LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

SENATE, No. 3491

STATE OF NEW JERSEY

218th LEGISLATURE

 

DATED: JUNE 26, 2019

 

 

SUMMARY

 

Synopsis:

Raises, over time, hourly Medicaid reimbursement rate for personal care services to $25.

Type of Impact:

Annual increases in State expenditures and revenue.

Agencies Affected:

Department of Human Services.

 

 

Office of Legislative Services Estimate

(In $ Million)

Fiscal Impact

FY 2020

FY 2021

FY 2022

FY 2023

FY 2024 

FY 2025 

 

State Expenditure Increase

$131.1

$177.9

$229.2

$285.1

$346.1

$387.3

 

State Revenue Increase

(Federal Funds)

$65.5

$89.0

$114.6

$142.6

$173.0

$193.6

 

 

 

 

·         The Office of Legislative Services (OLS) projects that the bill will increase State expenditures by $131.1 million in FY 2020 and federal Medicaid matching fund revenue by $65.5 million.  The projected State share of the additional expenditures will therefore total $65.5 million.  In subsequent fiscal years the annual impacts will grow in accordance with the bill’s phase-in schedule. 

 

·         The OLS estimates further that the State expenditure increase will total $387.3 million in FY 2025, the first fiscal year in which the $25 hourly Medicaid reimbursement rate for personal care services will be fully phased in.  After deducting $193.6 million in anticipated federal Medicaid matching funds, the projected State share of the increased expenditures will equal $193.6 million.    

 

·         The OLS does not make a projection for FY 2026 and beyond but notes that starting on January 1, 2025 the hourly reimbursement rate will be subject to an annual adjustment that will grow the annual fiscal impacts of the legislation further.  

BILL DESCRIPTION

 

     This bill raises, over time, the hourly Medicaid reimbursement rate for personal care services until the rate reaches $25 on January 1, 2024.  Thereafter, the rate will be adjusted annually for inflation in direct proportion to the increase in the consumer price index for all urban wage earners and clerical workers (CPI-W).     

     The phase-in schedule is as follows:  $20 per hour on July 1, 2019; $21 per hour on January 1, 2020; $22 per hour on January 1, 2021; $23 per hour on January 1, 2022; $24 per hour on January 1, 2023; and $25 per hour on January 1, 2024.  The hourly rate in any given year may be higher if the rate of increase in the CPI-W exceeds the rate of increase of the phase-in schedule.  In that case, the hourly rate will be inflated by the rate of change in the CPI-W.  In addition, the bill provides for an alternative schedule of increases in the hourly reimbursement rate if the federal minimum wage level exceeds the State minimum wage. 

     Currently, in FY 2019, the hourly reimbursement rate for personal care services is $19 for the fee-for-service (FFS) delivery system and a rate not to be less than $16 for the managed care organization (MCO) delivery system.

     Personal care services are provided in the home rather than a long-term care facility and include assistance with activities of daily living and household duties essential to the patient’s health and comfort.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS projects that the bill will increase State expenditures by $131.1 million in FY 2020 and federal Medicaid matching fund revenue by $65.5 million.  The projected State share of the additional expenditures will therefore total $65.5 million.  In subsequent fiscal years the annual impacts will grow in accordance with the bill’s phase-in schedule. 

      The OLS estimates further that the State expenditure increase will total $387.3 million in FY 2025, the first fiscal year in which the $25 hourly Medicaid reimbursement rate for personal care services will be fully phased in.  After deducting $193.6 million in anticipated federal Medicaid matching funds, the projected State share of the increased expenditures will equal $193.6 million.     

      The OLS does not make a projection for FY 2026 and beyond but notes that starting on January 1, 2025 the hourly reimbursement rate will be subject to an annual adjustment that will inflate the annual fiscal impacts of the legislation further. 

      The OLS estimate assumes baseline Medicaid reimbursement rates of $19 per hour for personal care services provided through the FFS delivery system and $17 per hour for services provided through the MCO delivery system. 

      This fiscal estimate also utilizes data provided by the Department of Human Services in response to a FY 2020 OLS Discussion Point.  The department estimated a $35.6 million increase in State costs in FY 2020 for every additional dollar by which the reimbursement rate paid to personal care service providers across the MCO delivery system increases, of which $17.8 million would be offset by additional federal Medicaid matching funds.  Currently, 95 percent of Medicaid recipients are served through the MCO system, indicating that the department would incur approximately $940,000 in FY 2020 for every additional dollar by which the reimbursement rate paid to personal care service providers across the FFS delivery system increases. 

      Lastly, the OLS assumes a five percent year-over-year increase in service utilization to account for growth in the population receiving personal care services.

 

 

Section:

Human Services

Analyst:

Sarah Schmidt

Senior Research Analyst

Approved:

Frank W. Haines III

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).