At $382 million, a contract for a private company to manage part of the stateís Medicaid program will be the largest contract ever issued by the State of New Hampshire.
The Joint Legislative Fiscal Committee met earlier than normally this month to help the Commissioner of Health and Human Services deliver the contract options to the Governor and Council at their meeting on Mar. 28.
The role of the 10-member Fiscal Committee was pretty simple. We needed to approve rates that had been negotiated with possible contractors. The budget bill passed last year moves New Hampshire from our current fee-for-service delivery system of care to a managed care system.
Medicaid in New Hampshire serves between 120,000 and 130,000 residents who are indigent or otherwise qualify for services. The roughly one billion dollar cost is shared between the state and federal governments but our Department of Health and Human Services administers the program.
Around 40 percent of the annual program is being put out to bid for management by a private firm. The state will provide oversight and insure that the private firm selected meets standards set forth in the contracts. Goals from the change include improving care while saving $16 million in state spending in the first year. The law says this program shall be in place by July 1.
I can assure readers that all aspects of Medicaid are complex and often confusing and at times frustrating to deal with. But it is important both for the services provided and because it is a fast growing, high cost business for the state. The current system is "unsustainable" to quote Commissioner of DHHS, Nick Toumpas.
To point out our difficulties overseeing and legislating on issues relative to Medicaid, the Fiscal Committee approved, as required by law, the rates for 22 categories or "cells" for Medicaid recipients based upon the services they are projected to receive over the next year.
Some beneficiaries, for example, are put into cells based upon their age. Children are in categories of 2 to 11 months, 1 to 5 years, 6 to 13 years and so on. The rates per beneficiary are projected to be $148.09 for children 6 to 13 years of age while the rate per beneficiary for a disabled adult male age 19 to 44 is $854.85. These rates are per month per beneficiary. The average rate per beneficiary per month is $276.
Add all the projected costs of serving all beneficiaries over the next year and you get to the cumulative total expense of the managed care contract of $382 million.
Approval of the rates was unanimous. What were the options for committee members? Trust the Commissioner and his team who are following a process the legislature itself put in place? Hold up the approval to get more information? I am not sure what that information would have told us but the delay would have put the July 1 start date in jeopardy. Or, oppose the rates and essentially stop the process from going forward?
It came down to trust. The committee endorsed the Commissionerís proposal. His next step is to present his case for the contracts that have been negotiated and need the Governor and Councilís approval on Mar. 28.
If readers find this complicated, it is. I wrote about the new managed care plan because more than 100,000 individuals depend on Medicaid services. We all want to provide the best possible care in a manner that is economical and fair to taxpayers. Managed care may help us to do that.
At Fridayís meeting, the Fiscal Committee also heard from the stateís auditors, KPMG. They presented their audit report for the fiscal year that ended last June 30. The stateís Comptroller, Ed Carter, then went through the Comprehensive Annual Financial Report.
Our normal audience of department heads and other officials fill the spectator section of our committee room. When discussion on the audit and CAFR began there were fewer people in the audience than at the 10 member committee table.
First, the MPMG audit report was unqualified or "clean." That is always good.
Secondly, the CAFR and audit usually are available in December, but this time it was completed in late February. The reason for the delay cited in the audit letter was $89 million in requested refunds or credits by some hospitals relative to their payment of the Medicaid Enhancement Tax that hospitals pay annually.
$20 million was deemed outside the statute of limitations and of the remaining $69 million in requests, the state issued determinations that have lowered the potential liability for refunds and credits and led to the conclusion "that a material net obligation" did not exist at the end of June and "therefore no financial liability was recorded."
Third, even though we were still feeling the impact of the recession, the state ended the year in the black with a surplus of $17.7 million. That is not much given that the state had general fund revenue of over $2 billion for the year, but it is always better to be in the black than in red.
Next week I will choose some lighter subjects to report on. But the stateís finances are important for citizens to understand as they impact all of us.
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