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Governor's Proposed Budget 2009

| Budget Talking Points 2009 | Caring for All DPW/Aging/Reform Briefing |
| Q&A Session Followup to Caring for All Briefing | DPW Budget Breakout |

OMHSAS Budget Summary and Breakout

Print Version

CARING FOR ALL PENNSYLVANIANS BUDGET BRIEFING:
02/04/09

Presenters: Departments of Public Welfare, Aging and Insurance and Governor’s Office on Health Care Reform (GOHCR).

DPW Secretary Estelle Richman discussed the proposed DPW 2009-10 budget. She explained the proposal responds to the current economic challenge by permanently reducing costs, but allows for an $804 million expansion in health care across all commonwealth agencies (of which $475 is in DPW). Additionally, the budget builds on progress to rebalance the long term living system and doubles the number of persons receiving adultBasic.

The current economic situation has created “the perfect budget storm”, Secretary Richman said, explaining that revenues are down, more people are unemployed and more people need help. Additionally, DPW must make of $500 million in federal funding that will not continue into the next budget year.

Secretary Richman announced that DPW funding is no longer the largest piece of the budget and stressed the department is continually working to reduce costs. She noted her department has saved $5 billion since 2003.

Turning to the governor’s initiatives, Secretary Richman explained there is opportunity in the form of the anticipated federal stimulus, however the challenge is to implement smart practices that permanently lower the cost of government so there is not a hole in the budget after the stimulus money expires.

The budget proposes a statewide MCO assessment of 2%, which will generate $400 million each year. Secretary Richman noted six states, including New Jersey and Maryland, also impose statewide MCO assessments. She argued this assessment is necessary to avoid major cuts in health care.

The second initiative of the budget proposal is “Smart Pharmacy”, which provides for acquisition of drugs by the department. Secretary Richman argued for this proposal, explaining that DPW earns seven times more drug rebates than managed care companies. This proposal will generate $146 million each year, she noted, which enables DPW to avoid cutting 60,000 children and adults from MA, cutting child care for 45,000 children, eliminate home and community based services to nearly 15,000 seniors, or major rate cuts for providers.

Secretary Richman noted the proposed 2% cuts for community mental health and behavior services and behavioral health cost saving initiatives will save $35 million and other MA cost containment initiatives will bring in $40 million in savings, including:
• $20 million from reduced hospital supplemental payments
• $15.7 million from enhanced fraud and abuse prevention and detections actives and expanded TPL
• $4.4 million from enhanced Access Plus/Pharmacy management

The budget will protect vulnerable children by expanding participates in child care and sustaining Keystone STARS. Core payment levels for all OCDEL programs will be frozen, as will weekend and evening care rates for STAR 2-4 providers. Secretary Richman also discussed plans for implementing a performance-based child welfare system that targets dollars for evidence-based practices for in-home services, PA Promising Practices, increased adoption, and implanting plans to reduce out-of-home reliance by 20%.

In conclusion, Secretary Richman debunked several myths about DPW. She stressed that DPW does not hand out cash, noting that 200,000 people receive TANF cash grants whereas 2,000,000 receive medical assistance. She also emphasized that eliminating fraud will not balance the department budget, noting it would take 620,000 children and adults defrauding the system to save a billion dollars.

Acting Aging Secretary Mike Hall then provided an overview of the PDA budget, first explaining that the budget proposes to expand the scope of the department and rename it the Department of Aging and Long-Term Living. He explained the new department will better advance the agenda, which includes institutionalizing the Office of Long-Term Living’s progress, building on that progress to make PA the best place in America to grow old or live with a disability, and benefit consumers and providers.

Secretary Hall emphasized the new department will streamline processes for consumers and providers by creating uniformity across the state, promoting access, ensuring that all Pennsylvanians have fair and equitable access, and better leveraging programs.

Regarding the budget, Secretary Hall said there are no cuts in nursing facility or home and community based services (HCBS) rates, the trend of growth in HCBS waiver program will continue, and PACE reimbursement will be modified to the invoice cost plus dispensing fees.

Insurance Commissioner Joel Ario then spoke about the situation of health care insurance in Pennsylvania. He discussed the findings of a recent statewide survey on uninsured rates show, which showed that more than one million Pennsylvanians do not have health insurance, and that number is growing.

Ario highlighted the following findings of the survey:
• 1,021,790 Pennsylvanians lack health insurance coverage. This is an increase from a 2004 study indicating that nearly 900,000 Pennsylvania residents were uninsured.
• Adults lacking health insurance rose from 755,000 in 2004 to nearly 883,000 in 2008.
• Characteristics of those who are uninsured show that: nearly 18% have lacked coverage for more than five years; 62%, ages 19-64, are working; of those people who are working and uninsured, nearly 48% work for small employers of fewer than 50 people; 61% have not seen a doctor or health care provider for routine care during the last 12 months (this compares to 24% of those with coverage); only 6% have stayed in a hospital overnight during the last 12 months (this compares to 11% of insured Pennsylvanians).

He emphasized the lack of social safety nets for adults ages 19-64 and opined that the numbers of uninsured are likely growing as the economy sinks. The primary safety net for this age group, he continued, is adultBasic, but the waiting list for the program is currently 183,000 people and this is projected to jump to 282,000 by the end of the fiscal year.

GOHCR Director Ann Torregrossa stepped in and argued the proposed budget will improve access to health care by reforming health care programs to save dollars without cutting eligibility and expand adultBasic to serve twice as many adults and include a prescription drug component. The expansion of adultBasic will be paid for with state and federal funds and is viewed as a bridge to a federal universal health care program and can sunset within four years.

Torregrossa explained this proposal will help people who are working, but unable to get insurance through their employers. Federal matching funds will equal 54% of every dollar spend on adultBasic expansion and the program can be ready to go on July 1 provided there is timely passage of state legislation and federal approval.

Stating Pennsylvania is the only state with a state-only funded program for uninsured adults, Torregrossa argued PA can no longer afford to leave federal funds on the table.