S3491 —

S3491 SHH1R StatementFISCAL 6/3/19ESTIMATE SENATE  HEALTH,LEGISLATIVE HUMANFISCAL SERVICESESTIMATE AND[First SENIORReprint] CITIZENS COMMITTEE   STATEMENT TO   SENATE, No.

 3491 with committee amendments   STATE OF NEW JERSEY 218th LEGISLATURE   DATED:

 JUNEJUNE 3,26, 2019          TheSUMMARY Senate  Health,Synopsis: Human Services and Senior Citizens Committee reports favorably and with committee amendments Senate Bill No.

3491.Raises, over time, hourly Medicaid reimbursement rate for personal care services to $25.

     Type As amended by the committee, this bill raises, over time, the hourly Medicaid reimbursement rate for personal care services to $25.  Providers who receive reimbursement for personal care services utilize those funds to cover direct and indirect administrative costs, as well as wages for workers who directly provide personal care services.  Personal care services are provided in the home rather than a long term care facility and include assistance with activities of dailyImpact: living and household duties essential to the patient’s health and comfort.

     Annual Currently,increases pursuant to section 1 of P.L.2017, c.239 (C.30:4D-7n), the reimbursement rate for personal care services within the Medicaid program, whether the services are provided in the Medicaid fee-for-service delivery system or through a managed care delivery system, is required to be no less than the established State Medicaidexpenditures fee-for-serviceand rate. revenue. However, pursuant to the FY 2019 Appropriations Act, the hourly reimbursement rate for fee-for-service personal care services is $19, while the hourly reimbursement rate for personal care services provided through a managed care delivery system is required to be no less than $16.

     Agencies AsAffected: amended by the committee, the bill eliminates a requirement that providers make assurances to the Division of Medical Assistance and Health Services in the Department of Human Services that increased funds realized under P.L.2017, c.239 (C.30:4D-7n et seq.) be used exclusively for salary increases for workers who directly provide personal care services.

 Department COMMITTEEof AMENDMENTS:Human Services.

         Office of Legislative Services Estimate (In $ Million) Fiscal Impact FY 2020 FY 2021 FY 2022 FY 2023 FY 2024  FY 2025    State Expenditure Increase $131.1 $177.9 $229.2 $285.1 $346.1 $387.3   State Revenue Increase (Federal Funds) $65.5 $89.0 $114.6 $142.6 $173.0 $193.6         ·         The committeeOffice amendmentsof amendLegislative sectionServices 2(OLS) projects that the bill will increase State expenditures by $131.1 million in FY 2020 and federal Medicaid matching fund revenue by $65.5 million.  The projected State share of P.L.2017,the c.239additional (C.30:4D-7o),expenditures towill removetherefore atotal requirement$65.5 thatmillion.  providersIn makesubsequent assurancesfiscal years the annual impacts will grow in accordance with the bill’s phase-in schedule.    ·         The OLS estimates further that fundsthe realizedState underexpenditure P.L.2017,increase c.239will (C.30:4D-7ntotal et$387.3 seq.),million whichin revisedFY 2025, the first fiscal year in which the $25 hourly Medicaid reimbursement rate for personal care services,services will be usedfully exclusivelyphased forin.  salaryAfter increasesdeducting $193.6 million in anticipated federal Medicaid matching funds, the projected State share of the increased expenditures will equal $193.6 million.       ·         The OLS does not make a projection for workersFY who2026 directlyand providebeyond personalbut carenotes services.that starting on January 1, 2025 the hourly reimbursement rate will be subject to an annual adjustment that will grow the annual fiscal impacts of the legislation further.

       TheBILL committeeDESCRIPTION amendments  revise     This bill raises, over time, the effectivehourly dateMedicaid toreimbursement providerate that,for insteadpersonal ofcare Julyservices until the rate reaches $25 on January 1, 2019,2024.  Thereafter, the billrate will takebe effectadjusted immediatelyannually uponfor enactment.inflation in direct proportion to the increase in the consumer price index for all urban wage earners and clerical workers (CPI-W).

               The committeephase-in amendmentsschedule makeis variousas technicalfollows:  corrections$20 toper thehour findingson andJuly declarations1, section2019; of the bill.

$21 per hour on January 1, 2020;

$22 per hour on January 1, 2021;

$23 per hour on January 1, 2022;

$24 per hour on January 1, 2023;

and $25 per hour on January 1, 2024.  The hourly rate in any given year may be higher if the rate of increase in the CPI-W exceeds the rate of increase of the phase-in schedule.  In that case, the hourly rate will be inflated by the rate of change in the CPI-W.  In addition, the bill provides for an alternative schedule of increases in the hourly reimbursement rate if the federal minimum wage level exceeds the State minimum wage.       Currently, in FY 2019, the hourly reimbursement rate for personal care services is $19 for the fee-for-service (FFS) delivery system and a rate not to be less than $16 for the managed care organization (MCO) delivery system.

     Personal care services are provided in the home rather than a long-term care facility and include assistance with activities of daily living and household duties essential to the patient’s health and comfort.

    FISCAL ANALYSIS   EXECUTIVE BRANCH         None received.

    OFFICE OF LEGISLATIVE SERVICES         The OLS projects that the bill will increase State expenditures by $131.1 million in FY 2020 and federal Medicaid matching fund revenue by $65.5 million.  The projected State share of the additional expenditures will therefore total $65.5 million.  In subsequent fiscal years the annual impacts will grow in accordance with the bill’s phase-in schedule.        The OLS estimates further that the State expenditure increase will total $387.3 million in FY 2025, the first fiscal year in which the $25 hourly Medicaid reimbursement rate for personal care services will be fully phased in.  After deducting $193.6 million in anticipated federal Medicaid matching funds, the projected State share of the increased expenditures will equal $193.6 million.            The OLS does not make a projection for FY 2026 and beyond but notes that starting on January 1, the hourly reimbursement rate will be subject to an annual adjustment that will inflate the annual fiscal impacts of the legislation further.        The OLS estimate assumes baseline Medicaid reimbursement rates of $19 per hour for personal care services provided through the FFS delivery system and $17 per hour for services provided through the MCO delivery system.        This fiscal estimate also utilizes data provided by the Department of Human Services in response to a FY 2020 OLS Discussion Point.  The department estimated a $35.6 million increase in State costs in FY for every additional dollar by which the reimbursement rate paid to personal care service providers across the MCO delivery system increases, of which $17.8 million would be offset by additional federal Medicaid matching funds.

 Currently, 95 percent of Medicaid recipients are served through the MCO system, indicating that the department would incur approximately $940,000 in FY for every additional dollar by which the reimbursement rate paid to personal care service providers across the FFS delivery system increases.        Lastly, the OLS assumes a five percent year-over-year increase in service utilization to account for growth in the population receiving personal care services.

    Section:

Human Services Analyst:

Sarah Schmidt Senior Research Analyst Approved:

Frank W.

Haines III Legislative Budget and Finance Officer     This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

  This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).