0403-Div of Human Services General Admin Fund; 8722- Cons Federal Funds Div Human Services Gen Admin Fund

Sources of Revenue:

General 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 require the Department of Health and Human Resources to annually review and adjust rates it pays to care providers to be comparable, on percentage basis, to rates paid to hospitals.
    The Department of Health and Human Resources (DHHR) estimates the cost to implement the proposed legislation to be substantial. However, due to vagueness in the bill (see memorandum section), the fiscal impact cannot be determined.

Fiscal Note Detail

Effect of Proposal Fiscal Year
Fiscal Year
(Upon Full
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0

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



    The proposed legislation requires the DHHR to adjust rates paid to “care providers”, to be comparable, on a percentage basis, to rates paid to hospitals and to adjust those rates annually. However, the proposed legislation does not define any specific provider group that the term ""care providers"" would be applicable to and therefore eligible for annual rate adjustments. Currently, the DHHR makes payments to various types of providers which provide services that may not be comparable to hospital services. Rates for various provider types are adjusted on different timetables, using a variety of methods, such as costs (based on an annual or semi-annual cost report) or annual indexes and weighting such as DRG’s or RBRVS.
    All reimbursement methodologies are presently prescribed in the State Plan or defined in an approved Waiver. Since funding for Medicaid services is a joint partnership between the Federal government and the State, all reimbursement methodologies have to be approved by the Centers for Medicaid Services (CMS) . Should the DHHR fail to secure prior CMS approval related to the methodology in the proposed legislation the result would be a loss of Federal matching funds. Additionally, federal regulation requires that certain payment methodologies be utilized in determing provider reimbursement. For example, the Benefits Improvement and Protection Act of 2000 requires states to develop a prospective payment system for establishing FQHC rates. Therefore, the methodology prescribed in the proposed legislation would be in direct conflict with federally prescribed rate methodologies. An additional issue to consider is that the hospital services are not comparable to other provider types, and hospital cost and reimbursement rates are not an appropriate basis for determining rate adjustments for other providers, such as the Aged/Disabled Waiver homemaker services providers.

    Person submitting Fiscal Note: Rocco S. Fucillo
    Email Address: