The Raleigh Report
From the Office of Representative Larry D. Hall
September 16, 2010
One of the fastest growing parts of the state budget is Medicaid, the health plan for poor people who need extra help covering their medical costs. Since fiscal year 2000, the state’s budget for medical expenses associated with Medicaid, including federal dollars, has increased from $4.8 billion to $9.9 billion. The state and local share of those costs during that time has grown from roughly $1.8 billion to $2.3 billion. The original budget for this fiscal year called for an increase in this line item to $2.7 billion. The increased cost of Medicaid can be attributed to many things, including population growth, an aging population, rising medical costs and the recent economic downturn. Still, faced with balancing a budget without raising taxes, my colleagues and I identified several cost cutting measures this year that kept the budget essentially flat while still providing service to those who need some help getting through difficult times. This week, I wanted to share some of our recent work in this area with you.
If you have any questions or if I can be of service to you, please contact me. Thank you as always for your interest in North Carolina and state government.
Efficiencies - The state approved a number of measures this year intended to help trim Medicaid costs. These efficiency measures include:
· Authorizing the Department of Health and Human Services to require prior authorization for brand name drugs for which the phrase "medically necessary" is written on the prescription.
· Allowing the Secretary of Health and Human Services to prevent the substitution of generic drugs for brand name drugs if after consideration of all rebates the cost is less than the generic.
· Requiring that medications prescribed for mental illness are included on the Preferred Drug List. This measure, in addition to the previous two, is expected to save at least $10 million in drug costs.
· Limiting coverage to procedures recognized or approved by the National Institutes of Health.
· Directing the department to apply Medicaid medical policy to recipients who have primary insurance other than Medicare, Medicare Advantage, and Medicaid.
The state also made several steps in the effort to combat Medicaid fraud. The anticipated savings from these measures is expected to reach $40 million this year. These efforts include:
Authorizing the Department of Health and Human Services to create a fraud prevention program that uses information from state and private databases to develop a fraud risk analysis of Medicaid providers and recipients.
Allowing the department to modify or extend exi s ting contract s to achieve Medicaid fraud prevention s aving s in a timely manner.
· Establishing a Class I felony for knowingly and willfully soliciting or receiving kickbacks, bribes, or rebates in return for or to induce a person to engage in Medicaid fraud.
· Doubling the Medicaid Investigative Unit staff at the Attorney General’s Office to expand the prosecution of Medicaid fraud and abuse. Additional staff will ensure increased prosecution and additional Medicaid funds recovered from fraudulent providers.
Budget- The state’s budget also calls for saving $50 million in Medicaid costs by better case management. The initiatives:
Expand efforts of the Community Care Network of North Carolina (CCNC). The Department of Health and Human Services contracts with the network to manage use of Medicaid services. Savings will be generated by expanding care management programs in hospital discharge, mental health; palliative care, and pharmacy. The improved system will enhance data integration, analytics, and reporting, increasing performance and save an estimated $45 million.
Eliminate Medicaid reimbursement of 'never events' in hospital inpatient settings. 'Never events' are certain types of medical issues that develop or are acquired while a person is in a hospital, but should have been prevented. The policy change brings Medicaid in line with Medicare reimbursement. Estimated savings are $5 million.
Studies- Legislators have also asked for two studies related to Medicaid policies. The studies will examine:
Provider rates - The Department of Health and Human Services or a contracted group will study reimbursement rates for Medicaid providers and program benefits.
HIV waivers - The department will study the feasibility of reducing the waiting list for the AIDS Drug Assistance Program by expanding eligibility for Medicaid to HIV‑positive individuals with incomes at or below 133 percent of the federal poverty level.
North Carolina suffered through a record-breaking drought in 2007 and the aftermath of that difficult time continues to influence our public policy. In addition to the immediate response to that crisis, we have made a number of changes that will improve our long-term approach to water planning. One of the decisions made in the House of Representatives was to establish a standing House Committee on Water Resources and Infrastructure so that we can examine water resource issues more closely and develop more expertise in the area. That committee has been busy and closely considered a number of measures.
Public Water - A new law (S.L. 2010-150, HB 1747) directs large community water systems and local governments that provide public water service to revise their local water supply plans when 80 percent of the water system's available water supply (based on calendar year average daily demand) has been allocated or when seasonal demand exceeds 90 percent. The plans must address foreseeable future water needs. Local governments must normally develop and submit such plans to the Department of Environment and Natural Resources at least once every five years.
Grants and Loans - The state has modified its criteria for which water and sewer projects receive priority when applying for grants and loans. The changes in the law (S.L. 2010-151, HB 1744):
· Clarify that the repair or replacement of leaking waterlines is a priority in situations where the line repair or replacement is being done to either improve water conservation and efficiency or to prevent contamination.
· Give priority to local governments with more than 1,000 service connections over similarly sized units if they have an asset management plan.
· Establish that a high-unit-cost project has priority over lower-cost projects. In addition, the act establishes a sliding scale system for determining the priority given to projects that exceed the high-unit-cost threshold.
· Give priority to those projects that promote the consolidation, management, merger, or interconnection of water systems. If an applicant demonstrates it is not feasible for the project to include regionalization, the funding agency must assign the project the same priority as a project that includes regionalization.
· Direct each local government to develop and submit a local water supply plan to the Department of Environment and Natural Resources at least once every five years. The department must use the information in the plans to create a state water supply plan and must also identify potential conflicts among the various local plans and ways in which local water supply programs could be better coordinated.
· Require local governments to adopt minimum water conservation measures to respond to drought or other water shortage conditions, but allows local governments to adopt more stringent standards. The act gives priority to those projects that adopt more stringent water conservation measures.
Studies - The Department of Environment and Natural Resources has been directed to establish a task force to: (1) develop a statewide survey to assess the state's water and wastewater infrastructure needs; (2) develop a plan for incorporating the information compiled from the United States Environmental Protection Agency surveys into the State Water Supply Plan; and (3) develop a plan for the creation and maintenance of a statewide water and wastewater infrastructure resource and funding database.
The act (S.L. 2010-144, HB 1746) also asks the department and the Local Government Commission to evaluate the costs and benefits of increasing the oversight of public water systems and wastewater. The agencies must report their findings and recommendations to the Legislative Study Commission on Water and Wastewater Infrastructure no later than November 1.
_ The Department of Agriculture and Consumer Services and the Department of Environment and Natural Resources have been asked to: (1) work with the North Carol ina Farm Bureau Federation, other agricultural organizations, and farmers to develop a plan to identify and report on agricultural water infrastructure needs; (2) identify and encourage voluntary practices that conserve and protect water resources; and (3) design a cost-share program to assist farmers and agricultural landowners who implement best management practices to conserve and protect water resources related to agricultural use. The law (S.L. 2010-149, HB 1748) also requires that a report on their findings and recommendations be submitted to the Legislative Study Commission on Water and Wastewater Infrastructure no later than November 1
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