HHS Budget Reflects Key LTC Imperative Priorities

Posted on June 30, 2021 by Jeff Bostic

The Minnesota State Legislature has passed the Health and Human Services (HHS) budget bill for the next biennium, and the bill has been signed into law by Gov. Tim Walz. The passage of this legislation, a bill that lawmakers heavily debated, is a critical step in finalizing a state budget before the new fiscal year on July 1. Since the bill is now law, there will be no shutdown of health and human services programs even if lawmakers fail to agree in other budget areas.

Released last week, the bill reflects a significant increase in investment compared to the current forecast for HHS spending. The bill adds $233 million in the current biennium and $568 million in the biennium after that. Much of the new spending is supported by federal American Rescue Plan funds, including almost $700 million from a temporary increase in the percentage of home and community-based services (HCBS) program costs covered by the federal government.

Provider cuts were, in large part, off the table, except for a few targeted areas tied to particular policy goals due to an influx of federal funds and a strong state budget forecast. Congress limited the use of home and community-based services (HCBS) funds to investments in those services, which allowed for targeted investments in our priority areas.

The Long-Term Care Imperative priorities reflected in the bill include Elderly Waiver rate increases and funding for nursing home moratorium exceptions. Both are critical investments needed in the wake of the COVID-19 pandemic.

HCBS
The bill makes across-the-board investments in both the Elderly Waiver (EW) and Disability Waiver (DWRS) rates while making several changes to benefit particular providers. It also creates a pathway to permanent implementation of alternative adult day services. Highlights of the bill include:

Elderly Waiver Rates: Elderly Waiver Rates updated to be 18.8% of the new rate formula blended with the rates before the partial implementation of the new rate system in 2019. Effective Jan. 1, 2022, for all services except customized living for disability waivers which stays at a 10% blend. Rate increases will vary by service because they all have different rates under the new and old systems—cost to the State of $8.3M first biennium and $17.9M second biennium.

DWRS Rates: DWRS rate update scheduled for July 1, 2022 is moved up to Jan. 1, 2022, and then the next rate update due on July 1, 2024 is delayed to Nov. 1, 2024 —creates a met increase in spending of $44 million of the next two biennia.

Customized Living Quality Improvement Grants: Funding doubled for the existing Customized Living Quality Improvement Grants, with $500,000 in additional annual grant funding for a total of $1 million per year available. Providers must serve at least 75% waiver clients to be eligible, but a requirement to serve 75 total waiver clients was removed.

EW Customized Living Rate Floor: Implements an EW customized living rate floor of $119 per day for providers who have more than 80% elderly waiver clients. Increases state spending by $3 million first biennium and $9.3 million in the second biennium.

Alternative Adult Day Services: Removes Alternative Adult Day Services from the list of waivers that will sunset on June 30. This move provides a program extension and gives the state flexibility to work toward a permanent program not tied to the public health emergency.

Acuity Limit for Disability Waiver Customized Living Clients: For disability waiver Customized Living clients only, creates a 24-hour limit and an acuity limit on services that can be authorized. These are blue-ribbon commissions on health care costs proposals that save the State money, $5.4 million in the first biennium and $15.3 million in the second biennium. 80% of the increased funding starting in 2022 must be used for employee wages and benefits.

Phase II of Waiver Reimagine: Implements Phase II of Waiver Reimagine, which changes the way services are provided and funded under disability waivers. This approach saves over $7 million in the second biennium. changes)

Assisted Living Report Card: Cancel the appropriation for the first year assisted living report card, saving $3.9 million. They are still moving forward with customer satisfaction surveys on an ongoing basis; the first round was delayed due to the pandemic.

Housing Supports Absence Days: The number of absence days covered for housing supports clients is increased to 74 days per incident and 92 days per year if the absence is due to being in a nursing facility, hospital or behavioral health setting.

Care Centers|
The care center value-based reimbursement system was subject to little discussion and no major proposed adjustments to its formulas, which was the Long-Term Care Imperative's hope since we went into the session anticipating lawmakers would consider cuts. We did win a significant new investment in property projects, which we had sought for years and is greatly needed.

The two pieces that are in the bill include:

Ongoing Funding for Moratorium Exceptions Projects: Permanent ongoing funding for moratorium exceptions projects at $4 million per biennium. The authorization covers that amount of projects each biennium plus any used funds carried over—State cost of $250,000 in the first biennium and $1.5 million in the second.

Therapy Assessment Requirements: Implementation of new assessment requirements at the end of therapy or clinical isolation and eliminating funding for the outdated critical access program. These were proposals developed in 2019 and included in the blue ribbon commission on the health care costs report. They save the State $3.9 million in the first biennium and $4.8 million in the second biennium with minimal impact to providers.

Background Studies
For more than a year, the Minnesota Department of Human Services (DHS) has conducted "emergency background studies," which are run without fingerprints and photographs and which complete Minnesota criminal history record checks only (FBI checks are suspended). Under current law, these emergency studies are valid only during the State's peacetime emergency and 60 days after the peacetime emergency expires. This creates a serious problem because it would mean that everyone who has only had an emergency background study (200,000+ individuals) would need to obtain a standard, fingerprint-based study within 60 days after the waiver ends. Key actions in the bill include:

Background Study Waiver: Provides that the background studies waiver shall remain in effect for 365 days after the peacetime emergency ends, which will allow time to clear the backlog of fingerprint studies needed.

Additional Fingerprinting Capacity: Authorizes DHS to retain the services of more than one authorized fingerprint collection vendor, which allows the creation of additional capacity to the background studies system.

Older Adult Services Grants and Studies
More federal matching dollars provide a one-time increase of almost $700 million for the State, and those funds had to be used on HCBS activities. After the rate increases for waivers, the State had a large pot of money left to spend in these areas. As a result, they created and expanded several grant programs and studies. Highlights for older adults include:

Provider Capacity Grants for Rural and Underserved Areas: $14 million for a new grant program to develop HCBS services in areas where those are currently lacking.

Workforce Development Grant: $5.6 million for a study by DHS to look at issues around recruitment and retention of long-term care workers

Own Your Future Study: $183,000 to DHS for a study of older adults use of Medicaid to cover long-term care services and supports

Respite Services Study and Grants: $4.4 million for a combination of a study of access to respite services and grants to expand respite programs

Technology grants for HCBS: a $2.5 million grant program for HCBS providers to provide access for clients to telehealth and other remote services

Age Friendly Communities: $1.45 million to the Board on Aging to provide additional grants to communities that are implementing Age Friendly plans

Assisted Living Licensure Payment Transition
With assisted living licensure being implemented in just over a month, the bill addresses a couple of issues related to customized living payment once licensure is implemented:

Customized Living Payment to Assisted Living and Exempt Providers: The bill clarifies that customized living payments can be made to licensed assisted living providers or providers exempt from licensure.

Requirements for Exempt Providers: The bill establishes requirements for exempt providers based on the housing with services requirements that expire on Aug. 1.

For more information regarding many of these key provisions, we invite you to a legislative wrap-up call on July 14 from 1–2:30 p.m. Plus, you’ll learn more about how you can get involved in advocacy throughout the rest of 2021. Register today!