NORTH DAKOTA LEGISLATIVE COUNCIL

Minutes of the

BUDGET COMMITTEE ON HUMAN SERVICES

Monday and Tuesday, July 10-11, 2006 North Central Human Service Center, Minot, North Dakota West Central Human Service Center, Bismarck, North Dakota

Senator Dick Dever, Chairman, called the meeting regarding its ability to recruit and retain staff. She to order at 1:00 p.m. at the North Central Human said the North Central Human Service Center is Service Center, Minot. aware of four of its staff members planning to retire Members present: Senators Dick Dever, this biennium and eight during the next biennium. Richard L. Brown, Tom Fischer, Judy Lee, John M. Ms. Rudolph said the North Central Human Warner; Representatives Jeff Delzer, William R. Service Center 2005-07 biennium budget totals Devlin, Vonnie Pietsch, Clara Sue Price, Sally M. $15.3 million and is authorized 116.28 full-time Sandvig, Gerald Uglem, Alon C. Wieland equivalent (FTE) positions. Members absent: Senators Aaron Krauter, Ms. Rudolph reviewed the center's funding and Russell T. Thane; Representatives Lee Kaldor, James program information which is included in Appendix B. Kerzman, Gary Kreidt, Ralph Metcalf, Jon O. Nelson, A copy of the report is on file in the Legislative Council Chet Pollert, Todd Porter, Louise Potter, Ken Svedjan office. Others present: Larry Bellew, State In response to a question from Representative Representative, Minot Delzer, Ms. Rudolph said the center is currently Matthew M. Klein, State Representative, Minot projecting a general fund turnback of $1 million for this See Appendix A for additional persons present. biennium. It was moved by Senator Brown, seconded by In response to a question from Representative Representative Wieland, and carried on a voice Price, Ms. Rudolph said the center is in need of a vote that the minutes of the previous meeting be six-to-eight-bed transitional living facility for individuals approved as distributed. being released from prison as they transition back into the community. BUDGET TOUR Ms. Rudolph provided an overview of the programs Ms. Marilyn Rudolph, Regional Director, North of the Northwest Human Service Center, the number Central Human Service Center, Minot, and Northwest of clients served, current status of its 2005-07 budget, Human Service Center, Williston, provided an and major program changes and needs for the overview of the North Central Human Service Center 2007-09 biennium. programs, the number of clients served, current status Ms. Rudolph said the Northwest Human Service of the center's 2005-07 budget, and major program Center serves the counties of Divide, McKenzie, and changes and needs for the 2007-09 biennium. Williams. Ms. Rudolph said the North Central Human Service Ms. Rudolph provided information on Western Center serves the counties of Bottineau, Burke, Sunrise, a consumer-run nonprofit organization McHenry, Mountrail, Pierce, Renville, and Ward. She providing work opportunities for its clients. said the Northwest and North Central Human Service Ms. Rudolph also provided information on the Centers share a director, business manager, regional center's peer support model which has been child care representative, vulnerable adult services successful in preventing hospitalization of individuals ombudsman staff person, and vision specialist. with mental illness. Ms. Rudolph reviewed the residential programs Ms. Rudolph anticipates the center will have provided by the center for individuals with addiction difficulty recruiting staff during the next biennium. She diagnoses, including New Hope, Brooklyn Flats, said 10 employees of the current 45.5 FTE positions Recovery House, and Hope's House. are eligible and plan to retire during the next Ms. Rudolph said over 50 percent of addiction biennium. referrals to the center are from the Department of Ms. Rudolph provided budget and program Corrections and Rehabilitation. statistics for the Northwest Human Service Center, Ms. Rudolph said the Oppen Home serves young which are included in Appendix B. A copy of the pregnant women and provides emergency shelter report is on file in the Legislative Council office. care services. In response to a question from Representative Ms. Rudolph expressed concern regarding the Delzer, Ms. Rudolph said the Northwest Human increasing costs of utilities, technology, and Service Center does not anticipate any general fund transportation. She said the center is also concerned turnback for this biennium. She said the center is currently projecting a $155,000 deficit due to less Human Services 2 July 10-11, 2006

revenue being generated from Medicaid-eligible 1. The Medicare Part D prescription drug clients. She said because of the increased economic program. activity in the Williston area due to the oil industry, 2. Reductions in pharmacy reimbursements fewer clients are eligible for Medicaid. implemented in January 2006 by Blue Cross The committee conducted a tour of the North Blue Shield of North Dakota. Central Human Service Center and the Oppen Home. 3. The impact of decreases for state Medicaid Ms. Nancy McKenzie, Statewide Human Service programs included in the federal Deficit Center Director, Department of Human Services, Reduction Act of 2005. provided information on clinical specialist services at Mr. Carlson provided information on a cost-of- the human service centers. dispensing study prepared by Dr. Michael Rupp, a Ms. McKenzie said the department is experiencing researcher at Midwestern University in Phoenix, increased turnover and recruitment difficulties for Arizona. He said 43 community pharmacies clinical specialists at the human service centers. She participated in this survey representing a response said the centers are unable to offer competitive rate of 25 percent. He said dispensing costs of these salaries compared to the job market for a number of pharmacies range from $4.77 to $15.04. He said the positions, including addiction counselors, nurses, median cost was $8.59 while the 80th percentile was psychologists, psychiatrists, and social workers. A $11.03. He said to guarantee that dispensing costs copy of the report is on file in the Legislative Council are covered for 80 percent of the community office. pharmacies across the state, the dispensing fee would need to be $11.73. PUBLIC HEALTH UNIT STUDY Mr. Carlson said Louisiana recently approved a Mr. Mike Melius, Executive Officer, Upper Missouri dispensing fee of $10 for brand name drugs and $15 District Health Unit, Williston, provided information to for generic drugs. the committee on its services and funding. Mr. Melius Mr. Carlson said the State Board of Pharmacy provided information on the unit's 2005 budget which anticipates over 50 percent of the licensed practicing totaled $1.5 million. He said because the statutory pharmacy owners in North Dakota will retire during the mill levy limit for health unit operations is five mills, the next 10 years. He said unless pharmacy payment district levies less than five mills to allow for rates are increased, it is likely that many of these fluctuations in the taxable valuation of real estate in pharmacies will close when the current owners retire. the area. He said if an economic downturn occurs in Mr. Carlson suggested the committee consider the area, the district would need flexibility to increase recommending a medication therapy management its mill levy to provide additional funding to maintain services initiative, which is a collaborative effort the program. involving physicians and pharmacists to resolve drug Mr. Melius stressed the importance of discretionary therapy problems for Medicaid patients. He said funding provided by general state aid and local mill these initiatives are lowering health care costs in levy revenues to meet the programmatic needs of the several states. He said while pharmacists in North unit. He discussed the essential services provided by Dakota have assisted the Department of Human the unit and believes the services that are most Services in the past to successfully implement prevention-focused are the most important. cost-savings programs, this initiative would provide Mr. Melius reviewed the food and lodging inspection further efficiencies to the Medicaid program. A copy services provided by the unit. He said the health unit of the report is on file in the Legislative Council office. inspects restaurants within the city of Williston and In response to a question from Senator Brown, school food services throughout the four-county Mr. Carlson said under the medication therapy district. He also provided information on the fees management services initiative, pharmacists would be charged by the unit. A copy of the report is on file in reimbursed for the time they spend reviewing drug the Legislative Council office. therapy issues of Medicaid clients. The committee recessed at 4:15 p.m. and MEDICAID STUDY AND REPORTS reconvened at 8:15 a.m. on Tuesday, July 11, 2006, Mr. Tim Carlson, North Dakota Pharmacists at the West Central Human Service Center, Bismarck. Association, Minot, commented on the availability and accessibility of pharmaceutical services across the BUDGET TOUR state and on the appropriateness of the amounts paid Mr. Tim Sauter, Regional Director, West Central by Medicaid. Human Service Center, Bismarck, and Badlands Mr. Carlson said the Pharmacists Association is Human Service Center, Dickinson, provided an recommending maintaining the current Medicaid overview of the programs and funding of the West reimbursement rate for brand name medications of Central Human Service Center. Mr. Sauter said the $4.60 but increasing the dispensing fee for generic West Central Human Service Center serves the medications from $5.60 to $15. Mr. Carlson reviewed counties of Burleigh, Emmons, Grant, Kidder, the following concerns affecting the future of McLean, Mercer, Morton, Oliver, Sheridan, and Sioux. community pharmacies in North Dakota: He said the center has experienced a 7 percent increase in demand for services during the last year. Human Services 3 July 10-11, 2006

Mr. Sauter said while alcohol continues to be the additional information on the status of their current number one drug problem in the area, the center is biennium's budget. seeing more clients abusing methamphetamine and Ms. Leann K. Bertsch, Director, Department of prescription drugs. He said 60 percent of the Corrections and Rehabilitation, reviewed the process individuals served in the center's adult addiction of providing treatment for inmates during incarceration program are referred by probation and parole while and as a condition of parole or probation and the cost many others are referred directly by the courts. He of providing treatment by the Department of said the center is also experiencing an increase in Corrections and Rehabilitation. Ms. Bertsch said each demand for presentencing evaluations. He said as inmate, when entering the prison, spends their first the center prepares its 2007-09 budget request, it will 30 days in an orientation program to identify problem consider requesting additional funding for residential areas that must be addressed if the inmate is to stay services for adolescents. out of prison in the future. She said once the needs Mr. Sauter said the West Central Human Service are identified, a case plan is developed for each Center has difficulty recruiting and retaining offender outlining the programs the inmate will employees primarily because salary levels are not participate in during the inmate's prison sentence. competitive with the private sector, county social Ms. Bertsch said between 80 to 85 percent of services, and tribal entities. Mr. Sauter said offenders have a serious problem with alcohol and 25 percent of the center's employees work a second drug abuse with the drug of choice being job to generate additional income to meet their needs. methamphetamine. She reviewed the substance Mr. Sauter provided statistical information on the abuse treatment programs provided by the budget and services of the center which are included department, including: in Appendix B. A copy of the report is on file in the 1. Short-term residential program. Legislative Council office. 2. Long-term residential program consisting of Mr. Sauter provided an overview of the Badlands 6 to 12 months of treatment. Human Service Center services and funding. Ms. Bertsch said approximately 37 percent of the Mr. Sauter said the Badlands Human Service Center inmate population has a mental illness diagnosis. serves the counties of Adams, Billings, Bowman, Mental health programs provided by the department Dunn, Golden Valley, Hettinger, Slope, and Stark. include: Mr. Sauter said demand for services at the center 1. Intensive anger management program. has remained fairly consistent over a number of years. 2. Intensive anger education. He said the Badlands Human Service Center is also 3. Batterers group. seeing an increase in the number of clients abusing 4. Individual therapy. methamphetamine and prescription drugs. He said 5. Grief counseling. 48 percent of the individuals served in the center's 6. Psychiatric referral. adult addiction program are referred by parole and 7. Psychiatric monitoring. probation. 8. Special needs mental health group. Mr. Sauter said the Badlands Human Service Ms. Bertsch said approximately 16 percent of the Center has not had any turnover in addiction department's inmates have a history of committing counselors for three years. However, he said, four of sexual offenses. She reviewed the sex offender the center's five addiction counselors are treatment programs, including: contemplating retirement in the next two years. 1. Low-intensity sex offender program lasting Mr. Sauter said 15 percent of the center's staff work a 10 weeks. second job to generate additional income to meet their 2. Intensive sex offender group. needs. 3. Special needs sex offender program. Mr. Sauter said budget concerns of the Badlands Ms. Bertsch said for the 2005-07 biennium, the Human Service Center include increased energy department anticipates spending $4.4 million, prices putting upward pressure on rental rates as well $4 million of which is from the general fund, for as travel costs for state vehicles, Information providing treatment services to inmates. Technology Department (ITD) rate increases, and the For offenders under the supervision of parole and center's ability to provide competitive salaries for its probation, Ms. Bertsch said it is important for employees. communities to have treatment services available to Mr. Sauter reviewed the budget and program meet the treatment needs of these individuals. statistics of the Badlands Human Service Center Historically, Ms. Bertsch said the regional human which are included in Appendix B. service centers have provided much of the Mr. Sauter commented that the human service programming and services in the communities; centers are effectively sharing information and however, as the offender population has increased, collaborating to meet the needs of North Dakota human service center resources have decreased or residents in an efficient manner. A copy of the report not increased enough to meet the demand. is on file in the Legislative Council office. Therefore, access and capacity issues have become Representative Delzer asked that for future budget more pronounced. status reports, the human service centers provide Human Services 4 July 10-11, 2006

Ms. Bertsch said the Department of Corrections service centers in North Dakota to address concerns and Rehabilitation will continue to collaborate with the about workforce shortages at county social service Department of Human Services to develop strategies centers, especially in rural counties in North Dakota. for providing appropriate levels of care to offenders Regarding licensed addiction counselors, under the supervision of parole and probation. Ms. Heitkamp said addiction counselors are required Ms. Bertsch presented the department's to have a bachelor's degree in addiction studies or a 2005-07 programming budget for the Field Services closely related field, including 32 credit hours in Division which totals $11 million, $9.2 million of which addiction studies. After obtaining a bachelor's degree, is from the general fund. A copy of her report is on file she said, candidates need to complete a 1,400-hour in the Legislative Council office. full-time clinical training program and pass both the Ms. McKenzie provided information on the number written and oral examinations. of individuals being referred by the Department of Ms. Heitkamp said additional faculty would be Corrections and Rehabilitation for treatment services necessary to increase the number of licensed at the human service centers, the cost of providing addiction counselors being trained by the University these treatment services, and alternative treatment System. options. As of March 2006, Ms. McKenzie said of the Dr. Jeffrey Weatherly, Department Chair, 1,253 human service center clients receiving Department of Psychology, University of North substance abuse treatment services, 642, or Dakota, presented information on psychology 51 percent, were referred by the Department of programs of the University System. Dr. Weatherly Corrections and Rehabilitation. Regarding identifying said over the past five years, 317 individuals have alternative treatment options, Ms. McKenzie said applied for entrance into the clinical psychology when a referral is made to the human service center, program at UND, 40 have been accepted, and 29 staff identifies the appropriate level of care needed PhDs have been granted. During a student's final two and any other providers that may be available to years of academic instruction, he said, they are provide treatment services to the client. She said the supported by paid practicum placement in Department of Human Services utilizes the drug court psychological facilities across the region. Before process where available as an alternative as well. A graduating, students must also complete a year-long copy of the report is on file in the Legislative Council predoctoral internship. He said currently all of the office. approved internship sites are outside North Dakota. Dr. Michel Hillman, Vice Chancellor for Academic Dr. Weatherly said the number of students and Student Affairs, North Dakota University System, admitted into the clinical program is constrained by a presented information on selected clinical specialty number of factors, including the amount of funding the programs of the University System. Regarding the program receives, the level of financial support psychiatry program, Dr. Hillman said the UND School available for students, the number of faculty, the of Medicine and Health Sciences Department of number of paid practicum placement sites available, Clinical Neuroscience is accredited to accept four and the number of internship sites available. A copy psychiatric residents per year. To accept more of the report is on file in the Legislative Council office. residents in the program and still maintain Mr. Rolf P. Sletten, Executive Secretary and accreditation, he said, the medical school would need Treasurer, State Board of Medical Examiners, to hire more faculty. provided information on the number of psychiatrists Ms. Thomasine Heitkamp, Chair of Social Work, practicing in North Dakota. Currently, Mr. Sletten said University of North Dakota (UND), presented 87 psychiatrists are licensed to practice in North information on the UND social work program and Dakota, the majority of which are practicing in Fargo, licensed addiction counselor program. Ms. Heitkamp Bismarck, and Grand Forks. A copy of the report is said the university admits 113 students to its on file in the Legislative Council office. undergraduate social work program and 73 graduate Mr. Tom Tupa, representing the Board of Addiction students. To maintain accreditation, Ms. Heitkamp Counseling Examiners and the Board of Social Work said the university may not have more than Examiners, provided information on the number of 12 students for each faculty member in the graduate licensed addiction counselors and social workers in social work program and no more than 25 students for the state. Mr. Tupa said there are currently each faculty member at the undergraduate level. 313 addiction counselors and 2,220 social workers Ms. Heitkamp said the Department of Social Work licensed in the state. He said the majority of addiction at UND has been actively involved in a number of counselors practice in Fargo, Bismarck, and Minot, activities to increase the number of social workers in while the majority of social workers practice in Fargo, North Dakota, including offering graduate and Bismarck, and Grand Forks. undergraduate curriculum on a more flexible basis, Mr. Tupa said establishing a student loan providing child welfare stipends to assist forgiveness program for licensees practicing in the undergraduate and graduate social work students, more rural parts of the state may be a method to involvement in planning efforts with the Western attract more addiction counselors and social workers Interstate Commission on Higher Education, and to the rural parts of the state. In addition, Mr. Tupa working collaboratively with directors of county social said the Board of Addiction Counseling Examiners is Human Services 5 July 10-11, 2006

considering making some of its requirements more has just begun its work, the State Department of flexible which may result in more addiction counselors Health plans to discuss with the task force members practicing in the state. He said the board may be the following public health concerns: introducing a bill to the 2007 Legislative Assembly 1. Tribal structure - Tribal health systems within making these changes. A copy of the testimony is on reservations function as separate entities file in the Legislative Council office. even though they are geographically located In response to a question from Senator Lee, within a local public health jurisdiction. Mr. Tupa said licensing requirements for addiction 2. Regional structure - In some instances, counselors are set in statute and North Dakota does regional services are provided from a single have more stringent requirements relating to the oral public health unit, resulting in that public examination than surrounding states. health unit paying costs above the regional In response to questions from Senators Fischer grant amount provided. and Brown, Ms. Carol K. Olson, Executive Director, 3. Accounting and administration - Federal Department of Human Services, said the department grants often require specific accounting for will provide information on programs affected due to federal funds spent which need to be the difficulty the department is having hiring licensed accurately recorded by the public health units. addiction counselors and the number of clients 4. Equity and service levels - Every North required to travel to receive addiction services and on Dakota resident should reasonably receive an waiting lists at human service centers. equal amount of public health service The committee conducted a tour of the West regardless of where they live in the state. Central Human Service Center. 5. Standard regulations - Public health The committee recessed for lunch at 12:00 noon regulations are not standardized across the and reconvened at 12:30 p.m. state. Ms. Nagel said the task force is in the process of PUBLIC HEALTH UNIT STUDY reviewing the allocation of local public health The Legislative Council staff presented a resources and expenditures of public health units. A memorandum entitled Public Health Units - Services copy of the report is on file in the Legislative Council and Funding. The memorandum summarizes survey office. responses from the 28 public health units in North Mr. L. David Glatt, Environmental Health Section Dakota relating to their funding, programs, Chief, State Department of Health, commented demographics, and essential services. regarding the involvement of public health units in the The Legislative Council staff said the 2005 budgets cleanup of methamphetamine laboratories. for the public health units totaled $26.5 million, In the past, Mr. Glatt said the State Department of $9.9 million of which was from federal funds, Health provided guidelines to local law enforcement $2 million of state funding, and the remainder from regarding the proper handling and disposal of wastes city, county, and other sources. relating to illegal methamphetamine laboratories. As Ms. Kelly Nagel, Local Public Health Liaison, State local law enforcement has become more aware of the Department of Health, presented information on local actions necessary to dispose of confiscated materials, public health planning activities and suggested the role of the department has diminished. legislative changes affecting duties and Mr. Glatt said in discussions with local public responsibilities relating to public health. health units across the state, the department learned Ms. Nagel said the overall goal of the local public that local public health units have had very little health planning process is to determine the public involvement with the cleanup of methamphetamine health services every citizen in North Dakota should laboratories during the past year. A copy of the report receive regardless of where they live. She said is on file in the Legislative Council office. representatives of local public health units have met Ms. Kathy Albin, Accounting Division Director, twice and have developed the following seven State Department of Health, provided information strategies for building local public health capabilities: regarding federal fund reductions affecting public 1. Service delivery; health services. 2. Structure; Ms. Albin said the department is concerned 3. Funding; regarding the following changes relating to public 4. Workforce; health-related federal grants: 5. Information and education/advocacy; 1. A $62,914 reduction in the grant for chronic 6. Laws and regulations; and disease and tobacco prevention results in a 7. Communication. decrease in health disparities planning efforts. Ms. Nagel said a Public Health Task Force has 2. The United States Environmental Protection been established to develop a process to analyze Agency (EPA) performance partnership grant data and other information about public health utilized by the Environmental Health Section services and to discuss issues and strategies for to operate many of its environmental building local public health capabilities identified in the protection activities is projected to decrease planning process. She said although the task force by approximately 2 percent with larger Human Services 6 July 10-11, 2006

percentage reductions proposed for specific In response to a question from Representative programs. Price, Mr. Bullinger said a high-risk establishment is 3. Reductions in emergency preparedness and one that manually prepares, chills, and reheats food. response funding affect the ongoing costs of Mr. Chad Kramer, Indian Affairs Commission, the bioterrorism infrastructure and the ability distributed testimony from Ms. Cheryl Kulas, of the state to respond to disasters and Executive Director, Indian Affairs Commission. emergencies. Ms. Kulas's testimony provided information on the 4. The cost of vaccines for immunizations is coordination of public health services on Indian increasing faster than the federal funds reservations. Ms. Kulas's testimony included the provided for these costs. following issues relating to the provision of health Ms. Albin said the preventative health block grant services on Indian reservations: has been eliminated from the President's budget in 1. Structure - The structure of the state public each of the past several years. In previous years, she health system is not organized to work with said, Congress has reinstated the grant but at lower the North Dakota American Indian public levels. She said it again has been eliminated from the health system. President's budget and Congress has not yet acted to 2. Health disparities - The federal Indian Health restore funding. She said this grant is one of the few Services, which also provides health services flexible federal funding sources the department may on Indian reservations, does not meet the use for a number of different programs, including the health service needs on Indian reservations. Healthy North Dakota Initiative, emergency medical 3. Health disparities and underfunding - Tribal services, and suicide and rape prevention. A copy of governments do not have adequate funding to the report is on file in the Legislative Council office. provide quality health care for the residents of Mr. Kenan Bullinger, Division of Food and Lodging the reservations. Director, State Department of Health, presented 4. Lack of culturally trained staff - Staff of public suggested legislative changes relating to the food and health units are unable to coordinate lodging inspection services system. effectively with the tribal public health system. Mr. Bullinger said the State Department of Health A copy of the report is on file in the Legislative is the primary agency responsible for the enforcement Council office. of food and protection laws. He said the department accomplishes its responsibilities with the assistance of MEDICAID STUDY AND REPORTS seven local public health units through memorandums Ms. Maggie Anderson, Medical Services Director, of understanding. He said these memorandums allow Department of Human Services, provided information the public health units to provide some of the on the development of management initiatives, the inspections and licensing functions within their areas biennial medical assistance report, activities relating of jurisdiction. He said the public health units to the prescription drug monitoring program, status of establish and retain their own license fees to pay for the Medicaid management information system (MMIS) the cost of operating their investigational services. project, the percentage of Medicaid payments to billed Recent changes in the memorandums include the charges by provider type, and the department's review addition of West Fargo food service facilities to the of its budget, programs, and services. Fargo/Cass Public Health Unit and the addition of Regarding the development of a disease food service facilities in the city of Williston to the management program, Ms. Anderson said the Upper Missouri District Health Unit. department has selected Specialty Disease Mr. Bullinger said the department is considering Management Services, Inc., Florida, to provide health legislation to allow the department to immediately fine management services to Medicaid recipients with or close an establishment that does not pay its annual selected chronic conditions. She said the department renewal fee by February 1. He said each year many is in the process of submitting its state plan establishments do not pay their license renewal fees amendment and waiver application to the Centers for by the deadline. He said this results in the State Medicare and Medicaid Services for authority to Department of Health staff spending a considerable operate the health management program. Once the amount of time and resources trying to collect the amendment and waiver are approved, the department fees. will enter into a contract with Specialty Disease Mr. Bullinger suggested a statutory change to allow Management Services, Inc., and begin the program. the department to assess a reinspection fee if a facility Ms. Anderson said once operational, this program has a number of critical violations. Mr. Bullinger should avert more costly health care services, such as suggested a statutory change to require all high-risk emergency room visits or unnecessary physician visits establishments be inspected annually rather than or hospitalizations. biennially. He said annual inspections would require Regarding the development of risk-sharing additional resources for the department either from agreements or managed care programs, additional general fund support or increased fees. A Ms. Anderson said the department is considering two copy of the report is on file in the Legislative Council agencies to provide a Program for All-Inclusive Care office. of the Elderly (PACE). She said the program will be Human Services 7 July 10-11, 2006 for individuals age 55 and older and provide a payment will increase by $3.8 million during the comprehensive package of acute and long-term care 2007-09 biennium. For the 2005-07 biennium, she services through an interdisciplinary team of said, the clawback payment was made for only professionals. She said the intent of the program is to 18 months. provide necessary services to prevent these Ms. Anderson said the department has received individuals from moving to a more costly level of care, information from Blue Cross Blue Shield of North such as skilled nursing care. However, if an individual Dakota indicating that the monthly premium payment requires care in a skilled nursing facility, the PACE for the children's health insurance program (CHIP) will agency is responsible for those costs within their increase by 20.3 percent or $36.94 per month per capitated payments. contract. She said the current monthly premium is Regarding the development of a long-term care $181.71. insurance/partnership program, Ms. Anderson said Ms. Anderson provided other information relating the department is collaborating with the Insurance to the Medicaid program, including eligibility Department to develop a long-term care insurance categories and expenditures, mandatory and optional partnership program. She said the program will allow services, current service limits and copayments, and a person who purchases long-term care insurance to input received from Medicaid providers. A copy of the protect assets equal to the amount the insurance has report is on file in the Legislative Council office. paid if they need to apply for Medicaid. The Insurance In response to a question from Senator Lee, Department's role is to ensure the insurance policies Ms. Anderson said the current dispensing fee for meet the criteria required by the federal Deficit pharmacies under the Medicaid program is $4.60 per Reduction Act of 2005. She said the program may not prescription brand name drug and $5.60 for filling a begin until acceptable insurance policies are available generic drug. She said if the generic dispensing fee in North Dakota and a state plan amendment has increased to $15 for the 2007-09 biennium, an been approved by the federal Centers for Medicare additional appropriation of $6.8 million would be and Medicaid Services. necessary, $2.5 million of which would be from the Regarding the biennial medical assistance report, general fund. Ms. Anderson said the department anticipates Ms. Debra A. McDermott, Department of Human receiving the actuarial analysis soon, which will Services, provided information on the estimated cost include a comparison to other payers and surrounding increase to the department, by funding source, of ITD states. She anticipates the report will be available for rate increases for the 2007-09 biennium. the committee's September meeting. Ms. McDermott said based on the rate increases Regarding the prescription drug monitoring provided by ITD for the 2007-09 biennium, the program, Ms. Anderson reviewed the activities of the department will need additional funding of $1.4 million, prescription drug monitoring workgroup and said the $615,000 of which is from the general fund. workgroup has decided the State Board of Pharmacy Representative Devlin asked for additional detail should be the entity responsible for operating the on the cost increases. Mr. Mike Ressler, Information program when established. Technology Department, said the major areas of rate Regarding the status of the MMIS project, increases include software development which is Ms. Anderson said the department has submitted and increasing from $58 to $63 per hour, wide area received approval from the Centers for Medicare and network services, and telephone services. Medicaid Services of the proposed MMIS contract and Ms. Shelly Peterson, President, North Dakota Long entered into an agreement with Affiliated Computer Term Care Association, Bismarck, commented Services, Inc., in June 2006. The department has regarding the availability and accessibility of long-term also selected a vendor to complete an independent care services across the state and on the analysis of the acceptance of the current Affiliated appropriateness of the amounts paid by Medicaid. Computer Services, Inc., bid, rebidding of the project, Ms. Peterson said North Dakota operates under a rate joint development with other states, use of a fiscal equalization system meaning the amounts paid by agent, and outsourcing the billing and payment Medicaid for long-term care services determine the components. She said this information will be amounts paid by all payers, except Medicare. She presented to the 2007 Legislative Assembly. said the 2.65 percent annual inflationary increases Regarding the percentage of Medicaid payments approved by the 2005 Legislative Assembly are not to billed charges, Ms. Anderson said the percentage adequate. She said concerns of the long-term care ranges from 32.4 percent for ambulance services to industry include the ability to recruit and retain staff 92.7 percent for hearing aid dealers. and facilities' actual costs exceeding payment rates. Regarding the department's review of its budget, Another concern in rural facilities is a declining programs, and services as required by Section 11 of census. Ms. Peterson said the 2007 Legislative House Bill No. 1012, Ms. Anderson said changes to Assembly will be asked to consider larger inflationary the federal medical assistance percentage (FMAP) increases for long-term care services. A copy of the will require an additional $21.7 million of general fund report is on file in the Legislative Council office. appropriations for the 2007-09 biennium. In addition, Ms. Barbara Murry, President, North Dakota she said, the North Dakota Medicare Part D clawback Association of Community Facilities, Bismarck, Human Services 8 July 10-11, 2006

commented on the availability and accessibility of Medicaid. Mr. Levi distributed a resolution prepared services for individuals with developmental disabilities by the North Dakota Medical Association encouraging and on the appropriateness of amounts paid by the Governor and legislative leaders to address the Medicaid. Ms. Murry said providers of developmental unfairness of state Medicaid rates that do not cover disabilities services are concerned with their ability to the practice costs for physicians and hospitals. recruit and retain staff. She said providers are Mr. Levi said the primary concern is that Medicaid experiencing staff turnover of 46 percent. She said payment methodologies have systematically resulted the association will be asking the Legislative in payments being substantially less than the actual Assembly to provide inflationary increases of at least cost of services. He said it is estimated that Medicaid 4 percent for each year of the next biennium. payments for physicians' services cover only To improve recruitment and retention of staff, 74 percent of the actual cost of providing the services. Ms. Murry said providers will be asking the Legislative He suggested the 2007 Legislative Assembly address Assembly to provide funding to increase wages by at the payment rates for physicians and hospitals to least $1.50 per hour for all community provider staff more adequately cover the costs of the services. A and for a 3 percent increase in the allowable fringe copy of the report is on file in the Legislative Council benefit rate for providers. office. Ms. Murry said providers are requesting an Mr. John Hougen, Public Assistance Director, increase in funding for the individualized supported Department of Human Services, provided information living arrangement to provide for additional on federal changes affecting the temporary assistance placements during the next biennium. for needy families (TANF) program. Mr. Hougen said Ms. Murry said other areas where additional Congress approved the Deficit Reduction Act of 2005 funding will be requested include complex behavioral, which reauthorized the TANF program through medical care, and guardianship services. A copy of September 30, 2010, with limited changes. He said the report is on file in the Legislative Council office. significant changes affecting the North Dakota TANF Mr. Arnold Thomas, President, North Dakota program include: Healthcare Association, Bismarck, commented on the 1. Recalibrating the caseload reduction credit - availability and accessibility of hospital services Starting in October 2006 states must achieve across the state and on the appropriateness of the a 50 percent work participation rate for TANF amounts paid by Medicaid. Mr. Thomas said although households with credits only with reducing the state's demographics are shifting to an aging caseloads below the federal fiscal year 2005 population, and more of the state's population is level. He said failure to achieve a work shifting from the western to the eastern part of the participation rate of 50 percent results in an state, the public still expects physician and hospital annual penalty of 5 to 12 percent of the services will be available close to home and that the annual TANF block grant which for North services be available 24 hours a day 7 days a week. Dakota would range from $1.3 million to Mr. Thomas said a hospital's largest expense is $5.5 million per year. personnel. He said North Dakota hospitals compete 2. Adding a penalty for failure of a state to for personnel locally, regionally, and nationally. He establish or comply with work participation said often hospitals need to provide higher salaries to verification procedures. attract health professionals to work in North Dakota. 3. Eliminating the high-performance bonus Based on a 2004 study, Mr. Thomas said North provisions - North Dakota has previously Dakota Medicaid pays 70 percent of the actual costs collected a number of high-performance incurred by a hospital in providing services. In the bonuses. past, he said, hospitals have been able to shift this 4. Authorizing the Secretary of Health and payment shortfall to commercial payers and the self- Human Services to issue healthy marriage insured; however, commercial insurers are no longer promotion and responsible fatherhood grants; willing to pay increased rates to offset the low however, these grants do not provide regular payments paid by the Medicaid program. Mr. Thomas funding for any existing state activity. stressed the importance of providing adequate 5. Counting in the state work participation rate inflationary adjustments for hospital services to cover any parent living with a child who is getting a the actual cost of the services. TANF grant, even if the parent is denied Mr. Thomas presented a number of TANF assistance. recommendations prepared in 2004 by a task force of 6. Granting the Secretary of Health and Human the North Dakota Healthcare Association and the Services additional regulatory and oversight North Dakota Medical Association on Medicaid authority to determine what the state may reimbursements. A copy of the report is on file in the count as a work activity and to require states Legislative Council office. to establish work participation verification Mr. Bruce Levi, Executive Director, North Dakota procedures. Medical Association, commented on the availability Mr. Hougen reviewed activities of the department and accessibility of medical services across the state to comply with the federal TANF program changes. and on the appropriateness of the amounts paid by He anticipates that with the plans now in place, North Human Services 9 July 10-11, 2006

Dakota will avoid penalties for failure to achieve the comment and anticipates the waiver application being 50 percent work participation rate effective October submitted later this year with an effective date 2006. A copy of the report is on file in the Legislative beginning July 2007. Council office. Ms. Anderson reviewed the allocation of the additional funding of $569,800 approved by the CHILDREN WITH SPECIAL 2005 Legislative Assembly for "medically fragile" HEALTH CARE NEEDS STUDY children. A copy of the report is on file in the The Legislative Council staff presented a Legislative Council office. memorandum entitled Programs for Children With In response to a question from Senator Fischer, Special Health Care Needs - Surrounding States and Ms. Anderson said the department will provide Survey Results. The Legislative Council staff said the information on the costs of providing services to memorandum summarizes state programs for children children with phenylketonuria and Russell-Silver with special health care needs in North Dakota, Syndrome. Minnesota, Montana, and South Dakota and presents Senator Dever asked for information on waivers selected results from a 2004 United States surrounding states have submitted for programs for Department of Health and Human Services report of a children with special health care needs. 50-state national survey of parents of children with Ms. Anderson said the department will gather that special health care needs. information and provide it to the committee. Ms. Anderson provided information on the status of Chairman Dever announced the committee's final the department's Medicaid waiver application to meeting is tentatively scheduled for September 12-13, provide in-home services to children with 2006, in Bismarck. The meeting adjourned subject to extraordinary medical needs and on the status of the call of the chair at 4:45 p.m. services being provided to medically fragile children. Ms. Anderson said the Medical Needs Task Force convened by the department in 2005 continues to ______meet and has completed a study estimating the Allen H. Knudson number of medically fragile children in North Dakota Assistant Legislative Budget Analyst and Auditor and profiling their medical care costs. She said the task force is now in the process of validating and prioritizing the most critical service needs for these ______children and their families. The department has Jim W. Smith completed a preliminary fiscal analysis estimating the Legislative Budget Analyst and Auditor cost per child for the waiver program. Ms. Anderson anticipates the department will have ATTACH:2 a draft waiver application available this fall for public