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Summary of Governor's Budget Proposal
Governor Lamont released his proposed biennial budget yesterday in an address to the State Legislature. We are reviewing the proposal in further detail, but below you will find the items that are of interest to our membership. 
 
This proposed budget will receive public hearings over the next few weeks and then the Legislature's Appropriations and Finance Committees will deliberate and prepare their own proposal. The Administration will then negotiate with the legislative leadership to come up with a final budget document to be voted on by the General Assembly by the June 5  session adjournment date.

The following are highlighted items of interest from the budget proposal with more detailed information,  reported in text taken directly from the budget documents , printed below it. We have also included the links to the actual budget documents at the end of this summary.

Highlights from the Governor's Budget Proposal:
  • Medicaid program remains a managed fee-for-service model
  • Rates are frozen for Medicaid long term services and supports providers, but the increases received by Medicaid providers in FY 18-19 are annualized
  • Nursing home rates are rebased in 2020 without any increase provided, but also without a stop-loss for homes with very low census (70%) or very poor quality scores (1 star) - with the goal of reducing access capacity
  • Money Follows the Person funding to achieve 800 additional nursing home resident transitions to the community in the second year of the biennium
  • Department of Housing remains its own department
  • Full funding for the four assisted living demonstration pilot sites reinstated
  • Asset test to be added to the Medicare Savings Program (MSP)
  • Paid Family Medical Leave and a phased-in $15 minimum wage
  • While the budget proposal calls for a significant reduction in state borrowing, the Non-Profit Grant Program is funded in second year of biennium

Medicaid Program
 
Medicaid Program to Remain a Managed Fee-for-Service Model: Building off of Connecticut's successful managed fee-for-service framework, the Governor's budget reflects continued efforts to achieve cost savings under the Medicaid program. In conjunction with national consultants, a joint review of the Medicaid program identified additional areas for potential savings. Following the completion of this work, the Department of Social Services developed a number of proposals that will result in cost savings.  These include a focus on utilization management, program integrity, rebalancing of long-term services and supports, pharmacy rebate optimization, value-based payments, and linking payments to social determinants of health.

Utilization Management:  $3.4 million in FY 2020 and $11.8 million in FY 2021 by strengthening utilization management (e.g., requiring confirmation of medical necessity of services that may be over-utilized or for which there are appropriate alternatives) based on a review of other states and payers ($8.5 million in FY 2020 and $29.5 million in FY 2021 after factoring in the federal share of Medicaid expenditures).

Integrity efforts:  $6.4 million in FY 2020 and $7.3 million in FY 2021 by providing further support of program integrity efforts ($16.1 million in FY 2020 and $18.3 million in FY 2021 after factoring in the federal share).

Rebalancing and MFP funding : $480,000 in FY 2020 and $4.7 million in FY 2021 by strengthening rebalancing efforts under Money Follows the Person, beyond the 529 transitions already assumed in DSS in each year of the biennium, by supporting 800 additional transitions to the community in the second year of the biennium ($1.0 million in FY 2020 and $9.5 million in FY 2021 after factoring in the federal share).

Nursing Home Rebasing and Reducing Excess Nursing Home Capacity:  $2.4 million in FY 2020 and $2.9 million in FY 2021 by reducing excess nursing home capacity through the rebasing of nursing home rates and eliminating "stop loss" provisions for homes with very low occupancy or very low federal quality measure scores ($4.9 million in FY 2020 and $5.8 million in FY 2021 after factoring in the federal share).

Further Explanation of Reduce Excess Capacity in Nursing Homes:  Long-term care rebalancing efforts have left the state with a significant surplus of empty licensed nursing home beds despite the closure of 26 nursing homes within the past 8 years. The optimal occupancy rate is typically around 95%, but Connecticut's current statewide occupancy rate is approximately 86%, which equates to over 3,000 empty beds. Achieving an occupancy rate of 95% requires the closure of approximately 2,200 beds statewide. To improve occupancy rates statewide, this proposal rebases rates in FY 2020 and eliminates the stop loss provision for any nursing home with remarkably low occupancy (70% or lower) or very low federal quality measure scores (one star). (Normally, when rates are rebased, rate reductions are limited through a "stop loss" - a mechanism that limits financial instability to nursing homes that would otherwise experience a drastic reduction in their Medicaid rate.) Under this proposal, nursing homes with high occupancy and high quality measures will be provided a stop loss of 2% if applicable. Savings figures reflect the state's share of Medicaid expenditures. After factoring in the federal share, this proposal will reduce total Medicaid expenditures by $4.9 million in FY 2020 and $5.8 million in FY 2021.

Hospital Value Based Payment Component:  $2.0 million in FY 2020 and $2.4 million in FY 2021 by instituting a value-based component to certain hospital payments such that readmissions within 30 days after discharge for a related diagnosis will be subject to a readmission payment adjustment of 15 percent ($6.1 million in FY 2020 and $7.3 million in FY 2021 after factoring in the federal share).
 
Department of Housing
 
Adjust Funding for the Subsidized Assisted Living Demonstration to Restore Funding Cut in Previous Year's Budget:  The Subsidized Assisted Living Demonstration Project was developed to provide a community-based housing and service setting for low-income seniors who are eligible for the Department of Social Services' Connecticut Home Care Program for Elders. These are seniors who otherwise might have to move into a more expensive nursing home setting. Rental subsidies are provided by the Department of Housing (through the Connecticut Housing Finance Authority who manages the projects). Pursuant to a longstanding Memorandum of Understanding (MOU), The Connecticut Housing Finance Authority calculates the rental subsidies in an amount sufficient to pay the actual debt service on the mortgage loans and bonds. The MOU further requires the Office of Policy and Management to include this amount in the Governor's budget submission.

Implement Medicaid Supportive Housing Benefit for High Cost, High Need Individuals:  Under this proposal, a 1915(i) state plan home and community-based services benefit will be developed that will serve up to 850 individuals who experience homelessness and whose average Medicaid costs exceed $40,000 per year. Transition and tenancy-sustaining supports have been found to be effective at achieving housing stability as well as improved health, community integration and life satisfaction. By providing stable housing and tenancy-sustaining wraparound services, this initiative is expected to allow participants to effectively access and engage with goals and action steps around their health, resulting in a 40% reduction in the Department of Social Services' Medicaid costs.

Provide Rental Assistance Vouchers to Support the Department of Social Services' Long-Term Care Rebalancing Strategy:  Provides funding to support housing vouchers for individuals who will transition out of institutional care. The funding is provided to achieve savings and support the Department of Social Services' rebalancing strategy.
 
Medicare Savings Program (MSP)
  
Governor Lamont's budget maintains income eligibility for the Medicare Savings Program (MSP), which will remain the highest in the country. Recognizing that Connecticut is one of only eight states that does not have an asset test , the Governor is proposing to reinstitute the asset test similar to what was in place prior to FY 2010 . With this change, Connecticut will join the 40 states with an asset test that is equal to the federal minimum (currently, $7,560 for singles and $11,340 for couples). Consistent with federal rules, countable resources include money in a checking or savings account, stocks and bonds. An individual's home, one car, a burial plot, up to $1,500 in a burial account, household and personal items will be excluded. To avoid excessive administrative costs, the asset test will be effective July 1, 2020, in order that the asset verification system is in place prior to implementation. This proposal will reduce state Medicaid expenditures in FY 2021 by $10.5 million ($21.0 million after factoring in the federal share). These savings figures reflect the state's share of Medicaid expenditures, which cover the costs of deductibles, coinsurance and copayments under the Qualified Medicare Beneficiary program, which is by far the largest of the three components of MSP. In addition, because Medicare premiums are covered through the diversion of Medicaid revenue, less revenue will need to be diverted to cover these costs, resulting in additional revenue of $16.0 million in FY 2021. In total, after factoring in staffing and systems costs, this proposal will result in net savings to the state of $25.6 million in FY 2021.
 
Paid Family Medical Leave and Increased Minimum Wage
  
Whereby middle- and upper-income individuals working for large employers are more likely to have access to paid family medical leave (PFML), only about six percent of low-income workers do.  This budget proposes a framework for equalizing the ability of both men and women to take time to bond with a new child, and to care for themselves or a family member. In addition to improved health outcomes, PFML also makes business sense. Workers who have access to paid leave tend to return to work after a child's birth, reducing business turnover costs and in some instances, costs to the state for public assistance.  Businesses will be able to offer this benefit to their employees at no fiscal cost; Connecticut's PFML program will be funded via a payroll tax on employees of approximately 0.5 percent, which will raise an estimated $400 million annually The payroll tax will be effective July 1, 2020 to fund system development and ramp up operations, with benefit beginning in FY 2022.

Governor Lamont's budget also proposes recommendations made by the Connecticut Commission on Fiscal Stability and Economic Growth to  phase-in an increase in the minimum payments wage to $15 over four years. Doing so may provide Connecticut's families the economic stability they need to rise up out of poverty and decrease their need for state assistance or subsidies. Also, many families often work multiple jobs to provide for their families and increasing the minimum wage will allow them more time to spend with their loved ones.  The minimum wage would increase from $10.10 to $11.25 in January 2020, followed by an increase of $1.25 every year until it reaches $15 per hour in 2023, the same year as Massachusetts reaches that threshold. (Note the time line begins in January 2020)
 
Non-Profit Grant Program
  
$25 million in the second year of the budget for the non-profit grant program.
Grants-in-aid to private, nonprofit health and human service organizations that are exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, and that receive funds from the state to provide direct health or human services to state agency clients, for alterations, renovations, improvements, additions and new construction, including health, safety, compliance with the Americans with Disabilities Act and energy conservation improvements, information technology systems, technology for independence, purchase of vehicles and acquisition of property. 

Links:

 

Lamont's FY 2020-2021 Budget Proposal (281 pages)

Budget Fact Sheet 

FAQs

CTMirrorLamont's health budget vs. Connecticut hospitals

 


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