Governor Proposes Medicaid Expansion

The i2i Center is closely tracking legislative areas that will impact behavioral health, I-DD, and progress towards integrated health.  The Governor has unveiled his budget proposal for the biennium of State Fiscal Year (SFY) 2019-2020 and SFY2020-2021.  This signals the formal beginning of the budget process.  It will be up to legislators as to how much of the Governor’s proposals are included in the budget that the General Assembly passes for the upcoming biennium. 

Close the Insurance Gap

• Provides access to affordable health insurance to 500,000 North Carolinians the first year—ultimately adding approximately 626,000 individuals to Medicaid.  It is stated in the Governor’s budget that Medicaid expansion requires no State dollars, as the federal government pays 90% of the costs and the rest is paid by hospitals and health plans, including the State appropriations of $3.3 million recurring for SFY19-20 and $74.9 million recurring for SFY20-21.
• Provides funds to help ensure financial stability for NC hospitals during the transition of Medicaid to a managed care system.  $22 million non-recurring in SFY19-20 and $54 million non-recurring in SFY20-21. 
• The Governor proposes an aggressive outreach to North Carolinians who are Medicaid eligible but not yet enrolled to ensure that many more North Carolinians have health insurance.  Projected increases are based on the experiences of other states and are supported by research-based health policy simulators.  State appropriations required are $15.7 million for SFY19-20 and $34 million for SFY20-21. 

Progress on Medicaid Transformation

• Transform Medicaid and Health Choice from fee-for-service to managed care by leveraging $268M of the Medicaid Transformation Reserve and leaving a minimum balance of $132 million in the Reserve at the end of the biennium:
• Appropriates $107 million from the Medicaid Transformation Reserve in the General Fund to the Medicaid Transformation Fund for qualifying needs directly related to Medicaid Transformation. These funds will support the enrollment broker and ombudsman program, an Electronic Data Interchange and Information Exchange Portal, centralized provider data management and credential verification, and finance and program integrity capabilities. Funds may be used to establish time-limited positions to support these efforts.
• Appropriates $161.6 million from the Medicaid Transformation Reserve in the General Fund to the Medicaid Transformation Fund for the State share of up to $509.1M in total requirements for qualifying needs directly related to the payment of claims incurred under the fee-for-service model. When NC transitions to managed care, there will be a window where the State must finish paying the remaining fee-for-service claims that were incurred prior to the managed care launch.

Increase Long-Term Services and Supports

• The proposal includes $1 million recurring in SFY19-20 and $3.2 million recurring in SFY20-21 is appropriated for the State share to provide additional low-acuity Innovations Waiver slots for individuals with developmental disabilities who are on the Innovations Waiver waiting list.  According to the Governor’s budget, 82% of the children and adults on the waiting list are receiving Medicaid. The Innovations Waiver allows individuals with disabilities to obtain individualized services and remain in their homes and communities. These additional slots will become available January 2020.
• It increases funding for the Transition to Community Living Initiative by $692,000 recurring in each year of the biennium, which supports eligible adults with mental illness in transitioning from institutional settings to housing in the community. This funding will provide additional tenancy and peer support services related to the US DOJ Olmstead Settlement.
• The Governor proposes that funds be designated to replace expiring federal receipts for Money Follows the Person to continue support for transitioning individuals with disabilities from inpatient facilities to qualified community settings. This funding shifts seven existing full-time employees (FTE) from receipt-supported positions and adds two new FTEs to provide administration, management, fiscal oversight, technical assistance, and direct support to beneficiaries.

Address Opioids, Substance Abuse Disorders and Mental Illness

• Within the Division of Health Benefits, the budget proposal includes $5.1 million recurring in SFY19-20 and $6.8 million recurring in SFY20-21 in State share to expand the continuum of Medicaid services for individuals fighting opioid and other substance use disorders. Additional services may include substance use disorder halfway house services and high-intensity residential services for individuals no longer needing inpatient care but not yet ready to return home.
• The budget proposal establishes eight FTE (four program managers and four program consultants) within the Division of MH/IDD/SAS to improve substance abuse treatment and recovery services, including oversight and monitoring of opioid treatment programs and administering the Substance Abuse Prevention and Treatment Block Grant, the Opioid STR Grant, and the State Opioid Response Grant. These positions will be supported entirely by $802,000 recurring for each year from the Substance Abuse Prevention and Treatment Block Grant.
• It also establishes three FTE within the Division of MH/IDD/SAS to improve the quality of mental health services. These positions will be supported entirely by $133,737 recurring in SFY19-20 and $267,473 recurring in SFY20-21 from the Community Mental Health Services Block Grant.
• Creates 60 FTE positions for Broughton Hospital, appropriating $8.8 million recurring in the second year of the biennium, to serve additional patients and provides operational support, including utilities, maintenance costs, and other physical plant operation costs in the new Broughton hospital.
• Provides $283,704 for each of the fiscal years to the Department of Public Safety for three Judicial Management and Accountability Courts (treatment courts) which provide intensive, specialized services to defendants with substance use and mental health disorders. The Governor states that these programs are proven effective in reducing recidivism and improving health and criminal justice outcomes.
• Provides $5 million non-recurring for SFY19-20 to expand TROSA into the Triad area to provide substance use disorder treatment, counseling and help participants learn work skills and find employment.

Offer Affordable Housing

• The proposal increases the annual appropriation for the Housing Trust Fund to $10 million (increases it by $2.34 million recurring for both years).  The Fund is the State’s most flexible source of money for affordable housing and allows intensive targeting of vulnerable groups, including people who are homeless or have disabilities.  The Housing Trust Fund is within the NC Housing Finance Agency budget. 
• An additional $20 million in non-recurring funds is designated for the Workforce Housing Loan Program to develop more safe and affordable housing units for low and moderate-income citizens.

Increase Employment Opportunities for Individuals with Disabilities

• Provides state matching funds ($513,000 in State appropriation for each year) within the Division of Vocational Rehabilitation to support jobs and training for individuals with disabilities through the Basic Support Vocational Rehabilitation grant. This will allow North Carolina to leverage an additional $1.9 million in federal funds.
• Provides $92,400 for each year leveraged with anticipated receipts to support five Benefits Counselors for individuals who are blind and/or have other disabilities to support their employment efforts and explain available support services.

Support for Children and Families

• Invests $15.9 million of lottery receipts to address the barriers communities face to expanding NC Pre-K, including rising operating costs and a reimbursement rate that has not changed since 2012. Also increases the NC Pre-K reimbursement rate by 8% per slot and the administrative support by 2% to build local capacity to expand the number of eligible children served in Pre-K slots created by SL 2018-2 and maintain program quality.
• Increases the State’s investment in Smart Start by $15 million recurring and $5 million non-recurring for SFY19-20 only to expand evidence-based, family strengthening and home visiting programs as well as other early childhood initiatives
• A $14.5 million non-recurring allocation provides approximately 2,300 additional slots for child care subsidy payments for children from low-income working families. Child care subsidy allows these children to receive high-quality child care that supports their healthy development while parents go to work, search for employment, or receive job training.
• Adds $1.1M to fund 11 DHHS Child Welfare positions to improve child welfare training, continuous quality improvement through onsite technical assistance to counties, and accountability for better outcomes for children and families. This request also includes $750,000 to purchase web-based child welfare training for state and county use.
• Increases by $2.9 million recurring funding within the Division of Social Services for evidence-based intensive family preservation services to prevent the unnecessary removal of children from families by improving family functionality, resiliency, and safety.

Raise the Age of Juvenile Jurisdiction

• The Department of Public Safety is allocated $28 million in FY19-20 and $36 million in FY20-21 to increase staff, court services, facilities, and transportation, and establish focused programming for the 16- and 17-year-olds who will enter the juvenile justice system. The proposal also provides $1.2 million in the first year of the biennium and $1.6 million in the second year for the court system to handle the increased juvenile caseload.
• Several items within the Governor’s budget will designate funding to increase staff capacity for expected increase in caseload when the “Raise the Age” goes into effect on December 1, 2019.

Focus on Healthier Families

• The Governor wants to establish the Office of Healthy Opportunities to assist DHHS in improving the health and well-being of North Carolinians, while reducing costs, by impacting both the medical and nonmedical drivers of health through an innovative, well-coordinated system of care. These efforts will address the conditions in which people live that impact up to 80 percent of a person’s health, such as food insecurity, housing instability, transportation needs, and interpersonal violence.
• The proposal provides $1 million in non-recurring funds for SFY19-20 for grants to local Food Banks. 

Improve Education and School-Based Mental Health

• The proposal adds flexible funding of $40 million recurring for both years to hire more nurses, counselors, psychologists, social workers, and school resource officers.  Each school will receive at least one full-time position or the equivalent dollars.  The overall appropriations is expected to fund approximately 500 full-time positions. 
• $210 million in FY 2019-20 and $390 million in FY 2020-21 is proposed to be invested in teacher and administrator compensation to reach the highest average salary in the Southeast by 2023 and to pay principals based on experience and school size. Average pay for existing teachers increases by 9.1% over the biennium. Funds are also provided to restore Master’s Pay and eliminate the requirement to pay for a substitute when using personal days.
• The Governor proposes an “Invest NC Bond” that places a $3.9 billion General Obligation Bond, $2 billion of that is designated for public schools, on the November 2020 ballot to ask voters to address key infrastructure needs across the State.