North Carolina Budget Update

Budget concerns continue to rise for North Carolina Home Care agencies. A review of the Senate approved budget for fiscal year 2009-2010 reveals that the Senate proposal – the latest version – is to cut $55 million from the Personal Care Services program during the next fiscal year by beginning reductions on October 1, 2009. This is referred to by the Legislature as a “15% cut” – meaning that 55 million is about 15% of the cost of the whole program for the fiscal year. That’s a big pill to swallow.

But is it really only a cut of 15%? In order to save $55 million in the nine months remaining of the fiscal year after October 1, no money would be saved from July 1 to September 30th. Spending would presumably continue at the current higher rate until October 1, 2009. Then, the $55 million would be cut from the $225 million of funding remaining for the year. This means that for the last nine months of the year, the Personal Care program would have to be cut 24.4%, not 15%. Plainly, this can’t be accomplished via a rate cut, (which would mean reducing reimbursement rates to about $11.10.) More likely, DMA will have to look to a mix or combination of other means – such as prior authorization, tightening scoring rules, and reduce the number of hours per month – to limit costs. For example, if DMA implemented a 25% reduction in hours per month, recipients now getting 60 hours per month of PCS services would be limited to about 45 hours per month. We think this could be among the most significant challenges providers will face in the coming year. What to do? First, providers need to be active in supporting the efforts of the North Carolina Association for Home and Hospice Care, which has a great track record and has been proven very effective in advancing the interests of personal care recipients as well as providers. Second, we suggest you go over your internal operating budget and decide how you would accommodate a reduction in PCS Medicaid hours of 20 - 25%. If you would like some help, let us know.