PA 12-1, December Special Session—HB 7001

Emergency Certification

AN ACT CONCERNING DEFICIT MITIGATION FOR THE FISCAL YEAR ENDING JUNE 30, 2013

SUMMARY: This act makes various statutory and budgetary changes to reduce the projected General Fund deficit for FY 13 by:

1. reducing General Fund appropriations for state programs and purposes for FY 13,

2. transferring money from various special funds and accounts to the General Fund for FY 13,

3. reducing scheduled transfers to the Special Transportation Fund (STF), and

4. reducing benefits available under certain state medical assistance and other social service programs.

Among other changes, it also:

1. eliminates longevity pay for non-unionized state employees who do not have their salary set in statute, while increasing their annual salary by the annualized amount of their last longevity payment;

2. decreases the amount of tax liability that an insurer can reduce through film tax credits;

3. reduces the per student state grant for charter schools;

4. allows public school security improvements to be eligible for funding under the Local Capital Improvement Program (LoCIP) Fund;

5. requires the State Board of Education (SBE) to approve a request by Newtown to shorten its 2012-13 school year; and

6. eliminates the requirement that the juvenile court, prior to committing a child convicted as delinquent to the Department of Children and Families (DCF), consult with the department to determine the appropriate placement.

A section-by-section analysis follows.

EFFECTIVE DATE: Upon passage unless otherwise noted.

1 — REDUCED APPROPRIATIONS FOR FY 13

The act authorizes the Office of Policy and Management (OPM) secretary to reduce FY 13 General Fund allotments to various agencies by a total of $210,540,125. It also allows him to reduce FY 13 STF allotments by $7,414,380.

2 — MOSQUITO SURVEILLANCE PROGRAM

By law, the Connecticut Agricultural Experiment Station must survey and test for mosquitoes carrying the eastern equine encephalitis virus, according to a plan developed and agreed to by its director and the commissioners of energy and environmental protection and public health. The act specifies that it must do this within available appropriations.

3 — PRIOR AUTHORIZATION FOR MEDICAID-FUNDED THERAPIES

The act requires the Department of Social Services (DSS) commissioner to establish, by regulation, prior authorization procedures for physical, occupational, and speech therapies for Medicaid participants. The department's regulations already cover these services when the level of care requested exceeds department thresholds. For example, prior authorization is required for physical therapy services that exceed twice-weekly visits (Conn. Agencies Reg. 17b-262-636).

The act allows the commissioner to implement necessary policies and procedures while in the process of adopting regulations, provided he publishes notice of his intent to adopt regulations in the Connecticut Law Journal within 20 days after implementing the interim policies and procedures.

4-7 — MEDICAID TRANSITION TO ADMINISTRATIVE SERVICES ORGANIZATION MODEL

The law authorizes DSS to replace its Medicaid fee-for-service and managed care models with a single model, overseen by an administrative services organization (ASO). (Dental and behavioral health services are excluded. ) DSS began implementing the new model in early 2012.

The law permits the department to annually modify rates for (1) outpatient hospital (clinic and emergency room), (2) “blended” inpatient, (3) home health and homemaker home health aide, and (4) medical provider services. (The department need not examine medical provider rates annually. ) The department can do this if needed to ensure (1) patient access or (2) that implementing the ASO model will not cost the Medicaid program more than it would without the change (i. e. , be “cost-neutral”). Although traditional Medicaid cost calculations take into account how often a particular service is provided (“utilization”), prior law specifically excluded this factor from DSS' cost-neutrality analyses. The act permits the department to take utilization into account during FY 13 and does not specify if it may be counted in future years. (PA 13-234 grants DSS this authority on a permanent basis. )

ASOs perform certain administrative services for a set fee and do not share any risk for providing medical services.

8 — CUSTOMIZED WHEELCHAIRS FOR MEDICAID RECIPIENTS

The act expressly provides that customized wheelchairs are covered under the state Medicaid plan, but only when DSS determines that a standard wheelchair will not meet an individual's needs. This equipment is already covered, but the department does not currently have sole discretion to determine if it is appropriate in a particular case.

In making this change, the act appears to override existing Medicaid wheelchair procurement policies for (1) nursing facilities, (2) intermediate care facilities for people with intellectual disabilities (“ICF/ID” — group homes), and (3) people living in the community.

The act also (1) authorizes the department to review and require pre-approval of repairs and parts replacement for all wheelchair types and (2) directs that refurbished wheelchairs, parts, and components be used whenever practicable.

Wheelchairs for Those Living in Nursing and ICF/MR Facilities

Current DSS regulations obligate the above-described facilities to identify Medicaid-eligible residents who may need customized wheelchairs. When a resident appears to meet the criteria, facilities must assign a multi-disciplinary team of health care providers to conduct a needs assessment and determine what, if any, wheelchair adaptations the resident needs. The act prohibits facilities and vendors from assessing a Medicaid recipient's wheelchair needs unless the department specifically requests it. (PA 13-234 eliminates the requirement that DSS request the assessment. )

Wheelchairs for Those Living in the Community

The regulatory procurement process for non-institutionalized Medicaid recipients begins with a written prescription and documentation of medical necessity. As with facility residents, the act prohibits vendors from conducting needs assessments for this group unless DSS makes a specific request. (PA 13-234 eliminates the requirement that DSS request the assessment. )

Regulations

The act authorizes the DSS commissioner to adopt implementing policies and procedures while in the process of adopting them as regulations. The act directs him to publish notice of his intent to adopt regulations in the Connecticut Law Journal no later than 20 days after implementing them.

9 — HOSPICE SERVICE RATE REDUCTION

The act imposes a temporary 5% reduction, from 100% to 95%, on Medicaid reimbursement rates from January 1, 2013 through June 30, 2013 for long-term care facility residents receiving only hospice care.

The reduction is consistent with federal law, which allows states to set a facility's per diem rate at 95% of what it otherwise would have been when the facility's services and those of a hospice agency overlap.

9 — CHIROPRACTIC COVERAGE FOR MEDICAID RECIPIENTS

The act requires the DSS commissioner to amend the Medicaid state plan to limit chiropractic coverage only to the extent required by federal law. (PA 13-243, 80, eliminates this requirement. )

10 — FEDERALLY QUALIFIED HEALTH CENTERS (FQHC)

FQHCs are community-based clinics that provide primary and preventive health care services to “medically underserved” populations or areas without regard to a patient's ability to pay. Medicaid reimbursements are a major source of FQHCs' funding. Each center is paid a separate, prospective payment system rate, based on its historical costs. Cost reports, prepared from audited financial statements, provide the financial information DSS needs to determine if an FQHC's Medicaid rates are too high or too low.

Under the act, centers must annually provide DSS Medicaid cost reports and financial statements for the previous state fiscal year, along with any other information the department reasonably requires. The first filing was due by February 1, 2013, and subsequent filings are due each January 1 thereafter. Although neither is currently required in statute, DSS already requires FQHCs to provide this information annually.

Changes in Projects' or Services' Scope

Federal public health grants are a source of FQHCs' operating funds. In many cases, centers must submit an initial scope of work with their grant applications, describing how they will use any funds awarded. They must inform the funding agency (usually the federal Health Resources and Services Administration (HRSA)) and get its approval before changing an existing project's scope

By an unspecified date, the act also requires FQHCs to give DSS copies of their original, HRSA-approved scope of project descriptions and all approved amendments. Going forward, centers must give the department written notice and copies of any new federally approved amendments no later than 30 days after approval.

The act also requires FQHCs to notify DSS in writing of increases or decreases in the scope of services they provide within 30 days of the change. If DSS requests additional information, centers must provide it within 30 days of the request.

Rate Adjustments

The act authorizes DSS to use the method specified in federal Medicaid law to raise or lower an FQHC's “encounter” (all services provided in a single health center visit) rate based on the department's review of its (1) Medicaid cost report and audited financial statement, (2) federally approved initial or amended scope of project documents, or (3) written notice of increases or decreases in the type of services it is providing. Centers receive separate rates for medical, dental, and mental health encounters.

Penalties

The act authorizes the DSS commissioner to fine an FQHC $500 for each day its required information is more than 30 days overdue.

Regulations

The act authorizes the commissioner to implement necessary policies and procedures, provided he publishes notice of his intent to adopt regulations in the Connecticut Law Journal within 20 days after he has implemented them.

11-13 — INTERDISTRICT MAGNET SCHOOL TUITION

The act extends authorization for interdistrict magnet school tuition requirements and related provisions to preschool. Prior law did not specifically authorize tuition charges for preschool. (PA 13-247 repealed this and establishes a different approach for tuition at these preschools under which the sending districts do not pay tuition. )

14-21, 27, 29, 30, & 38 — TRANSFERS TO THE GENERAL FUND FOR FY 13

The act transfers available balances from various agency appropriations, special funds, and non-appropriated accounts to the General Fund to be counted as General Fund revenue for FY 13. It does the same for any remaining balance in the boating account and fuel oil conservation account. The amount transferred from each appropriation, fund, or account is listed in Table 1 below.

Table 1: Transfers to FY 13 General Fund Revenue

Agency

Fund/Account

Amount $

14

Office of Higher Education

Capitol Scholarship Program

236,117

15

OPM

Regional Performance Incentive Account

7,500,000

16

Department of Banking

Banking Fund

1,200,000

17

Workers' Compensation Commission

Workers' Compensation Administration Fund

450,000

18

Public Utilities Regulatory Authority

Consumer Counsel and Public Utility Control Fund

2,300,000

19

Insurance Department

Insurance Fund

500,000

20

Department of Energy and Environmental Protection

Boating Account

Any remaining balance

21

Comptroller

Fuel Oil Conservation Account

Any remaining balance

27

Department of Motor Vehicles

School Bus Seat Belt Account

4,700,000

29

Public Utilities Regulatory Authority

Public, Educational, and Governmental Programing and Education Technology Investment Account

3,600,000

30

Department of Public Health (DPH)

Biomedical Research Trust Fund

2,000,000

38

Department of Economic and Community Development

Statewide Marketing

2,000,000

22 — DSS REIMBURSEMENTS TO PHARMACIES

The act reduces, from $2 to $1. 70, the amount of the dispensing fee that DSS pays pharmacists for each prescription they fill for beneficiaries of DSS pharmacy assistance programs (e. g. , Medicaid).

The act also increases, from 14% to 15%, the discount from the average wholesale price (AWP) DSS pays independent pharmacies for filling brand name prescriptions, subject to federal approval. Under PA 12-1, June Special Session, and contingent upon federal approval, DSS must reimburse independent pharmacies for dispensing these drugs to Medicaid recipients at AWP minus 14%. Chain pharmacies continue to be paid at AWP minus 16%. (PA 13-234 repeals the two-tiered reimbursement structure. )

23 — TRANSFER OF FUNDS TO THE STF

The act reduces, by $7. 414 million, the amount of money the comptroller must transfer from the General Fund to the STF in FY 13. Under prior law, he had to transfer $102. 659 million; the act requires him to instead transfer $95. 245 million.

24 — DCF PLACEMENTS OF CHILDREN WITH UNLICENSED CAREGIVERS

The law generally (1) prohibits DCF from placing children who have been removed from their parents' custody and are temporarily in DCF custody with someone who is not licensed and (2) subjects license applicants to criminal background and state child abuse registry checks. But the law permits the department to place children with certain unlicensed relatives and others in certain circumstances.

The act eliminates the 90-day limit on how long children can be placed by DCF with these caregivers (i. e. , unlicensed relatives, nonrelatives if the child's sibling who is related to the caregiver is also placed with that caregiver, or a special study foster parent) before they have to be licensed.

By law and unchanged by the act, these placements can be made only when they are in the child's best interests. Additionally, DCF must conduct a satisfactory home visit and a basic assessment of the family, and the intended caregiver must attest that any adult living in the household has not been (1) convicted of a crime or (2) arrested for (a) a felony against a person; (b) injury or risk of injury to or impairing the morals of a child; or (c) the possession, use, or sale of a controlled substance.

Under Title IV-E of the federal Social Security Act, states can claim federal reimbursement for foster care maintenance payments made to caregivers who are licensed by the child welfare agency. But the federal government will not reimburse a state that is out of compliance with its own law relative to licensing caregivers. Under prior law, if DCF failed to license someone within 90 days, it could not claim any federal reimbursement for foster care payments made even after the caregiver became licensed.

The act also eliminates an obsolete requirement that the commissioner adopt regulations establishing certification procedures and standards for certain unlicensed caregivers.

25 & 26 — STRETCHER VANS FOR CERTAIN MEDICAL ASSISTANCE PATIENTS

The act provides that DSS regulations may authorize payment only for the mode of transportation that is medically necessary for anyone covered by one of its medical assistance programs. Current DSS regulations allow for the least costly, most appropriate mode of transportation for someone when needed to obtain medically necessary services.

The act further provides that notwithstanding DSS medical assistance and DPH emergency services laws to the contrary, if any of these recipients (1) requires nonemergency transportation, (2) must be transported in a prone position, and (3) does not require medical services during transport, he or she may be transported in a stretcher van. The DSS commissioner must establish Medicaid rates for these rides. A stretcher van is a vehicle, such as a modified van, capable of accommodating a stretcher for transporting individuals who cannot sit up.

The act requires the Department of Transportation (DOT), in consultation with the DPH commissioner, to adopt regulations to establish oversight of stretcher vans as a livery service, which requires a DOT permit. The regulations must prescribe safety standards for the vans, including a requirement that an attendant, in addition to the driver, accompany anyone transported in them.

The act also eliminates a requirement that any person operating a vehicle other than an ambulance, rescue, or management service vehicle have a DPH license or certificate in order to transport patients on a stretcher.

PA 13-234 precludes using stretcher vans to transport Medicaid recipients, rendering the related provisions summarized above moot.

28 — MUNICIPAL VIDEO COMPETITION TRUST ACCOUNT

Each fiscal year, the law requires the comptroller to deposit into the municipal video competition trust account up to $5 million from the gross earnings tax on certified competitive video service providers (i. e. , certain cable TV companies). The act reduces the maximum deposit into the account for FY 13 to $1. 5 million. By law, money in the account at the end of a fiscal year is distributed to municipalities as property tax relief.

31 — CHARTER SCHOOL PER-STUDENT GRANT REDUCTION

The act reduces the state's FY 13 per-student grant for charter schools by $300, from $10,500 to $10,200. It keeps intact scheduled increases for FY 14 to $11,000 and for FY 15 and subsequent years to $11,500. It also makes a conforming change that the last quarterly payment from the state in FY 13 may be adjusted pro rata for each student. (PA 13-247 reduced the per-student grant increase for FYs 14 and 15. )

A charter school is a public school organized as a nonprofit corporation and operated independently of a local or regional board of education.

32-37 — LONGEVITY PAY FOR NONUNIONIZED STATE EMPLOYEES

The act eliminates longevity pay for nonunionized state employees whose pay and longevity are not stated in statute. It makes the April 2013 payment their final longevity payment and bans longevity payments for any service they complete on and after April 1, 2013. Beginning July 1, 2013, the act increases the affected employees' pay by the annualized amount of their final longevity payment.

The act does not affect judges, workers' compensation commissioners, chief and deputy state's attorneys, chief and deputy public defenders, the probate court administrator, and family support magistrates, all of whom have their salaries and longevity schedules set in statute.

Eliminating Longevity Payments

Under prior law, longevity pay was given twice a year to nonunionized state employees who had served the state for at least 10 years. (Unionized state employees' longevity pay is determined through their union contract. ) The amount of the payment increased at five-year steps — at 15, 20, and 25 years — until the employee reached a maximum for his or her position.

The act requires the administrative bodies of each branch of state government and the Division of Criminal Justice to eliminate longevity payments for state service completed on or after April 1, 2013.

The act supersedes the administrative authority of the relevant administrative bodies to establish longevity schedules as follows:

1. Administrative services commissioner and OPM secretary — CGS 5-200(p),

2. Chief court administrator and Supreme Court Justices — CGS 51-12,

3. Division of Criminal Justice — CGS 51-279, and

4. Legislative Management — any general statute provisions.

Final Longevity Payments

The act requires the last longevity lump sum payments to be made on the last regular pay day in April 2013 for:

1. managerial, confidential, and classified and unclassified employees of the Executive Branch, constituent units of higher education, and the Board of Regents for Higher Education;

2. Judicial Department employees; and

3. legislative employees.

It specifies that the payment is based on the employee's service as of September 1, 2011. Thus an employee must have 10 years of state service by September 1, 2011 to receive the payment and any additional service after that does not increase payment amounts.

It also makes conforming changes, including permitting those who retire between October 1, 2012 and March 31, 2013 to receive a prorated longevity payment based on the proportion of the employee's six-month period served before retirement.

Salary Increases

With the first pay period after July 1, 2013, the act increases the annual salary for each non-union employee who (1) received a longevity payment in April 2011 and (2) does not have his or her salary stated in statute. The increase must be the annualized amount of the longevity payment paid on the last regular pay day of April 2013.

39 — LAPSES

The act allows the OPM secretary to recommend the following reductions in FY 13:

1. $2. 5 million in Executive Branch expenses,

2. $1. 5 million in Executive Branch expenses for personal services,

3. $2 million in Legislative Branch expenditures, and

4. $5 million in Judicial Department expenditures.

The six legislative leaders must determine how the legislative reductions are achieved. The chief justice and chief public defender must determine how the judicial reductions are achieved.

40 & 41 — STEM CELL RESEARCH FUND FINANCING

The act eliminates the transfer, in FY 13, of $10 million from the Tobacco Settlement Fund to the Stem Cell Research Fund, instead transferring this money to the General Fund. Prior law required the transferred money to be used to provide grants to eligible institutions to conduct embryonic or human adult stem cell research.

The act authorizes the issuance of up to $10 million in state bonds to DPH for the same purpose.

EFFECTIVE DATE: Upon passage for the transfer provision and January 1, 2013 for the bonding provision.

42 & 43 — INSURANCE PREMIUM TAX CREDIT LIMIT

Existing law (1) classifies insurance premium tax credits into three types, (2) specifies the order in which an insurer must apply the three credit types to offset liability, and (3) establishes the maximum liability that an insurer can offset in calendar years 2011 and 2012 by claiming one or more of these types of credits.

For the 2012 calendar year, the act moves film production and film infrastructure tax credits from type 1 to 3, as shown in Table 2. In doing so, it changes the order in which insurers apply film production and film infrastructure credits to offset liability and generally lowers the amount by which an insurer can use these credits to reduce its tax liability.

For example, under prior law, an insurer claiming film production and infrastructure tax credits (i. e. , type 1 credits) along with other business tax credits (i. e. , type 3 credits) applied the type 3 credits first to reduce its liability by up to 30% and then applied the type 1 credits to reduce its liability by up to 55%. By classifying the film production and infrastructure credits as type 3 credits, the act lowers, from 55% to 30%, the amount by which the insurer could reduce its insurance premium tax liability by using the same mix of credits.

Table 2: Insurance Premium Tax Credit Classifications

Type

Prior Law

Act

(For 2012 Calendar Year)

1

Film Production

Entertainment Infrastructure

Digital Animation

Digital Animation

2

Insurance Reinvestment Fund

Insurance Reinvestment Fund

3

All Other Credit Programs

All Other Credit Programs

As under existing law, for 2011 and 2012, an insurer may offset additional tax liability by an amount equal to $6,000 multiplied by its average net monthly increase in employees, up to 100% of its total tax liability.

The act also protects insurance premium taxpayers affected by the lower credit limit for the 2012 calendar year from interest penalties for any underpayment. The law generally requires insurance premium taxpayers to pay estimated taxes in quarterly installments of 30% for the first quarter, 30% for the second, 20% for the third, and 20% for the fourth. If the company underpays any installment, the law requires it to pay interest of 1% per month on the underpayment.

Application of Insurance Premium Tax Credits. The law specifies the order in which an insurer must apply the three credit types to offset liability as follows:

Table 3: Premium Tax Credit Application

Credit Types Claimed

Order of Applying Credits

Maximum Reduction In Tax Liability

Type 3

None

30%

Types 1 & 3

1. Type 3

2. Type 1

Type 3 = 30%

Sum of two types = 55%

Types 2 & 3

1. Type 3

2. Type 2

Type 3 = 30%

Sum of two types = 70%

Types 1, 2, & 3

1. Type 3

2. Type 1

3. Type 2

Type 3 = 30%

Type 1 & 3 = 55%

Sum of all types = 70%

Types 1 & 2

1. Type 1

2. Type 2

Type 1 = 55%

Sum of two types = 70%

A related act, PA 13-184 ( 72), extends the insurance premium tax credit limit to 2013 and 2014 and reimposes the tax credit classifications that applied in 2011.

44 — TRANSFERS

The act transfers $2 million from the Community Investment Account (CIA) to the General Fund as revenue for FY 13. It requires that the account's remaining revenue be distributed as required by law. By law, $10 of each fee credited to the CIA must be deposited in the agricultural sustainability account. The remainder of the revenue is split among the departments of Agriculture, Economic and Community Development, and Energy and Environmental Protection, and the Connecticut Housing Finance Authority, for specified purposes.

45 — NEWTOWN SCHOOL YEAR

By law, the SBE is authorized to shorten the school year (which must be at least 180 school days) due to an unavoidable emergency. The act requires the SBE to allow a shorter 2012-2013 school year in Newtown if its school board requests this.

46 — HEALTH CARE COST CONTAINMENT COMMITTEE

The act requires Health Care Cost Containment Committee (HCCCC) members who represent the state, in consultation with the state comptroller, to propose that the committee review prescription claims data from active and retired state employee healthcare plans for ways to increase generic prescription use under the terms established by the State Employees Bargaining Agent Coalition (SEBAC) agreements.

The HCCCC has 17 members: eight represent state management interests and are appointed by the governor; eight represent state employee interests and are selected by the SEBAC unions; and one neutral representative is jointly selected by the management and labor representatives.

Among other things, the 2009 SEBAC agreement created a three-tiered medication copay system, with employees paying $5 for generic medications, $10 for preferred name brands, and $25 for non-preferred name brands. The 2011 agreement maintained $5 copays for all generic drugs, but it increased co-pays for preferred name brand drugs from $10 to $20, and for non-preferred name brands from $25 to $35.

47 — FUNDING FOR MUNICIPAL BUILDING AND SCHOOL SECURITY SYSTEMS

The act makes municipal improvements to building security systems, including schools, eligible for funding under the LoCIP Fund. A related act, PA 13-184, 94-95, further expands the list of projects eligible for LoCIP funding.

LoCIP, administered by OPM, reimburses municipalities for the cost of eligible local capital improvement projects, such as road, bridge, and public building construction activities. OPM annually allocates LoCIP funds to municipalities according to a statutory formula (CGS 7-535 et seq. ).

48 — JUVENILE DCF COMMITMENT

The law requires a juvenile court to commit a child convicted as delinquent to DCF if the court finds that its probation or other services are inadequate for the child. The act eliminates the requirement that the juvenile court consult with DCF to determine the placement that would be in the child's best interest prior to making such a commitment.

The law also allows the juvenile court to order a child convicted as delinquent and committed to DCF to be placed directly in a contractual residential facility in Connecticut. The act requires the juvenile court to consult with DCF prior to ordering such a placement.

EFFECTIVE DATE: Upon passage and applicable to commitments and orders entered on or after that date.