SAMHSA222s Weekly Financing News Pulse: State and Local Edition August 25, 2010 8/25/2010 1 SAMHSA222s Weekly Financing News Pulse: State and Local Edition California Connecticut Florida I ndiana M aine Massachusetts Michigan Mississippi N ebraska North Carolina O klahoma W est Virginia Wisconsin To Subscribe to SAMHSA222s Weekly Financing News Pulse, please go to the following link and choose 223Health Care Financing224: https://service.govdelivery.com/service/multi_subscribe .html?code=USSAMHSA&origin=http://www.samhsa.go v/enetwork/success.aspx For quest ions or comments, please contact Rasheda Parks ( Rasheda.Parks@samhsa.hhs.gov ). SAMHSA222s Weekly Financing News Pulse: State and Local Edition August 25, 2010 8/25/2010 2 Around the States: State and Local Behavioral Health Financing New s California UCLA Policy Brief Finds Increase in California222s Uninsured: On August 23, the University of California, Los Angeles Center for Health Policy Research released a brief examining the number of uninsured Californians by county. The brief found that 37 counties 222 uninsurance rates are above the statewide average of 24.3 percent. In addition, t he total number of uninsured residents rose by 5 percent, from 6.4 million in 2007 to 8.4 million in 2009. The authors found that the newly uninsured were concentrated in the Northern/Sierra region, the San Joaquin Valley, and Southern California. The brief attributes t he increase to high unemployment, which has depressed income and caused a decline in employer-sponsored coverage ( Los Angeles Times, 8/23 ; UCLA, 8/23 ). Delayed Budget Forces State to Begin Reimbursing Community Clinics with IOUs: Because the California Legislature ha s yet to approve a budget, California has begun reimbursing community clinics 222 Medicaid services using IOUs rather than checks. The state budget was due July 1 ; however, a $2 billion reserve fund allowed the state to continue the reimbursements until those funds were exhausted. Officials from the California Primary Care Association , an organization representing over 800 non -profit community clinics and health centers, say Medi -Cal reimbursements typically make up 50 to 80 percent of clinics222 revenue. The state will reimburse the clinics once a budget is passed ( San Gabriel Valley Tribune, 8/20 ). Update: Assembly Approves Bill Establishing Health Exchange, Senate Approves Bill Regulati ng Health Insurance Rate Increases : On August 20, the California Assembly approved legislation ( SB 900) to create a health insurance exchange, as outlined in the national health care reform law. However, because the Assembly amended the Senate bill, it now returns to the California Senate . A companion bill ( AB 1602 ) to establish the exchange222s duties and fees is also awaiting action in the Senate. In related news, on August 23 , the Senate approved legislation ( AB 2042 ) barring health insurers from raising rates more than once annually. That bill now goes before Govern or Arnold Schwarzenegger (R) ( San Francisco Chronicle, 8/20 ; Los Angeles Times, 8/24 ). Insurer Trade Group Sues DOI Over Re scission Regulations : On August 23, the Association of California Life and Health Insurance Companies (ACLHIC) filed suit to stop California Department of Insurance (DOI) regulations affecting rescission in the individual insurance market. The new regulations require insurers to investigate applicants222 medical histories thoroughly before ac cepting any premium payments from them. The trade group argues that the DOI acted 223in excess of its jurisdiction and authority224 by establishing the regulations , which it claims c onflict with the state222s insurance code. Additionally, the ACLHIC argues that the new regulations are cost and time- prohibitive. An expedited hearing has been scheduled for the case ( AP via Insurance Journal, 8/23 ). Connecticut AG I nvestigating Rite Aid222s Prescription Drug Pric ing : On August 20, Attorney General Richard Blumenthal (D) announced that his office is investigating Rite Aid222s prescription drug pricing. SAMHSA222s Weekly Financing News Pulse: State and Local Edition August 25, 2010 8/25/2010 3 Blument hal222s office is seeking to determine whether Rite Aid illegally attributed its price increases to a new state law requiring pharmacies to offer Medicaid beneficiaries the same prescription drug discounts that they offer to other customers. T he Connecticut Department of Social Services (DSS) and the Connecticut Department of Consumer Protection (DCP) will also participate in the investigation ( Hartford Courant, 8/20 ; Kaiser Health News, 8/24 ). Florida Update: CMS to Review State222s Medicaid Pilot Program Before Renewing Medicaid 1115 Waiver: On August 17, Centers for Medicare & Medicaid Services (CMS) officials sent a letter to the Florida Agency for Health Care Administration (AHCA) stating that CMS wil l conduct a review of the state222s Medicaid reform pilot program before deciding whether to renew Florida222s Medicaid Section 1115 waiver. On June 30, AHCA officials requested a three -year extension of the waiver that allows them to operate the program; however, CMS officials decided to treat the request as a renewal rather than an extension, allowing CMS to modify t he pilot. CMS officials say Florida222s failure to expand the program statewide will be a factor in their review . The reform pilot currently operates in Baker, Broward, Clay, Duval, and Nassau Counties, enrolling beneficiaries in private managed care plans rather than the state222s traditional fee-for-service (FFS) plan. The state222s waiver for the program expires July 1, 2011 ( Health News Florida, 8/23 ; South Florida Business Journal, 8/23 ; Kaiser Health News, 8/24 ). AG222s Office Recovered $400 Million in Medicaid Fraud Since 2007 : On August 20, Attorney General Bill McCollum (D) announced that his office222s Medicaid Fr aud Control Unit has recovered $400 million since 2007. The unit222s ability to detect fraud will expand as Attorney General McCollum implements a federally funded pilot program that allows his office to access the Medicaid Management Information System222s d ata directly ( Channel 6 News, 8/20 ). Indiana DMHA Reducing State Psychiatric Hospital Capacity by 30 Percent : Officials from the Indiana Family & Social Services Administration222s (FSSA) Division of Mental Health and Addiction plan to eliminate 355 beds at the state222s psychiatric hospitals, reducing capacity by 30 percent . As part of the process, DMHA intends to transition its six psychiatric hospitals from long -term to intermediate care facilities. Under the plan, the state will devote inpatient psychiatric beds to individuals with serious mental illnesses (SMI ) and move patients with chronic addiction and developmental disabiliti es into community -based care. State officials estimate the transition will be complete by March 1 ( The Journal Gazette, 8/22 ; DMHA, 7/8 ). Cummins Behavioral Health Systems to Close Two Outpatient Facilities : On September 30, Cummins Behavioral Health Systems will close its outpatient mental health facilities in Lafayette and New Whiteland because of lower than anticipated revenue. Last fiscal year, the Lafayette and New Whiteland facilities generated a combined $2 50,000 less than anticipated . The lower revenue is the result of a shift in Medicaid reimbursement and state funding. The state is now directing funds to facilities that serve individuals with more severe mental illnesses. In October, the state will begin awarding funds originally allocated to Cummins to Wabash Valley Alliance and the Hoosier Assurance SAMHSA222s Weekly Financing News Pulse: State and Local Edition August 25, 2010 8/25/2010 4 Plan. T he Hoosier Assurance Plan is the state222s primary payer for MH/SUD treatment ( Journal and Courier, 8/21 ). Maine Methadone Clinic Closes Over DEA Investigation: On August 19, the Turning Tide methadone clinic in Rockport closed because of an ongoing U.S. Drug Enforcement Agency (DEA) investigation that deemed the clinic a 223danger to public health and safety.224 The clinic222s owner and one of the clinic counselors were recently charged with federal drug offenses. Maine has permanently revoked the clinic222s license and the DEA seized all methadone stored at the clinic . The Maine Of fice of Substance Abuse (OSA) is sending Turning Tides 222 280 patients to clinics in Bangor, Calais, Portland, South Portland, Waterville, and Westbrook for treatment ( Bangor Daily News, 8/21 ). Massachusetts Update: DOI Reaches Agreement with Health New England on Rate Increases : On August 17, the Massachusetts Department of Insurance (DOI) and Health New England reached an agreement on Health New England222s premium increases for the individual and small business markets. Health New England originally proposed rate increases ranging from 11.5 percent to 21.3 percent; however, Massachusetts Insurance Commissioner Joseph Murphy rejected those proposals on April 1. Under the new agreement, Health New England may increase premiums by 8.3 to 14.7 percent. Of the six insurers that have appealed the rate rejections, Health New England is the fifth to settle with the DOI . Fallon Community Health Plan222s appeal is still pending ( Boston Herald, 8/1 8 ; The Boston Globe, 8/18 ; Kaiser Health News, 8/18 ). RWJF/ Urban Institute Brief Examines Uninsured, Suggests Efforts to Increase Coverage : To determine the effectiveness of Massachusetts222 2006 health reform law, t he Robert Wood Johnson Foundation (RWJF) and the Urban Institute released a brief examining 2008 data on Massachusetts222 uninsured. The brief found that over 85 percent of the state222s uninsured residents are between the ages of 19 a nd 64. In addition, uninsured residents are more likely than the insured to be young, single, male, minorities, non-citizens , and non-proficient English speakers . Furthermore, t he uninsured have less education, a higher rate of unemployment, lower incomes , and greater financial stress. The brief also found that 42 percent of the state222s uninsured might be eligible for the state222s Medicaid program, MassHealth, or subsidized coverage in the state222s Commonwealth Care program. To expand coverage, t he author s suggest better addressing the needs of 18 to 2 6 year olds and ensuring that communication materials are written at the fourth to eighth grade reading level ( The Wall Street Journal, 8/17 ; Kaiser Health News, 8/18 ). Michigan Update: Governor Updates Budget Proposal, Health Care Affected : On August 18, Governor Jennifer Granholm (D) announced cuts to her proposed $47.09 billion FY2011 budget. To close a projected shortfall, Governor Granholm eliminated $600 million in proposed spending, including 3 percent across - the -board cuts for all state agencies. In addition to the across -the - board cuts, the governor222s budget amendments would reduce funding for the Michigan Departments of Community Health (DCH), Human SAMHSA222s Weekly Financing News Pulse: State and Local Edition August 25, 2010 8/25/2010 5 Services (DHS), and Corrections (DOC) by an additional $50 million each. DHS oversees the state222s Medicaid program. Governor Granholm did not alter provisions in her original proposal that would c ontinue an 8 percent Medicaid reimbursement reduction implemented this year and enact a 3 percent tax on physicians222 gross receipts. Michigan222s budget is due October 1 ( The Michigan Messenger, 8/20 ). Mississippi State Implements Medicaid EHRs : On August 19, Mississippi222s Medicaid program implemented an electronic health record (EHR) program. The program allows physicians to share patient information and send prescriptions to pharmacists electronically. The federal government is financing the majority of the EHR program and the state is contributing $1.6 million. Mississippi awarded Shared Health a four - year $9.5 million contract to operate the program ( AP via The Daily News, 8/23 ). Nebraska Milliman Suggests Health Reform May Cost Nebraska222s Medicaid Program Up to $766 Million By 2020: On August 18, state officials released a stud y by Milliman Inc. assessing the impact of the national health care reform law on Nebraska222s Medicaid program. The report projects that reform will increase Medicaid costs by $526 million to $ 766 million through 2020. For t he report , Milliman assumes that Nebraska222s Medicaid program will enroll 108,000 to 145,000 additional beneficiaries under reform. Legislators critical of the report contend that Milliman did not adequately account for the potential Medicaid savings under reform , including a reduction in uncompensated care ( Kaiser Health News, 8/19 ; AP via Business Week, 8/18 ; The Lincoln Journal Star, 8/18 ). North Carolina Audit Finds Medicaid Could Cut Inmate Health Costs by $11.5 Million Annually : On August 24, the North Carolina Office of the State Auditor released an audit of the North Carolina Department of Correction 222s (DOC) inmate health care spending. The audit found that the DOC could save $11.5 million annually by requiring hospitals to bill Medicaid for certain health expenses incurred by eligible inmates . The federal government does not typically pay for inmate health care; however, Medicaid does cover treatment for eligible inmates in private or county -run hospitals. DOC officials say they are working with North Carolina Department of Health (DOH) officials to determine inmates 222 Medicaid eligibility. In addition, DOC officials report that they p lan to review all inmate hospital admissions for potential Medicaid reimbursement beginning in September . According to the audit, the DOC spent $159.8 million on inmate health care in 2008 and 2009 ( WRAL, 8/24 ) . BCBS of North Carolina Files Rate Increase Requests : On August 19, Blue Cross Blue Shield of North Carolina (BCBS) filed a request with the North Carolina Department of Insurance (DOI) to increase premiums for its Blue Advantage and Blue Options Health Savings Account (HSA) plans by 7 percent and 2 percent, respectively. The plans cover a combined 300,000 individuals. BCBS officials say the proposed increases are needed to compensate for rising medical costs and the implementation of the national health reform ( WRAL, 8/19 ; Kaiser Health News, 8/20 ). SAMHSA222s Weekly Financing News Pulse: State and Local Edition August 25, 2010 8/25/2010 6 Oklahoma Update: State Supreme Court Overturns Insurer Fee Designed to Raise Medicaid Funds : On August 24, the Oklahoma Supreme Court overturned a law establishing a fee on health insurers. The court deemed the law unconstitutional because the Oklahoma Legislature passed it during the last five days of the legislative session without a supermajority. The law ( HB 2437) would have required health insurers to pay a 1 percent fee on all paid claims until January 1, 2015. Under the law, the Oklahoma Insurance Departme nt would use the funds for state222s Medicaid program. State officials projected that the fee would have raised $78 million annually, drawing down an additional $190 million in federal matching funds in FY2011 and $140 million in subsequent fiscal years ( AP via Canadian Business, 8/24 ). West Virginia State Redirects Federal Grant , PRC Funding Reduced by Half : West Virginia is redirecting a federal grant , reducing t he Prevention Resource Center 222s (PRC) $3 million budget by half . The West Virginia Department of Health and Human Resources (DHHR) typically allocated all of a federal substance abuse treatment and prevention grant to the PRC. However, citing a 2008 technical review by the Substance Abuse and Mental Health Services Administration (SAMHSA ) which found that the state222s grant -funded prevention efforts were 223poor,224 DHHR decided to open the grant up for bidding. The state is currently reviewing applications. Under the reallocation, PRC will remain open but scale back its staff and devote fewer resources to prevention and treatment programming ( The Ch arleston Gazette, 8/21 ). Wisconsin DOC Reaches Settlement with ACLU to Improve Health Care for Female Inmates, Mental Health Care Affected : On August 19, the Wisconsin Department of Corrections (DOC) reached a settlement in a 2006 federal suit filed by the American Civil Liberties Union (ACLU) on behalf of 700 female inmates at the Taycheedah Correctional Institution in Fond du Lac. The suit alleged that there was a disparity between the health care available to male and female inmates. Under the settlement, the DOC must hire a consultant to review physical and mental health services at the prison, make recommendations for improvements, and monitor compliance with those recommendations until the court determines that health care practices at t he hospital are acceptable. The DOC will also hire a full- time family practice physician. Furthermore, the DOC must construct new mental health facilities at the prison and a separate off-site center to house and treat approximately 45 female prisoners w ith serious mental illnesses (SMIs). The new prison facilities will cost $7.5 million and the off -site center will cost $19 million. Under the deal, t he off -site center must b e operational by June 1, 2012 ( Milwaukee Journal Sentinel, 8/18 ; UPI, 8/19 ).