budget hearings jan 13.jpg

Legislators, state agency employees, lobbyists and others packed a meeting room at the Alabama State House for budget hearings on Wednesday.

(Mike Cason/mcason@al.com)

The Alabama Medicaid Agency, the largest consumer of dollars from the state's General Fund, requested a $157 million increase today at budget hearings at the Alabama State House.

That would be a 23 percent increase from this year's General Fund appropriation of $685 million for Medicaid.

Medical inflation, the cost of transition to a managed care system and refunding of past overpayments from the federal government are factors in the requested increase.

Also, Medicaid relied this year on a $37 million carryover from the previous year and on a $20 million one-time payment from an oil spill settlement.

Legislators questioned Acting Medicaid Commissioner Stephanie Azar for more than two hours this morning.

The legislative session begins Feb. 2, and lawmakers will need to pass state budgets for the year that begins Oct. 1.

Azar said Medicaid has few options for cutting expenses because of requirements from the federal government, which pays about 70 percent of Medicaid costs in Alabama.

"When you have the federal government bringing in 70 cents on every dollar, there's a lot of requirements you have to make that is beyond Medicaid's control and the state of Alabama's control," Azar said.

She said if Alabama eliminated its optional programs it would save about $7 million in state dollars. The optional programs include hospice, outpatient dialysis and eyeglasses for adults.

"We are a bare bones program," Azar said.

Some legislators asked Azar what steps are taken to reduce fraud and waste. She said the agency has a program integrity unit and reports fraud to the attorney general.

Sen. Larry Stutts, R-Sheffield, an obstetrician, said waste is a major concern.

"I could sit here all day and tell you first-hand stories, because I've been a Medicaid provider for the last 23 years, and I can tell you when you look at what we're asking the taxpayers to subsidize, it's absurd how much waste there is in the program," Stutts said.

For example, Stutts said it's common for pregnant women on Medicaid to come to the hospital by ambulance when they start having contractions.

Sen. Arthur Orr, R-Decatur, asked if there was a way to get Medicaid recipients to make better decisions to reduce obesity, smoking, drinking and other conditions and habits that cause health problems.

"They want the taxpayers to pick up the tab for that, and they live their happy lives however they want to," Orr said.

"Is there anything we can do to raise the bar on personal responsibility for people in the Medicaid system?"

Rep. John Knight, D-Montgomery, countered that line of questioning with a defense of Medicaid recipients and the program.

"I come across Medicaid patients every day," Knight said. "These are people that would like to do better. They would like to be gainfully employed. They are not trying to take advantage of the system.

"I could talk about the major corporations in this state that we incentivize. We never talk about the waste with those corporations. We never talk about the cost of the CEOs. We don't talk about the lobbyists, or the people that are down here that get tax exemptions that come down here to keep from paying any Alabama income taxes."

Azar said the Legislature took an important step toward controlling long-range costs when it approved the transition to managed care through regional care organizations in 2013.

Since then, the state has been working to get the RCOs ready.

Azar said the state has been in negotiations for 18 months with the Centers for Medicare and Medicaid Services for a waiver required for the RCOs to operate. She said she was hopeful the waiver would be approved soon.

RCOs are intended to help control the growth in the cost of Medicaid over time while improving health care outcomes, advocates of the change say.

Azar said the transition cannot go forward if the Legislature does not provide the requested General Fund increase.

Slightly more than 1 million people in Alabama receive Medicaid benefits, including 51 percent of the state's children.

Medicaid accounts for more than one-third of spending from the $1.8 billion General Fund.

The Department of Human Resources also appeared at today's budget hearings.

DHR Commissioner Nancy Buckner said the agency would need a $20 million increase in its General Fund appropriation, to $79 million, to maintain the current level of services next year.

The General Fund appropriation is a small portion of DHR's budget, which is $2 billion this year, with most of that federal funds.

DHR administers many programs, including the Supplemental Nutrition Assistance Program (food stamps), Temporary Assistance to Needy Families, subsidized child care programs, licensing and inspections of child care centers, and child welfare.

Buckner said part of the requested increase would be to hire 30 social workers for the child welfare program. She said DHR has a 29 percent turnover rate for social workers, who receive an average salary of $37,000 for a job that can be highly stressful, involving the investigation of child abuse and neglect complaints.

The Department of Mental Health indicated it would need to increase its General Fund appropriation by $7 million, to $113 million, to maintain the current level of services next year.

Mental Health Commissioner Jim Perdue said inflation raises the cost of doctor's care and medicines and some of the agency's contracts have escalation clauses.

He said personnel costs are rising.

To save money, Perdue said he would like to move the agency's main office from Montgomery to Tuscaloosa because the lone remaining state mental health hospital, Bryce Hospital, is in Tuscaloosa.

"When we've got the majority of the employees for mental illness there, then why shouldn't we have the management?" Perdue said.

Perdue said the moving the main office would eventually save money because of rental costs the agency is paying in Montgomery.

The commissioner talked to legislators today about two key problems. He said there is a shortage of mental health beds in many parts of the state.

"I think that's a very acute problem across the state," Perdue said.

He said there are plenty of beds in some places, including Birmingham, but a critical shortage in others, including south Alabama.

Perdue also talked about the need to provide services for 3,200 people with intellectual disabilities who are on a waiting list for assistance because of a lack of funding.

Courtney Tarver, associate commissioner for intellectual and developmental disabilities, said the department would need an additional $7 million initially, plus increases of $3 million to $4 million annually over the next five years to provide care for those on the waiting list.

Neal Morrison, commissioner of the Department of Senior Services, said he did not plan to request an increase in state funding for next year.

But Morrison said one way the state could save money over time would be to increase state funding for a Medicaid program administered by Senior Services that helps people move from nursing homes into homes.

Morrison said 29 people have moved from nursing homes in the last six months under the program.

Updated at 4:57 p.m. to add information about DHR's budget needs. Updated at 6 p.m. to add information about Mental Health and Senior Services. Updated at 7:23 p.m. to add more quotes.

