BEFORE THE Department of Public
health and human services of the
STATE OF MONTANA
In the matter of the adoption of New Rule I pertaining to behavioral health targeted case management fee schedule
NOTICE OF ADOPTION
TO: All Concerned Persons
1. On July 7, 2017, the Department of Public Health and Human Services published MAR Notice No. 37-801 pertaining to the public hearing on the proposed adoption of the above-stated rule at page 1038 of the 2017 Montana Administrative Register, Issue Number 13.
2. The department has adopted New Rule I (37.85.106) as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:
NEW RULE I MEDICAID BEHAVIORAL HEALTH TARGETED CASE MANAGEMENT FEE SCHEDULE (1) remains as proposed.
(2) The Department of Public Health and Human Services (department) adopts and incorporates by reference the Medicaid Behavioral Health Targeted Case Management Fee Schedule effective
October 1, 2017 January 1, 2018 for the following programs within the Developmental Services Division (DSD) and the Addictive and Mental Disorders Division (AMDD):
(a) through (3) remain as proposed.
AUTH: 53-2-201, 53-6-113, MCA
IMP: 53-2-201, 53-6-101, 53-6-402, MCA
3. The department has thoroughly considered the comments and testimony received. Many commenters made the same comments. A summary of the comments received and the department's responses are as follows:
Comment 1: The department received many comments opposing the 3.47% reduction in Medicaid provider rates.
Response 1: The department has lowered the rate reduction from 3.47% to 2.99%, which will be effective January 1, 2018. The lowered rate reduction was achieved by implementing legislatively mandated funding reductions in Senate Bill (SB) 261 §§ 12 and 21. SB 261 § 12 included a 0.5% reduction to Medicaid benefits of $1,423,827, which is part of the rate reduction. The SB 261 § 21 reduction for Health Resources Division of $3,500,000 is included in the calculation of the rate reduction.
Comment 2: On July 26, 2017, the Legislative Children, Families, Health and Human Services Interim Committee (committee) notified the department that members of the committee objected to the proposed rule, pursuant to 2-4-305(9), MCA, although the committee did so without articulating any basis for its objection. On November 8, 2017, the committee adopted a formal written objection to the proposed rule, pursuant to 2-4-406(1), MCA, which set forth its reasons for objecting.
Response 2: As originally proposed, the effective date of the rate change would have been October 1, 2017. The department delayed the filing of its final notice in light of the committee’s objection pursuant to 2-4-305(9), MCA. The committee first set forth the bases for its objection in its formal objection adopted November 8, 2017, pursuant to 2-4-406(1), MCA. Pursuant to 2-4-406(2), MCA, the department is permitted to submit to the committee its response to the written objection, after which the committee may withdraw its objection.
Comment 3: The department received comments that its interpretation of House Bill 2 of the regular session (HB 2) and SB 261 is contrary to legislative intent.
Response 3: The department decreased the rate reduction from the proposed 3.47% cut to a 2.99% cut. The department does not agree with the commenters that its interpretation of HB 2 or SB 261 is contrary to legislative intent.
Section 17-7-138(1)(a), MCA, provides: "Expenditures by a state agency must be made in substantial compliance with the budget approved by the legislature. Substantial compliance may be determined by conformity to the conditions contained in the general appropriations act and to legislative intent as established in the narrative accompanying the general appropriations act."
The department considered the following factors while calculating the 2.99% provider rate decrease:
a. Legislative intent as adopted in the legislative fiscal analyst narrative (Legislative Fiscal Report) located at http://leg.mt.gov/content/Publications/fiscal/Budget-Books/2019/fiscal-publications.asp;
b. Conditions contained in Senate Bill (SB) 261 (Note: In the special session the legislature amended and revised HB 2 by incorporating legislative changes from the 2017 regular session that were made by several bills, including SB 261. In doing so, the legislature intended the incorporated changes to reflect current law before the special session commencing November 14, 2017.); and
c. The amount of time available to achieve the required spending reductions.
The department's proposed provider rates were based on legislative appropriations:
The department calculated the 2.99% rate decrease based on the money the legislature appropriated to spend for the following programs: Medicaid provider services (MAR Notice No. 37-788); targeted case management services (MAR Notice No. 37-801); developmental disabilities program services that were available through the 1915c, 0208 and 0667 Home and Community Based Waiver programs (MAR Notice No. 37-802); and nursing facility reimbursement rates (MAR Notice No. 37-805).
SB 261 revised Montana's state budgeting law. SB 261 reduced appropriations if actual state revenue was less than thresholds the legislature established in SB 261.
Section 21(1) of SB 261 provides as follows: If the amount of the certified unaudited state general fund revenue and transfers into the general fund received at the end of fiscal year 2017 is less than $2,192,000,000, as determined by the state treasurer on or before August 15, 2017, and if House Bill No. 2 is passed and approved, then the department of public health and human services general fund appropriation for "Health Resources Division" in House Bill No. 2 is reduced by $3,500,000 in fiscal year 2018 and $3,500,000 in fiscal year 2019.
Section 21(3) of SB 261 provides as follows: The legislature intends that the appropriation reduction in subsections (1) and (2) be used to reduce Medicaid provider rates over the 2019 biennium.
Section 21(4) of SB 261 provides as follows: The appropriation reductions in subsections (1) and (2) are in addition to the across-the-board reduction in general fund appropriations in [section 12].
Section 12(1) of SB 261 provides as follows: If the amount of the certified unaudited state general fund revenue and transfers into the general fund received at the end of fiscal year 2017 is less than $2,204,000,000, as determined by the state treasurer on or before August 15, 2017, and if House Bill No. 2 is passed and approved [section 11 of House Bill No. 2] must be amended as follows:
Section 11. Appropriations -- reduced appropriations for certain fiscal year 2019 general fund appropriations. (1) All general fund appropriations in this section for fiscal year 2019, excluding the appropriations for K-12 BASE Aid, Reimbursement Block Grants, State Tuition Payments, Transportation, Natural Resource Development K-12 School Facilities Payment, Special Education, and the Coal-Fired Generating Unit Closure Mitigation Block Grant are reduced by 0.5%.
The 2.99% decrease in provider rates is calculated as follows:
Appropriation reductions in SB 261
SB 261, Section 12, amends HB 2, §11 to reduce Medicaid
general fund appropriations by 0.5% or -$1,423,827
SB 261, Section 21, reduces the appropriation for
the Health Resources Division by -$3,500,000
Total reduction -$4,923,827
Total federal funds lost due to general fund
appropriation reduction -$9,331,608
Total required cost reduction in SFY 2018 -$14,255,435
Projected expenditures for impacted Medicaid
provider types $954,922,507
Rate reduction required to achieve
reduction in 12 months 1.49%
Rate reduction required to achieve
reduction in 6 months 2.99%
The earliest the department can implement the rate reductions is January 1, 2018. Therefore the rate reduction implemented in this rule, in accordance with legislative intent as previously described, is 2.99%.
Comment 4: Instead of cutting Medicaid rates, why doesn't the department cut employees, facilities, programs, and operating costs?
Response 4: The department has numerous cost reduction measures in place including staff reductions. The Legislature reduced the department's total personnel services budget by 6.3% in HB 2 and SB 261. The department has limited its hiring to essential positions since April of 2017 to achieve this cost constraint. In addition, there is a 1.7% reduction in non-Medicaid general fund appropriations included HB 2. Cost constraints in operating costs, facilities, and other department programs have been implemented to achieve this requirement. These appropriation reductions and corresponding cost constraints are separate and distinct from the proposed Medicaid provider rate reduction discussed in this rule.
The department continues to look for cost savings in facilities, programs and operating costs, but it has not identified any additional savings that would not adversely impact citizens.
Comment 5: Provider rate reductions will increase Medicaid expenditures in higher cost usages, such as emergency room visits, inpatient hospitalizations, and the state psychiatric facility.
Response 5: The department does not agree that an across-the-board 2.99% rate reduction will significantly impact access. See response to comment 7. The department's analysis shows that Medicaid members will continue to receive medical care and services despite the rate reduction; therefore the rate reduction will not cause increased use of higher cost services.
Comment 6: Why did the department reduce all rates by a uniform amount instead of evaluating each program's reimbursement rates?
Response 6: Evaluating and adjusting each program's reimbursement rates would have been time consuming and costly and would not result in rate changes that were significantly different than the uniform reduction. Instead of evaluating each program, the department calculated a uniform rate reduction based on the amount of the budget reductions in SB 261, the time needed to recover the amount of the budget reductions, and the specific instructions in SB 261, Section 21. Acting promptly is important because the reduction must be made during SFY 2018. A percentage rate reduction can be smaller if the total is recovered over a longer period of time. The uniform reduction is a reasonable, non-biased solution.
Comment 7: The department received several comments stating that rate reductions will cause more providers to refuse Medicaid patients, reducing access to services, and affecting quality of care.
Response 7: The new rates are consistent with efficiency, economy, and quality of care. The rates are sufficient to enlist enough Medicaid providers so that care and services through the Montana Medicaid program are available to the extent that such care and services are available to the general population in the geographic area.
Comment 8: The department received several comments that rate reductions will detrimentally impact small businesses.
Response 8: The department agrees that all rate reductions detrimentally impact providers, including small businesses; however the requirements of 2-4-111, MCA, are not triggered by the rate change. Section 2-4-111, MCA, requires state agencies to determine if a proposed rule will significantly and directly impact small businesses. For purposes of 2-4-111, MCA, a small business is defined as "a business entity, including its affiliates, that is independently owned and operated and that employs fewer than 50 full-time employees." Section 2-4-102(13), MCA. The Governor's Office of Economic Development (GOED) has interpreted "small business" to mean privately owned, for-profit entities. (July 22, 2013, memorandum from GOED).
Although the proposed rate decreases do not significantly and directly impact small businesses, as defined in statute, the department included statements of the fiscal impact on providers in its notice of proposed amendment. Because the rate decrease is required by law there are no alternatives to identify.
Comment 9: The department received comments that the legislature intended the provider rate cut in SB 261 to be 1%.
Response 9: The department does not agree that a 1% Medicaid provider rate reduction represents the entirety of legislative intent. Section 21 of SB 261 requires a provider rate reduction evenly spread across applicable providers to achieve a $3,500,000 annual general fund cost reduction. If implemented over a 12-month period, the $3,500,000 reduction in Section 21 alone would result in an approximate 1% provider rate reduction. Section 21, however, is just one of several components of reductions in SB 261. In addition to Section 21, this rule also implements other reductions mandated by SB 261. See response to comment 1.
Comment 10: One commenter stated that they were concerned the hearing and written comments will not be considered.
Response 10: The department thanks the commenter for the comment. All comments and testimony provided by all parties in connection with this rulemaking are reviewed and considered as part of the rulemaking process.
Comment 11: One commenter stated that a transition plan was needed before the rate reductions became effective.
Comment 11: The department thanks the commenter. The time between the proposed rate change and the effective date is approximately 6 months, which provides some time for planning.
Comment 12: Several commenters stated that providers will have to eliminate targeted case management (TCM) services, reduce staff, reduce salaries, or some combination if provider rate reductions take effect.
Response 12: The department is required to implement the reduction of appropriation for TCM services mandated by the 65th Legislature. The department is hopeful that TCM providers can implement operational efficiencies in a manner that minimizes the impact on client services.
Comment 13: One commenter expressed concern that a reduction in TCM services will hinder youths', families' and members' ability to access services such as medication management and outpatient psychotherapy, particularly in rural areas.
Response 13: TCM services do not include medication management or outpatient psychotherapy. The commenter's concern likely relates to referrals to those services by a TCM case manager. The department is hopeful that TCM providers can implement operational efficiencies in a manner that minimizes the impact on client services.
Comment 14: One commenter asked why the department stated that the provider rate reductions to TCM rates are consistent with efficiency, economy and quality of care.
Response 14: The language refers to 42 U.S.C. § 1396a(a)(30)(A) which requires a state to assure Medicaid payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available. SB 261 reduced the general fund appropriation for targeted case management in the Addictive and Mental Disorder Division by $965,000 in fiscal year 2018 and $965,000 in fiscal year 2019. Additionally, SB 261 reduces the general fund appropriation for targeted case management in the Developmental Services Division by the same amounts for fiscal years 2018 and 2019. The resulting rates are sufficient to enlist targeted case management providers.
Comment 15: One commenter stated the department should collaborate with providers on alternative solutions to budget reductions.
Response 15: The department agrees with the commenter. The department has ongoing contact with its providers through its TCM program officers and other department employees. The department welcomes information and input.
4. This rule adoption is effective January 1, 2018.
/s/ Brenda K. Elias /s/ Sheila Hogan
Brenda K. Elias Sheila Hogan, Director
Rule Reviewer Public Health and Human Services
Certified to the Secretary of State November 27, 2017.