Gov. Perdue’s 2010-11 Budget Recommendations: Health and Human Services

At first blush, the Governor’s Health and Human Services (HHS) budget recommendations give the appearance of a net $386 million in reductions to the 2010-11 spending plan approved in last year’s biennial budget bill.

But $578 million of the itemized “reductions” are not really cuts, but reductions in state expenditures to be backfilled by federal funds. In reality, 2010-11 spending on HHS programs would see an increase of nearly $200 million compared to the previously approved budget, a rise of 4.4 percent.

Specifically, there are two significant items listed as cuts in the Governor’s recommendations that would not actually be cut but instead financed by federal funds. First, is the $499 in additional federal Medicaid support anticipated for 2010-11. This funding allows the Governor to then list a $499 cut to the state budget.

Similarly, there is another $79 million reduction in Medicare Part D spending courtesy of anticipated federal stimulus funds.

Major expansions and reductions include:

Expansions

• $430 million extra appropriated for “Medicaid Rebase adjustments.” Additional funds are needed for 5.6 percent growth in Medicaid eligible individuals this year, a growth rate unanticipated last year
• $23 million expansion to restore community service funding that was cut in 2009. Community services are a part of Mental Health/Developmental Disabilities/Substance Abuse Services division of DHHS
• $11.1 million to expand enrollment in AIDS Drug Assistance Program. Allows those eligible, individuals on the waiting list as of July 1 who are within the 125 percent of the Federal Poverty Level, to enroll in the program  
• $8.5 million to expand NC Health Choice enrollment. This expansion would cover an additional 8,096 children. NC Health Choice is a government-subsidized health insurance program for children from families who earn too much to be Medicaid-eligible, but below 200 percent of the federal poverty level
• $114,550 to create a sole source contract with the Department of Correction’s Nash Optical. A sole source contract would cut off competition and make the Nash Optical the sole provider of optical supplies 

Reductions

• $499 million anticipated in non-recurring cuts to Medicaid. This is not an actual reduction in spending on the program, however. It actually represents an increase in federal Medicaid funding, allowing the state to reduce its appropriation
• $79 million reduction in Medicare Part D spending based on anticipated ARRA funds. Also not an actual cut, but merely the replacement of state funding with federal funds
• $60 million from eliminating in-home Personal Care Services (PCS) and replacing with a new program for adults with “the most intense needs”
• $45 million in savings generated by Community Care of North Carolina (CCNC) from improved care management. CCNC is a primary manager of the state’s Medicaid program
• $36 million in savings anticipated through initiatives targeting fraud waste and abuse in Medicaid
• $11.6 million reduction in coverage for emergency adult dental care
• $9.5 million in anticipated savings through more stringent regulation of off- label use in antipsychotic drugs. “Off label use” is a term for prescribing drugs for a use other than what has been approved by the FDA 
• $7.7 million reduction in Smart Start Funding, a reduction of 4 percent
• $2.5 million permanent reduction to funding for counties for foster care and other child protective services
• $1.3 million in cuts to Independent Living Program total budget. Independent Living Program provides services to individuals with significant disabilities to increase independence and employment
• $1 million reduction in community health grants. Community health centers will no longer be assured funding in the final grant year