Connecticut
Medicaid Managed Care Council
Legislative Office Building Room 3000, Hartford CT 06106
(860) 240-0321 Info Line (860) 240-8329 FAX (860) 240-8307
www.cga.state.ct.us/ph/medicaid

Congressional & State Budget Updates

May 5, 2003

SUMMARY OF THE CONGRESSIONAL CONFERENCE COMMITTEE AGREEMENT
ON THE FY2004 BUDGET RESOLUTION - H. Con. Res. 95
(April 14, 2003)

From the National Conference of State Legislatures Summary

www.NCSL.org

Unlike most previous years, Congress passed its FY2004 budget resolution four days before its statutory deadline of April 15. Passage of the budget resolution means that appropriators can commence the FY2004 appropriations process, beginning with setting of spending allocations to each of the appropriations subcommittees. This means that tax-writing committees and others can commence action on issues under their jurisdiction that relate to provisions, such as reconciliation instructions, included in the conference agreement. Congress is in recess until April 28. Upon return, expect fiscal-related actions to commence in earnest.

The budget resolution establishes a $2.2 trillion budget for FY2004 (exclusive of FY2003 supplemental appropriations), 4.3% over FY2003. Estimates that the federal budget will continue in deficit until 2012. Just a reminder: this is a ten-year budget that provides direction, but is not legally enforceable. However, it usually is politically enforceable for the current year. Much of what might be contained in this agreement could change during FY2003 with appropriations, tax cutting and other actions taken by the Congress.

The following highlights Medicaid issues:

· Excludes the $265 billion in ten-year reductions to entitlement and mandatory programs, such as Medicaid, TANF, SCHIP, food stamps, child welfare and others. The House sought these reductions and the Senate, joined by NCSL, opposed them. One-third of the reductions would have come in FY2004.

· Includes no less than $30 billion in state fiscal assistance per Sense of the Senate language (see section 605 of the conference agreement). That language suggests a temporary boost in federal matching assistance payments for Medicaid and other undesignated assistance. It is up to the Senate Finance and House Ways and Means Committees to determine the structure of any fiscal relief package. NCSL supported this relief as a means for plugging gaps in unfunded federal mandates and underfunded national expectations and for developing an intergovernmental/private sector economic recovery partnership.

· Provides $2.2 billion in increased FY2004 funding to states for special education (Individuals with Disabilities Education Act). Appropriators will determine whether this increase, supported by NCSL to close the gap on this egregious unfunded mandate, is realized.

· Provides $1 billion in increased FY2004 funding to states for implementation of the No Child Left Behind Act. Appropriators will determine whether this increase, supported by NCSL to compensate states for this underfunded expectation, is realized.

· Reinstates just over $3 billion in unspent state SCHIP funds conditioned on enactment of appropriate legislation by the Congress' committees of jurisdiction. NCSL supported this reinstatement. (See Section 403 of the conference agreement.)

· Provides a $400 billion reserve fund for Medicare modernization and prescription drugs (Section 401), a near-$13 billion reserve fund for Medicaid reform (Section 402), a $50 billion reserve fund for health insurance for the uninsured (Section 405) and a $7 billion reserve fund for states to exercise options to expand Medicaid for children with special needs (Section 406). Accomplishment of any or all of these is contingent upon substantive congressional action. All of these provisions are costed out over 10 years.

· The budget resolution provides a total, ten-year federal tax relief package of $1.2 trillion. $550 billion ($350 billion in the Senate) is to be accomplished through reconciliation instructions to Congress' tax-writing committees. The remainder is doable through non-reconciliation means. The reconciliation-related tax changes (Section 201) are based primarily on the President's economic recovery recommendations - although those instructions only set revenue target changes and do not include any substantive language. House Ways and Means and Senate Finance Committees must report by May 8 on their recommendations. (Reminder: the budget resolution is unenforceable - this date could slide, particularly in the Senate). Reconciliation instructions permit the Senate, through its rules, to enact tax changes with 51 votes. The non-reconciliation tax adjustments (also not specified in Section 201) are assumed to be an acceleration of various parts of the enacted 2001 federal tax changes. They essentially require 60 votes in the Senate - or enough to close off debate.

Connecticut Budget

The Appropriations Committee biennial budget proposal was passed on April 29 with a vote of 30 Yea and 21 Nay. The following highlights the Appropriation Committee budget that affects Medicaid:

Medicaid & HUSKY PROGRAM

	Governor’s Proposal	Appropriation Committee Proposal
Medicaid Dental Funding	Eliminate Medicaid adult dental services, redirecting $10M to children ‘s dental services that would be carved out of the MC program	Did not concur with eliminating adult dental services: Agreed to the elimination of the adult dental pilot program, redirecting $300,000 in savings to FQHC’s to improve kids dentalcare.
	Governor’s Proposal	Appropriation Committee Proposal
Presumptive Eligibility (PE)	Eliminate the PE policy	Did not concur: replaced $2.8M & $3M
Implement the BH Partnership	Reallocation of $200M in FY05 from Medicaid & HUSKY B programs to BHP	Concurred with the Governor’s recommendation
HUSKY B Premiums	Apply the $30/m premiums to families in Band 1 (>186%-235%FPL). Increase Band 2 (>235-300%FPL) to $50/m with a $75 family cap.	Concurred with the Governor’s recommendation
HUSKY A & Medicaid FFS Benefits	Bring Medicaid medical benefit package in line with commercial HMO coverage, likely reducing available services and increasing co-pays	Did not concur: put back in 6.5 & $15M projected savings from the Governor’s recommendation.
HUSKY B Enrollment/restructure benefit package	Suspension of HUSKY B enrollment for 2 yrs of budget, change benefit package to that similar to commercial HMO benefits.	Did not concur: put back $2.2 & $6.9M projected savings from the Governor’s recommendation.
Medicaid MC Update	Update for current service update for caseload and utilization of $42.6M; 2.5% rate incr. for MCOs 1/1/04.	Concurred with Governor’s proposal.
Employer Health Insurance Subsidy (ESI) program	DSS could contract with small employer health subsidy program: individuals and families <185% could participate.	Did not concur: program could be included in the proposed HIFA waiver (see SAGA)
Children’s Health Council Funding	Funding eliminated	$1M in each year of the 2-year budget.
State General Assistance (SAGA) Funding	Eliminate funding; increase private hospital DSH payments by $58.3M to offset increased uncompensated care due to this	Implement a managed care program under the federal Health Insurance Flexibility Act (HIFA) waiver which would allow SAGA medical expenditures to be eligible for federal reimbursement. Eliminated the Public Acute Care Hospital DSH ($1.7M) and medical emergency assistance DSH (%58.3M).
Medicaid FFS Preferred Drug list	For next 2 yrs phase in PDL with one class of drugs (proton pump inhibitor).	Assume PDL will be implemented ona broader spectrum of drugs with additional savings of $15M/yr.
Medicaid FFS Update	2% rate incr. for home health & community based careproviders. FFS provider caseload & utilization updates of $10M. *$3.6M update funding for breast & cervical ca. TX	Concurred with Governor’s proposal
Care Enhancement/disease Management (DM) for ABD pop.		Recommends that DSS implement a DM program for high cost Medicaid clients (approximately 400); $1M for the purpose of contracting with providers of DM services.
SBHC Reimbursements	Reducing share of federal Medicaid revenues to local school districts to 50-50 split (current 60-40)	Did not concur with Governor’s recommendation.
Centralize DSS Eligibility Functions		Provides $100,000 in FY04 to centralize certain eligibility processes in DSS.

The Finance Committee passed a revenue package on Thursday May 1, 2003 that included $700M in new tax revenues & fund transfers. See summary on www.ctkidslink.org. The budget has not yet gone to the floor for a vote as of May 7, 2003.

For more information on the budget www.cga.state.ct.us Office of Fiscal Analysis.

For information on Congressional budget process, www.NCSL.org