costs for the fiscal year ending in 2002. For July 1, 2006, the Department shall perform the same calculations using DESCRIPTION (continued)
the adjusted costs for the fiscal year ending in 2003. For July 1, 2007, each facility shall receive a full recalculation based upon its 2004 Medicaid cost report of adjusted costs.
This act shall take effect on July 1, 2004.
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
Office of Attorney General
Department of Mental Health
Department of Health and Senior Services
Department of Social Services
Mickey Wilson, CPA
Director
February 3, 2004