Summary:  House Recommendation

COMMUNITY  HEALTH

FY 2004-05  Senate Bill 1063 (H-1)

FY 2003-04 YTD

(as of 2/12/04)

Difference: House

from FY 2003-04 YTD

Rev. Executive* (as of 2/24/04 (

Senate

House

Enacted

Amount

%

IDG/IDT

$69,204,800

$70,543,400

$70,543,400

$70,543,400

$1,338,600

1.9%

Federal

5,380,898,600

5,255,049,100

5,267,506,300

5,277,363,400

(103,535,200)

-1.9%

Local

812,256,100

459,179,500

456,096,500

456,029,400

(356,226,700)

-43.9%

Private

57,844,000

54,976,400

54,976,400

55,476,400

(2,367,600)

-4.1%

Restricted

738,112,300

1,437,104,000

920,404,000

1,409,389,300

671,277,000

90.9%

GF/GP

2,652,980,300

2,476,078,800

2,974,148,800

2,465,986,500

(186,993,800)

-7.0%

Gross

$9,711,296,100

$9,752,931,200

$9,743,675,400

$9,734,788,500

$23,492,400

0.2%

FTEs

4,388.3

4,680.0

5,083.7

5,101.6

713.3

16.3%

1.     Federal Medicaid Match Rate

Recognizes the loss of $168.4 million in temporary federal fiscal relief that is partially offset by an increase in the regular federal Medicaid match rate from 55.89% to 56.71%, as proposed by the Executive.  This results in a decrease in federal revenue of $102.6 million and a State GF/GP increase of the same amount.

Gross

Federal

GF/GP

N/A

N/A

N/A

$0

(102,569,300)

$102,569,300

2.     Medicaid Caseload, Utilization, and Inflation

        Increases

Concurs with the additional federal funding recommended by the Executive to reflect Medicaid costs associated with inflation, utilization and caseload growth of 3.3%.   It assumes some decline in the number of Medicaid eligibles from the peak in FY 2003-04.

Gross

Federal

GF/GP

$6,927,970,200

4,045,732,300

$1,915,455,700

$229,485,000

129,397,800

$100,087,200

3.       Economic Adjustments

Includes $55.1 million Gross ($21.9 million GF/GP) for economic adjustments related to employees’ salaries and wages, insurance, retirement, and rent and building occupancy charges, as reflected in the Executive Recommendation with technical adjustments.  The adjustment is partially offset by unspecified employee-related reductions of $16.7 million Gross ($6.9 million GF/GP).

Gross

IDG

Federal

Restricted

Local

GF/GP

N/A

N/A

N/A

N/A

N/A

N/A

$33,333,000

5,008,100

7,161,700

2,285,200

8,855,200

$15,022,800

4.        Human Resources Optimization Savings

Agrees with Executive proposed savings of $262,300 by consolidating Human Resources functions into a Call Center to be established within the Department of Civil Service.

Gross

Federal

CMHSP

GF/GP

$1,379,900

0

0

$1,379,900

($262,300)

(61,500)

(67,000)

($133,800)

5.      Actuarially Sound Rates for Medicaid Mental Health and      Substance Abuse Services

Allocates $29.3 million Gross ($12.7 million GF/GP) for Medicaid Mental Health and Substance Abuse Services, as proposed by the Executive, to comply with a federal requirement for actuarially sound Medicaid capitation rates as a condition for the renewal of Michigan’s federal Medicaid managed care waiver.  The payment rates for Medicaid Mental Health and Substance Abuse Services would be increased by 2.5% and 3.0%, respectively. The Department is seeking federal approval to implement the actuarially sound rate requirement over a two year period.

Gross

Federal

Local

GF/GP

$1,400,414,800

813,069,300

26,000,000

$561,345,500

$29,314,300

16,624,100

0

$12,690,200

6.      Quality Assurance Assessment Program for Group Home Beds

Adopts the Executive proposal to replace GF/GP funds with state restricted funds for Medicaid Mental Health Services anticipating approval of legislation that would provide for a new quality assurance assessment program for group home beds for persons who are developmentally disabled.  The Department would be allowed to retain $3.5 million of the projected additional revenue of $7.0 million.

Gross

Federal

Local

Restricted

GF/GP

$1,372,625,900

796,933,300

26,000,000

0

$549,692,600

$0

0

0

3,500,000

($3,500,000)

7.     Health Regulatory Systems

Includes $37.6 million Gross ($5.4 million GF/GP) for Health Regulatory Systems that was transferred from the former Consumer and Industry Services due to implementation of Executive Order 2003-18.  The personnel for Health Regulatory Systems administer programs involved with the licensing, certification, and regulation of health professions and facilities.

Gross

Federal

Restricted

GF/GP

$0

0

0

$0

$37,622,000

13,481,800

18,749,400

$5,390,800

8.      Public Health Federal Grant Increases

Appropriates a net increase of $7.6 million in federal grant funds for public health programs, including $2.0 million for bioterrorism preparedness and response, $2.1 million for cancer prevention and control, and federal reductions and increases to 20 other line items, as proposed by the Executive.

Gross

Federal

GF/GP

N/A

N/A

N/A

$7,644,300

7,644,300

$0

9.      Vital Records Fee Increase to Offset GF/GP Reduction

Appropriates $1.5 million of state restricted fee revenue to replace the GF/GP appropriation for vital records, as recommended by the Executive.  This adjustment requires a statutory change to increase vital records fees (Section 2891 of the Public Health Code).

Gross

Restricted

GF/GP

$4,289,000

2,796,200

$1,492,800

$0

1,492,800

($1,492,800)

10.    Chronic Disease Prevention Initiatives

Does not allocate $26.8 million of new state restricted Healthy Michigan Fund revenue from a proposed $0.75 per pack cigarette tax increase to chronic disease prevention initiatives as recommended by the Executive ($8.7 million for maternal and children’s health, $13.1 million for chronic disease prevention, and an additional $5.0 million for smoking prevention programs).

Gross

Federal

Restricted

GF/GP

$19,525,300

14,184,900

5,185,400

$155,000

$0

0

0

$0

11.    Reorganization of Mental Health Programs

Agrees with the Executive proposal to move the following program budgets from the Community Living, Children, and Families appropriation unit to Mental Health appropriations units: Family Support Subsidy, Children’s Waiver Home Care Program, housing programs for disabled and homeless, and the OBRA nursing home placement for mentally ill and disabled persons.  These programs were reorganized out of the mental health administration in FY 1999-2000.

Gross

Federal

GF/GP

$53,493,100

40,862,300

$12,630,800

$0

0

$0

12.    Morris Hood Wayne State University Diabetes Outreach

Eliminates funding of $250,000 for the Morris Hood Wayne State University Diabetes Outreach line item.

Gross

GF/GP

$250,000

$250,000

($250,000)

($250,000)

13.    Children’s Special Health Care Services- Managed Care

Eliminates managed care for special needs children eligible for Children’s Special Health Care Services that was also recommended in the Executive budget.  Only a small percentage of program participants are enrolled in managed care, and the Department has not seen evidence of better results.

Gross

Federal

GF/GP

$129,465,100

64,331,700

$65,133,400

($7,131,700)

(4,044,000)

 ($3,087,100)

14.    Physician Reimbursement for ER Services

Does not concur with reduction of the Medicaid payment rate to physicians for hospital emergency room visits by 20 percent, as proposed by the Governor.  The proposal would have reduced funding by $6.9 million Gross ($3.0 million GF/GP).

Gross

Federal

GF/GP

$227,166,200

125,814,400

$101,351,800

$0

0

 $0

15.    Medicaid Pharmaceutical Services Savings

Rejects the Executive and Senate proposed savings of $36.6 million Gross ($16.0 million GF/GP) from reducing the pharmacy dispensing fee to $2.50, increasing the average wholesale price discount on brand name drugs, a 30% discount for generic drugs, and establishing a mail order pharmacy policy for maintenance drugs.  The House increases brand name drug copayments to $3.00; authorizes limits on brand name drugs to 4 prescriptions per month; and assumes $2.0 million in savings from Warner-Lambert settlement for a net reduction of $2.3 million Gross ($3.0 million GF/GP)

Gross

Federal

Restricted

GF/GP

$595,603,300

336,837,800

18,900,000

$239,865,500

($2,310,000)

(1,310,000)

2,016,7000

($3,016,700)

16.    Adult Dental, Podiatric, Chiropractic, and Hearing Aids

Concurs with Senate restoration of Medicaid funding foradult dental, podiatric, chiropractic, and hearing aid services that were eliminated in the FY 2003-04 budget.  This was not included in the Executive Recommendation.

Gross

Federal

GF/GP

$0

0

$0

$27,720,000

15,720,000

$12,000,000

17.    Nursing Home Services - Hospital Leave Days

Supports the Executive recommendation to eliminate Medicaid reimbursement to nursing homes for beds of Medicaid patients who are temporarily hospitalized.  According to the proposal, current nursing home occupancy rates indicate that beds would be available when the patient returns from the hospital stay.

Gross

Federal

Local

Tobacco

Restricted

GF/GP

$1,666,345,000

929,319,100

11,275,400

35,768,200

191,423,100

$498,559,200

($12,705.000)

(7,205,000)

0

0

0

($5,500,000)

18.    Actuarially Sound Medicaid HMO Payment Rates

A 7.5% increase in Medicaid HMO rates recommended by the Governor is included for federally required actuarially sound payment rates to managed care providers.  The cost would be $124.0 million Gross ($53.7 million GF/GP) for HMOs.

Gross

Federal

Local

Restricted

GF/GP

$1,602,051,500

886,372,400

299,572,500

224,026,100

$192,080,500

$124,047,100

70,347,100

0

0

$53,700,000

19.    Graduate Medical Education (GME) Transfer

Concurs with the Executive proposed $100.0 million shift of GME funds to the HMO line that was not in the Senate bill.  This results in $3.3 million in assumed GF/GP savings from applying the HMO quality assurance assessment to the GME funds.

Gross

Restricted

GF/GP

N/A

N/A

N/A

$0

3,300,000

($3,300,000)

20.    Medicaid Optional Eligibility Groups

Eliminates optional Medicaid coverage for parents, caretaker relatives, and persons under 21, but older than 18.

Gross

Federal

GF/GP

N/A

N/A

N/A

($119,000,000)

(67,484,900)

($51,515,100)

21.    Disproportionate Share Payments to Hospitals

Increases Hospital DSH payments by $5.0 million, and uses the Senate proposed methodology for distribution of the new funding to hospitals.

Gross

Federal

Restricted

GF/GP

$45,000,000

25,150,500

9,700,000

$10,149,500

$5,000,000

2,835,500

0

$2,164,500

22.    Hospital Disproportionate Share Payment

Authorizes increased disproportionate share payments above the appropriated level if the necessary Medicaid matching funds are provided as allowable state match.

Gross

Federal

Restricted

N/A

N/A

N/A

$33,200,000

18,800,000

$14,400,000

23.    Medicaid Special Financing Payments

Assumes additional GF/GP savings of $27.7 million above the Executive Recommendation in FY 2004-05 from continuation of increased Medicaid special financing payments included in State Budget Director Letter dated 5/19/04 for FY 2003-04.

Gross

Federal

Local

Restricted

GF/GP

$791,338,100

442,844,300

337,754,400

10,739,400

($417,415,000)

$50,900,000

28,865,400

0

49,734,600

($27,700,000)

24.    Medicaid Overpayments

Includes the Senate proposed $1.0 million for a contract to recover Medicaid overpayments to medical providers but the House lowers the net savings  to $3.6 million Gross ($1.0 million GF/GP).  The House recognizes additional savings of $1.2 million Gross ($500,000 GF/GP) from a Medicare recovery program.

Gross

Federal

GF/GP

N/A

N/A

N/A

($4,775,000)

(3,275,000)

($1,500,000)

25.    Medicaid Revenues from Tobacco Taxes

Concurs with the additional $419.1 million recommended by the Governor for Medicaid services to replace GF/GP from a proposed cigarette tax increase of $0.75 per pack, and from existing cigarette taxes currently earmarked for the Budget Stabilization Fund. 

Gross

Restricted

GF/GP

$0

38,824,700

$1,336,892,400

$0

419,000,000

($419,000,000)

26.    Tobacco Settlement Revenue Adjustments

An additional $63.7 million in tobacco settlement revenue from the Merit Award Trust Fund is included to finance Medicaid base expenditure needs, as proposed by the Governor.

Gross

Restricted

GF/GP

$0

93,000,000

$1,336,892,400

$0

63,700,000

($63,700,000)

27.    Estate Tax Revenues for Medicaid Services

Does not assume $94.3 million for Medicaid from estate tax revenues obtained through decoupling Michigan’s estate tax from the federal estate tax included in the Executive recommendation.  

Gross

Restricted

GF/GP

$0

0

$1,336,892,400

$0

0

$0

28.    Budgetary Savings

Includes a budgetary savings amount of $27.2 million.

Note: $100 point of difference also included in all line items.

Gross

GF/GP

N/A

N/A

($27,236,900)

($27,236,900)

Sec. 206.  Contingency Funds– RESTORED

Includes Executive proposed restoration of language not included by the Senate that appropriates up to $100.0 million in federal contingency funds, up to $20.0 million in state restricted contingency funds, up to $20.0 million in local contingency funds, and up to $10.0 million in private contingency funds that are not available for expenditure until transferred according to provisions in Section 393(2) of the Management and Budget Act. The FY 2003-04 budget does not include contingency fund language.

Sec. 262.  Expenditure of Appropriated Funds– NOT INCLUDED

Does not include current year language the Executive deleted and the Senate restored requiring the Department to provide a written explanation for all legislative transfers upon submission of the request for the legislative transfer by the Department of Management and Budget. Also requires the Department to provide an annual report of lapses by line item for this appropriation act.

Sec. 266.  Travel Funds– NOT INCLUDED

Rejects Senate language prohibiting the Department from spending Part 1 funds for travel outside the state of Michigan. Also requires the Department to spend no more than 50% of the amount spent for travel in FY 2003-04.

Sec. 267.  Budgetary Savings– NEW

Includes budgetary savings of $27.2 million to be implemented through transfers approved by the Legislature, pursuant to the Management and Budget Act.

Sec. 308.  Primary Care Services–  NEW

Allocates $250,000 to a pilot project to support operation of a health center that serves the uninsured, underinsured, and Medicaid population of Barry County who are currently not being served

Sec. 407.  Substance Abuse Prevention, Education, and Treatment Grants– RETAINED

Retains current year language the Executive deleted and Senate restored requiring appropriations for substance abuse prevention, education, and treatment grants be expended for contracting with coordinating agencies or designated service providers. Also specifies the Legislature’s intent that coordinating agencies and designated service providers work with CMHSPs or specialty prepaid health plans to coordinate services provided to individuals with both mental illness and substance abuse diagnoses.

Sec. 442.  Medicaid Adult Benefits Waiver – RETAINED

Retains current year language expressing the Legislature’s intent that the $40.0 million transferred from CMH Non-Medicaid Services to support the Medicaid Adult Benefits Waiver be used to provide state match for increases in federal funding for primary care and specialty services provided to enrollees and economic increases for the Medicaid Specialty Services and Supports program.  Also requires the Department to request federal approval to increase the amount of savings retained by a Specialty Prepaid Health Plan (PHP) from 5% to 7.5% of aggregate capitation payments.  If the request is denied, the Department is required to allow PHPs and their affiliate CMHSP members to retain 50% of the GF/GP portion of funds allocated under the Medicaid waiver.  The Executive and Senate recommended deletion.

Sec. 450.  Audit and Reporting Requirements for CMHSPs –REVISED

Revises current year language requiring the Department to continue a Work Group comprised of CMHSPs or specialty prepaid health plans and departmental staff to recommend strategies to streamline audit and reporting requirements for CMHSPs or specialty prepaid health plans.  Does not include the Senate revision that requires the Department to take into consideration the recommendations of the work group.  The Executive proposed deletion.

Sec. 451.  Actuarially Sound Capitation Rates– NOT INCLUDED

Does not include new Senate provision requiring the Department to seek federal approval to implement actuarially sound capitation rates for Medicaid Mental Health and Substance Abuse Services over 2 years.

Sec. 452.  Financial Impact on CMHSPs– NOT INCLUDED

Does not include new Senate proposal that prohibits the retroactive implementation of any policy that results in a negative financial impact on CMHSPs or Prepaid Health Plans.

Sec. 453.  Substance Abuse Block Grant Work Group– NOT INCLUDED

Does not include new Senate section requiring the Department to share the findings of the federal Substance Abuse Block Grant Work Group with the Senate and House Appropriations Subcommittees on Community Health by December 1, 2004.

Sec. 454.  Feasibility Study –NEW

Appropriates $50,000 of the Mental Health/Substance Abuse Program Administration line item for a feasibility study for increased coordination and collaboration between community health and human service agencies. The Executive and Senate did not include this new section.

Sec. 650.  Fish Consumption Advisory –NEW

Requires that the annual fish consumption advisory be posted on the internet and made available to clients of the Women, Infants, and Children Nutrition Program (WIC).  The Executive and Senate did not include this new section.

Sec. 804.  Tetanus and Diphtheria Immunization –NEW

Requires that tetanus and diphtheria immunization be offered annually at the same time that influenza immunization is offered to elderly patients in long-term care facilities. The Executive and Senate did not include this new section.

Sec. 1106a.  Abstinence Education Program Requirements – RETAINED

Concurs with Senate to retain language that establishes specific items of instruction as requirements for federally funded abstinence education programs, and gives priority in allocation of funds to programs that do not provide contraceptives to minors and that strive to include parental involvement.  The Executive proposed deletion.

Sec. 1109.  Dental Services Program for the Uninsured - REVISED

Concurs with the Executive to delete language that requires a report by the Michigan Dental Association documenting its efforts to increase membership participation as Medicaid providers, as a condition to receiving program funds. The Senate retained the language and further makes the receipt of program funds contingent upon the full restoration of coverage for Medicaid adult dental services. 

Sec. 1302.  Allocation of Funds for Forensic Nurse Examiner Programs– RETAINED

Concurs with the Senate to retain language that allocates up to $50,000 for expansion of forensic nurse examiner programs to facilitate training to improve evidence collection for the prosecution of sexual assault.  The Executive proposed deletion.

Sec. 1609.  Optional Medicaid eligibility groups– NEW

Eliminates optional Medicaid coverage for parents, caretaker relatives, and persons under 21, but older than 18. The Executive and Senate did not include this new section.

Sec. 1620.  Pharmacy Dispensing Fees and Copayments– REVISED

Maintains the current $3.77 pharmacy dispensing fee, and rejects the Executive and Senate cost containment measures related to dispensing fees, mail order pharmacy, brand name and generic drug reimbursement.  The House also increases brand name drug copays to $3.00 and allows limits on brand name drugs to 4 prescriptions per month.

Sec. 1630. Medicaid Hearing Aid, Podiatric, and Chiropractic Services – RESTORED

Restores vetoed language to continue hearing aid, podiatric, and chiropractic services at not less than the level provided on October 1, 1996 and also reinstates adult dental services as well.  The Executive did not include this section.  The House alsorequires report on options to contain Medicaid hearing aid costs.

Sec. 1647.  Graduate Medical Education Payments– RETAINED

Requires graduate medical education payments to hospitals to be no less than the payment level in effect on April 1, 2004.  The House includes technical changes to the Senate version.The Executive proposed deletion.

Sec. 1673.  MIChild Premiums– MODIFIED

Allows the Department to increase the maximum premiums for MIChild eligible persons from $5 per month for a family to $15 per month. The change concurs with the Executive and Senate recommendation.

Sec. 1689.  MIChoice Home and Community Based Services – RETAINED

Gives priority in HCBS enrollment to nursing home residents and those eligible for nursing homes, and requires screening to prevent unnecessary nursing home admissions.  Directs DCH to transfer funds to the HCBS program for successfully moving persons out of nursing homes if there is a net reduction in the number of Medicaid nursing home days of care.  Provides for a quarterly report on HCBS allocations and expenditures by regions and net cost savings.  Requires competitive bid for administration of the new screening and assessment process for long-term care services.  The Executive and Senate recommended deletion.

Sec. 1700.  Actuarially Sound Capitation Rates –NEW

Includes Executive proposed language that requires the Department to request a federal Medicaid waiver to obtain approval to implement actuarially sound capitation rates for managed care organizations over two years. It also would require Medicaid provider rate reductions if the waiver request is denied.  The Senate did not include this provision.  The House does not include a new Senate provision that limits Medicaid HMO contracts and federal waivers to implement new HMO contracts to one year, but does concur with the Senate requirement for the Department to complete a study by January 2005 of alternative approaches to providing Medicaid health care services to those currently served by HMOs.

Sec. 1711.  Medicaid 2-Tier Case Rate for Emergency Services– RETAINED

Continues the 2-tier Medicaid case rate for emergency physician charges that limits aggregate payments to 80% of Medicare rates rather than 60% of Medicare rates in the Senate bill. The Executive proposed deletion.

Sec. 1717.  Disproportionate Share Payments to Hospitals (DSH) –NEW

Concurs with a new Senate section that revises the distribution of DSH funds through 2 separate pools, but increases the funding amount by $5.0 million over the Senate.  The first pool would distribute $45.0 million proportionately based on the amount received by each hospital in FY 2003-04.  The remaining $5.0 million would be allocated to hospitals that received less that $900,000 in DSH payments in FY 2003-04 based on each hospital’s Medicaid revenue and utilization.

Sec. 1718.  Adult Home Help Review Process –NEW

Revises new Senate language that authorizes Medicaid adult home help beneficiaries to request a departmental review of any decisions that may adversely affect their access to home help services.

Sec. 1719.  Hospital Payments for Maternity Services –NOT INCLUDED

Does not include new Senate provision that requires a report by February 1, 2005 comparing Medicaid fee-for-service, Medicaid HMO, and commercial insurance payment rates for labor and delivery services with Michigan hospital costs for providing such services.

Sec. 1721.  Medicaid Financial Eligibility For Long-Term Care Patients– NEW

Requires a review of Medicaid eligibility requirements for long-term care patients related to prepaid funds that are subsequently returned to individuals who qualify for Medicaid. Executive and Senate did not include this new section.

Sec. 1722.  Medicaid Disproportionate Share Payment– NEW

Authorizes increased disproportionate share payments above the appropriated level if the necessary Medicaid matching funds are provided as allowable state match.

Sec. 1723.  First Alert Response Program– NEW

Contingent on the availability of funds, provides $15.0 million to level 1 trauma centers for First Alert Response Program, and $5.0 million for hospitals at least 50 miles from level 1 trauma centers that also have at least 14,000 emergency room visits per year. Executive and Senate did not include this new section.