MH/DS REFORM BILL PASSES HOUSE

• Defines core services. These core services are to be available in all regions, but only as funding allows. You can read the list of core services here.    

• Defines "conflict free case management" so that people can choose their case managers, even if they work for the same organization providing them services. Case managers must offer choices beyond what they provide, and must honor these choices.    

• Requires counties to form regions to fund and deliver non-Medicaid services. Regions must be at least three counties, but no longer must have a minimum population.     

• Allows waivers from the three-county region requirement for counties that can do it on their own. One- or two-county regions would have to prove they are able to deliver the same (or better) outcomes & meet regional requirements. 
  

• Lets regions decide how they will operate. Details on voting, pooling funds, and how they will govern themselves are left to the region. However, the regional governing board may only have one supervisor from each county as voting members. Only one consumer and one provider are allowed on the governing boards - and they are not allowed to vote. Regions are to have advisory boards to get input from the people using the services and the people providing the services.
  

• Establishes a new timeline for regionalization. April 1, 2013 (counties form regions); April 2-July 1, 2013 (DHS works with counties not yet in a region and other regions around them to resolve differences and find them a home); December 31, 2013 (counties are all in a region unless waived); and June 30, 2014 (regionalization done).

• Eliminates legal settlement on July 1, 2013. The redistribution of state case dollars made this discussion difficult to address by July 1, 2012 as originally planned; so the House pushed the date back one year.

• Sets up a process to open up to 50 sub-acute beds to address the needs of persons with serious and persistent mental illness. Acute beds are expensive, and often people need some step-down level of care like sub-acute beds (i.e. something more than community-based treatment, but less than hospitalization).

• Continues planning process to address workforce shortage issues, establish outcomes and performance measures for the new system, determine options to provide services to persons with developmental disabilities (other than ID), and children's disability services.  

• State will now pay for all Medicaid services, beginning July 1, 2012. This includes ICF/ID and State Resource Centers. Funding to do this will be added to the Health/Human Services Budget. To pay for it, the state will keep all money currently going to counties for allowed growth and property tax relief, and get an extra $42 million to cover the shortfall.   
  
  
• Regions/counties will now only pay for non-Medicaid services and services to people not eligible for Medicaid, beginning July 1, 2012. Core services identified in the bill are required, but only as funding allows.  
  

• Disputed bills that go back to July 1, 1997 will be written off by the state. These are bills that counties have said are not their responsibility and have refused to pay. This doesn't help counties pay for services, but it does address a source of confusion when looking at county financial information. There is an estimated $12 million in disputed bills statewide.   

• Reinstates the property tax levy for MH/DS services beginning July 1, 2013 - and "equalizes" the property taxes based on population. Current county levies raise $125 million statewide, but this would be reduced when the new levy goes into effect. Counties will continue to levy their capped amount, unless it comes out to more than $47.28 per person living in the county. Counties levying more than this amount will be required to lower their taxes (but they do not get funds to replace these lost service dollars). Those levying under the $47.28 per person will get state funds that bring them up to that level (estimated cost statewide is $28 million). Here is an example of how this will work in two counties:  
  

• Scott County is allowed to raise $3.3 million from its local property tax to pay for non-Medicaid services. That's about $20 per person living in that county. Beginning July 1, 2013, Scott County would budget for $7.8 million ($47.28/person). The state would pay the difference between the current levy ($3.3 million) and the budgeted amount ($7.8 million).   

• Jasper County is allowed to raise $3.1 million from its local property tax to pay for non-Medicaid services. That's $84.66 per person living in that county. Since they are above the $47.28/person cap, they would have to lower their levy and collect only $1.7 million beginning July 1, 2013. They will have to find a way to cut costs and make up this $1.4 million difference, which is nearly half of that county's current budget. That probably means cutting services.    

• Sets up a Transition Fund and Transition Committee to ensure the orderly transition from the current system to the new system. Counties will have only their levies to pay for services in the next year, and that's not enough to maintain services at current levels.    

• A Transition Fund is set up for the next year to give some counties one-time funds to help them continue current core non-Medicaid services. These funds are meant to bridge the gap until property taxes are equalized on July 1, 2013. Funding for this will be in the Health/Human Services Budget - but legislators are talking about $10 million when the Iowa State Association of Counties estimates the need to be $20 million. Applications for these funds require a great deal of detail that some counties may not be able to provide, including proof that they will not need those funds in the following year. 

• DHS will appoint a Transition Committee of stakeholders to make recommendations on the transition from the current system to the new regional one. They will work out details on the continuation of the property tax levy, per capita equalization payments, funding for the system, and how to address growth and population shifts. Legislators talked about a 3% annual growth added to the $47.28 cap so counties could begin to provide all of the core services listed, and start making headway on "core plus" services like jail diversion. But this increase is not in the bill as currently drafted - this committee's recommendations on growth will be reviewed next year.      

• Part of the deal not included in SF 2315 will need to be added to the HHS Budget - allowing counties to keep unspent risk pool funds for another year. Some counties were unable to spend all of these funds.   

Potential Unintended Consequences

Nothing is ever simple when it comes to Iowa's mental health and disability services system, which is why the legislature wants to make changes. They want the system to be more uniform, more focused, and better understood. 

• The bill as currently written appears to limit access to services to those earning less than 150% of the federal poverty level. Regional funds are not to be used to pay for services to persons with family incomes that are more than 150% of the federal poverty level. Counties are currently allowed to pay for services up to 200% of the federal poverty level, and almost all do. The bill states that the Legislature plans to look into a future expansion to 200% of the federal poverty level, but states that no public funds will be used to pay for services to persons in that 150-200% range. Other parts of the bill protect people currently receiving services that are not considered "core," but only if there is funding for it. It is unclear as to whether this protection would include persons between 150-200% of the federal poverty level. Any new consumers in that income range would not be eligible for regional/county services. This probably is not the intent - so Senators will need to decide whether or not to clarify this.     
  

• Many counties may have trouble accessing needed Transition Funds. Transition funds may be used to preserve "core services" to "targeted populations." This seems to suggest counties that serve populations beyond those targeted in the bill (like DD or BI) may not be able to access transition funds to continue those services next year. It also suggests counties providing services beyond the core may not be eligible for transition funds. So unlike Risk Pool dollars that are typically allocated to counties to "avoid service reductions and eliminate waiting lists," this Fund would only help maintain what is now considered "core" to the initial service populations (MI, ID). Counties that do more may be denied transition funding to maintain current services. Senators will need to decide what they want to accomplish with these funds - stabilizing services this year, or forcing counties to make difficult decisions now rather than later.   

• Requires counties asking for transition funds to show how they will sustain the services after these one-time funds run out. Legislators wanted to make sure counties didn't use these one-time funds to expand services that would just have to be cut next year. This will be extremely difficult for those counties that are currently levying above their per capita limit - they are set to lose money from local taxes and have no way of making those funds up (like the Jasper County example above). Cuts will be their only option. Regionalization may help some areas, but that will be several years away. Senators will need to decide whether to force these cuts now - rather than later - or help sustain the services now in hopes that new agreements will help struggling counties.     
  

• The Iowa State Association of Counties (ISAC) believes counties will have to pay 2-3 months of Medicaid bills, with no way of paying them next year. ISAC estimates that counties will have to pay $54 million worth of Medicaid match in the next fiscal year, because of delays in Medicaid billing. When the fiscal year ends on June 30, 2012, counties will have paid for 12 months of bills, but they will still owe for another 2-3 months. The state gets 100% of the funds for 9-10 months of bills; counties may have to dig into their non-Medicaid service dollars to make these payments.   ISAC believes this could lead to service cuts and waiting lists, and transition funds cannot be used to pay for Medicaid services.

• Core services established in the bill are based on funding available. If the financing of the system is not addressed adequately in the next two years, counties/regions may not be able to make headway to expand the core services provided, let alone start on the "core plus" list. Legislators are confident that the new per capita levy will provide counties with a good base of funds, regionalization will help provide more efficiencies that can be reinvested in services, and growth in the state "equalization fund" will help county budgets grow. But many advocates that were around for the last round of promises for growth are skeptical. Show me the money, they say.

• Funding for the system (since the money isn't in the bill)
• Changing to a regional system (concerns about local access to services)  
• Promising to pay for future system growth (based on past experience) 
• Requiring some counties to lower their levies without replacing lost funds (cuts or waiting lists in those counties).
  

BUDGET UPDATE

Sen. Jack Hatch (Polk County)
Sen. Joe Bolkcom (Johnston County)
Sen. Amanda Ragan (Cerro Gordo County)
Sen. David Johnson (Osceola County)
Sen. Robert Bacon (Story County)  
Rep. Dave Heaton (Henry County)
Rep. Linda Miller (Scott County)
Rep. Matt Windschitl (Harrison County)
Rep. Lisa Heddens (Story County)
Rep. Beth Wessel-Kroeschell (Story County)

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