Brief ⁽¹⁾

HB 3042 would establish an Intergovernmental Transfer Program administered by the Secretaries of Social and Rehabilitation Services (SRS) and Aging. The bill also would establish a number of funds for the administration of the program, and provide for investment and management of certain of those funds by the Kansas Public Employees Retirement System (KPERS) Board of Trustees.

The bill creates procedures for administering, managing, and dispensing enhanced Medicaid funding generated by the Intergovernmental Transfer Program. Under the program, the State Treasurer would transfer State General Fund moneys and Medicaid matching funds to participating nursing facilities operated by local governments. After a holding period and after deducting a participation fee established in agreements between the facilities and the Department on Aging, the nursing facilities would remit the net proceeds to the state treasury. The Intergovernmental Transfer Fund, created by the bill, would serve as a clearing account to perform the necessary transfers.

Prior to July 1, 2001, 60.0 percent of amounts received by the state from participating facilities would be allocated to the Senior Services Trust Fund (created by the bill); 25.0 percent allocated to the State General Fund with a specific appropriation going to the Special Education Services Aid Fund (created by the bill); 10.0 percent to the Long-Term Care Loan and Grant Fund (created by the bill); and 5.0 percent to the (Home and Community Based Services) HCBS Programs Fund (also created by the bill). After June 30, 2001, 70.0 percent would be allocated to the Senior Services Trust Fund, and 25.0 percent allocated to the Medicaid Services Matching Fund (created by the bill) and 5.0 percent to the Long-Term Care Loan and Grant Fund.

The Long-Term Care Loan and Grant Fund would be used to make loans to a variety of specified types of entities that provide residential services to senior citizens. Those loans would be used to finance infrastructure improvements, such as building congregate housing for seniors living in small communities, converting adult care homes from one type to another, converting private residences to licensed homes, converting space in rural hospitals to adult care facilities, and improving adult care homes. Loans also could be made from the fund to rural hospitals for incentive payments for physician, physician assistant, or licensed professional nurse services. An application for a loan accompanied by a rejection from a Kansas commercial lending institution for a loan at prevailing commercial rates for the same purpose would be given priority over a loan application without a rejection letter. Moreover, applications for loans to facilities having less than 60 beds would be given higher priority than facilities having 60 beds or more.

Grants from the Long-Term Care Loan and Grant Fund are to be awarded by the Secretary of Aging for competitive matching grants and only from the amount of moneys received from interest payments under the loan agreements provided by the Long-Term Care Loan Program. Grants may be made for improvements in the quality of case management services under the HCBS programs, for improvements for adult care homes, and for financial assurance grants for community service providers.

The HCBS Programs Fund is to be used to reduce the waiting list for programs and services provided under the HCBS programs. The Medicaid Services Matching Fund is to be used to provide state matching funds for Medicaid programs and services under the Medicaid State Plan. All expenditures from the HCBS Programs Fund and the Medicaid Services Matching Fund are to be approved by the Secretary of Aging and in accordance with appropriations acts.

The Special Education Services Aid Fund is also established in the state treasury. The first $14.6 million is to be transferred into this fund instead of the State General Fund in FY 2001. The Special Education Services Aid Fund is to be administered by the Department of Education. All moneys in the fund are to be used for aid to school districts in accordance with the special education for exceptional children act.

The Senior Services Trust Fund would be invested and managed by the KPERS Board of Trustees with interest earnings credited to the fund. Expenditures from the Senior Service Fund could be used for projects intended to reduce future Medicaid costs, to help seniors avoid premature institutionalization, to improve the quality of life for customers of long-term care programs, or for a state match for senior service programs authorized by federal law. The bill would prohibit any moneys in the Senior Services Trust Fund from being used to create or fund any entitlement program not in existence on the effective date of the act.

The House Committee of the Whole amended the bill to provide that the Senior Pharmacy Assistance Program be given first priority for the use of the moneys from the fund.

The amendments added by the House Committee on Appropriations created and specified the uses for the grant fund, the HCBS Programs Fund, the Medicaid Services Matching Fund, and the Special Education Services Aid Fund. In addition, the transfer to the State General Fund was eliminated in the second year.

Background

The Department on Aging began exploring the possibility of instituting a Kansas Intergovernmental Transfer Program following a presentation from an official with the Nebraska Department of Health and Human Services. In testimony presented to the Senate Committee at its hearing on the bill, the Department on Aging described the program as based on two conditions. First, federal regulations allow states to make Medicaid payments to nursing facilities owned by political subdivisions at a different rate than that paid to other nursing facilities. Second, the aggregate payments to all nursing facilities in the state for Medicaid residents may not exceed the amount that Medicare would have paid.

The Kansas Hospital Association presented testimony in support of the bill at the Senate Committee hearing. However, the Association requested that funding from the program be provided to pay the outstanding claims of the Horizon Health Care Plan. The Kansas Association of Homes and Services for the Aging requested expansion of the percentage allocated to the Long-Term Care Loan Fund from 15 percent to 40 percent during the first year of the program, with a provision for grants in addition to loans. In addition, the Association requested a continuation of the 15 percent allocation to the loan and grant fund in the out years.

The fiscal note prepared by the Division of the Budget states that:

The Department on Aging's current estimate of new federal funding as a result of the program is approximately $100.0 million per year in federal funds to the state. Under a "best case" scenario, the agency could gain one quarter of revenues, or approximately $25.0 million in FY 2000; however, revenue may not fall in the current year because the federal Health Care Financing Administration has 90 days to approve the plan. The Department's costs associated with implementing the bill cannot accurately be estimated at this time. The bill provides for the Department to be reimbursed for costs associated with the program, therefore, there would be no impact on the State General Fund.

The Department of Social and Rehabilitation Services, as the state Medicaid agency, is required to submit a state Medicaid plan amendment to the federal Health Care Financing Administration under federal rules and regulations in order to implement the bill. The agency states that it could carry out the provisions of the bill within current resources.

The State Treasurer estimates an increase in the Treasurer's banking fees of $16 in FY 2000 and $66 in FY 2001. The agency states that passage of SB 653 would have no effect on the staffing and operational expenditures of the agency. All duties required of the agency resulting from passage of the bill could be conducted with existing staff and resources.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html