0525 - Consolidated Medical Service Fund / 0407 - Central Office General Administrative Fund

Sources of Revenue:

General Fund,Special Fund

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The purpose of this bill is to provide for the adequate staffing of nursing homes and training of nursing home staff. The Department of Health and Human Resources estimates the fiscal impact of this bill to be $25,356,936, with a state share of $8,792,511. The Department estimates these increased costs will occur over three areas of the Department. These areas are:
    The Bureau for Public Health will incur additional costs to fulfill the regulatory provisions of the legislation. These provisions include the determination that minimum staffing levels are being met and that training provisions are being complied with by nursing homes. The total estimated cost in this area is $55,572 the first year and $53,947, thereafter. These costs will participate in the Office of Health Facility Licensure and Certification cost allocation program. Up to fifty percent of the total cost may be general revenue, up to twenty-five percent may be federal funding and up to twenty-five percent may be special revenue funding. Additionally, the Bureau will incur one-time costs in the amount of $40,864 to review and revise the current training curriculum for state approved nurse aide training programs to 160 hours. These costs are funded fifty percent general revenue and fifty percent federal funding.
    The Bureau for Behavioral Health and Health Facilities will incur an increase in personal services expenditures of $2,067,168 for the five state Long Term Care Facilities which includes a 12% acuity adjustment. These facilities include Hopemont Hospital, Lakin Hospital, John Manchin Sr. Health Care Center, Pinecrest Hospital, and Welch Community Hospital. These additional FTE's consist of 9 registered nurses, 11 licensed practical nurses, and 28 certified nursing assistants. These expenditures will be from general revenue dollars. In addition, cost consideration was given for the training referenced in §16-5C-26. Per our estimates, we believe this training for certified nursing assistants will cost $500,000 annually based upon an estimated 250 staff at 40 hours of training (above the current OHFLAC requirement of 120 hours) at an average hourly cost of $50. This bureau did not consider the cost for grants for employee retention programs referenced in §16-5C-27 due to the inability to project costs based upon the information provided.
    The Bureau for Medical Services is the third area of the Department to be impacted. The additional cost is an estimated increase of $22,693,332, of which approximately $6,177,125 would be state funds. This projection is based on the additional staffing and training required by the proposed legislation and includes the requirement that an RN supervisor be on duty 24 hours/day, 7 days/week versus the current requirement of 8 hours/day, 7 days/week.
    The Department estimates that revenue generated as a result of the civil penalties (CMPs) will be $354,500. This estimate consists of the following: instances of immediate jeopardy non-compliance with staffing requirements at $3,050/day X 3 instances/year X 30 days until follow-up can be done for a total of $274,500/year; instances of non-immediate jeopardy non-compliance with staffing requirements at $50/day x 20 instances/year x 60 days until plan of correction is finalized for a total of $60,000/year; instances of failure to meet posting requirements at $1,000/day X 20 instances/year X 1 day out of compliance for a total of $20,000/year.

Fiscal Note Detail

Effect of Proposal Fiscal Year
Fiscal Year
(Upon Full
1. Estmated Total Cost 0 25,356,936 25,314,477
Personal Services 0 2,154,884 2,112,395
Current Expenses 0 508,720 508,720
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 22,693,332 22,693,332
2. Estimated Total Revenues 0 354,500 354,500

Explanation of above estimates (including long-range effect):

    Please explain increases and decreases in personal services, current expenses, etc., including assumptions and data source
    and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact
    is expected to vary in future years.
    Bureau for Public Health (Office of Health Facility Licensure and Certification) - Personal Services Costs = $87,716, including employee benefits, for first year and $45,227 thereafter. Current Expenses (Hearings, Travel, Postage) = $8,720. Total BPH cost $96,436, for first year, with an approximate state share of $48,218.
    Bureau for Behavioral Health and Health Facilities - $2,567,168 is based upon the following personal services costs: 9 RNs at $366,372 (9 * $40,708); 11 LPNs at $324,500 (11 * $29,500); and 28 CNAs at $582,400 (28 * $20,800) for a total of $1,273,272. The acuity adjustment of $152,793 is 12% of personal services. Benefits were calculated as follows: admin. fees, OPEB and health insurance at $6,982 per FTE and FICA, retirement, and workers' compensation at 24.03% of personal services. The remaining $500,000 is current expense for annual certified nurses aid training (250 staff * $50 * 40 hours). Forty hours of training is the difference between the current state criteria (from OHFLAC) of 120 hours for certification and the 160 hours proposed in this bill.
    Bureau for Medical Services - Currently the requirement for a RN supervisor is 8 hours per day. The requirement to increase a RN supervisor to be on duty for 24 hours per day, 7 days per week will increase the annual cost by $22,693,332; of this amount $16,516,207 is estimated to be Federal funds $6,177,125 State funds (using blended FMAP for SFY 2012 from Medicaid 6-year projection file of 72.78% Federal / 27.22% State). Due to annual FMAP changes, the costs would vary annually for the continued maintenance of this legislation. There is no associated cost increase for the nurse aide training as they are currently paid a flat fee for training.
    Total cost for the Department = $25,356,936 with a state share of $8,792,511.


    It is unclear to the Department if the revenue generated will go directly to the general revenue fund for the Department or directly to the state general revenue fund. The proposed legislation does not specify the use of the revenue collected as a result of any penalties, therefore the Department assumes all collections will be deposited into the state general revenue fund.
    In addition to significantly increasing costs to the Department, there are concerns with some areas of vagueness for which clarification would be needed in order to accomplish implementation. Presently, an LPN is required for nursing supervisor; by requiring an RN, this will increase Medicaid costs. The terms licensed personnel and direct caregivers can be duplicated or underreported because licensed personnel can also be direct caregivers. The ratios are increased so additional staff will be required, increasing Medicaid costs. For the areas of food preparation etc. where nurses have performed those services in the past, staffing for those areas will have to be maintained which is not something that has happened in the past; this increases costs. The costs and ownership of the committee that must be formed is unknown. Costs will increase for Medicaid because residents that are separated on different floors must meet the ratio requirements, and could double staff requirements. For example, if there are 10 residents on the first floor and 5 residents on the second floor, there must be more than on licensed professional and caregivers to meet the ratios by floor. The "Director" identified is unknown. Increased training will increase Medicaid costs. A "grant" is identified; however, there is no ability to identify who will administer and where the money will come from. Requiring a mentor will increase costs by also having to hire mentors. Current staff may not be able to absorb because of the ratio of staff to resident requirements. Wage increases, of course increase costs. Other initiative that are not identified may increase costs, but we are unable to address unknowns.
    There are too many variables that must be considered in establishing a grant program as described and the Department is not able to estimate costs without more specific information.

    Person submitting Fiscal Note: Michael J. Lewis, M.D., Ph.D.
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