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STATE BUDGETS: 2018 Session Review

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The Legislature passed and the Governor approved a $7.5 billion budget for the state's fiscal year that starts on July 1, 2018 (aka "fiscal year 2019" or "FY19" for short).  This is an increase of $225.9 million. Here's how the budget breaks down:

  • Added back the $23.3 million "deappropriation" cuts made in March.
  • Paid back the remaining $113.1 million that was borrowed from the Cash Reserve Fund in 2017.
  • Increased funding for specific programs, services, and government functions by $89.5 million (1.2% increase).
As you can see, most of your tax dollars go to Medicaid, human services, schools, and prisons.
Here are a few highlights from this year's budget:
  • Medicaid funding is increased by $55.1 million (but none of that will go to the rates managed care companies are paid by the state, called capitation payments).  MCOs have said state spending on the Medicaid managed care system is too low and not sustainable without increases; this budget does not address this issue.
  • Medicaid get an extra $1.6 million to pay for stronger oversight of managed care organizations (see the list of new requirements for MCOs under the "Medicaid Managed Care" article).
  • There are a few provider rate increases - home health care providers get an extra $1 million and home- and community-based service (HCBS) providers will see $3 million added to their "tiered rates."  A special work group appointed by DHS will figure out how best to adjust tiered rates using these funds, and will report back to the Legislature if any additional work is needed.  In addition, Medicaid targeted case management will go to a fee schedule, instead of being reimbursed based on cost.
  • There are a couple things to watch over the next year.  First, DHS is going to look at how providers are paid by Medicaid and Medicare, chart the differences in payments, and make recommendations on changes by January 1, 2019.  Medicaid officials have said publicly they would like to pay the same rates as Medicare.  Depending on the service, this could mean a lower reimbursement rate or a different way to get paid.  DHS could not make these changes without legislative approval, so anything recommended would need to be discussed in 2019 Legislative Sesion.   Second, DHS is allowed to adjust non-institutional Medicaid provider rates to meet federal mental health parity laws. That sounds good, but you will want to watch how this is done.  Equalizing can be done in two ways: bringing rates up to the same level, or bringing rates down to the same level.
  • Medicaid members that have copayments for prescription drugs will now pay $1 for all drug categories. Currently members pay $1-3 depending on the prescription.
  • Medicaid is given some infrastructure money to update its Medicaid Information Systems - $8.5 million over the next eight years.  This money comes from taxes generated by the state's casinos and lottery.  Legislators hope this will help provider, MCO, and Medicaid systems communicate better.
  • New complex needs services are funded -  $876,000 to pay for the state Medicaid share of these new services and $56,000 for subacute mental health facility inspections. Check out the "Regional Mental Health & Disability Services" article for more detail.
  • Children's mental health got a boost this year with the Governor's decision (Executive Order #2) to establish a Children's Mental Health System Board.  The budget includes $300,000 to fund this board's work, which includes a strategic plan that will make sure Iowa's children have access to the mental health services they need in or near their hometowns.  
  • Funding for the inherited metabolic disorders program ($153,755) was restored.  This funding, which was eliminated in the March deappropriation, provides grants to cover the cost of necessary special foods and supplements for people with phenylketonuria (PKU) and other inherited metabolic disorders.  
  • Funding for regional autism grants ($384,552), the Epilepsy Foundation ($144,097), and Prevent Blindness Iowa ($96,138) were also restored in this budget. They too had funding eliminated during the March round of budget cuts.
  • Des Moines University will receive $250,000 to jumpstart a joint effort with NAMI Iowa to train primary care doctors to identify and treat patients with mental illness.  
  • The Department on Aging is using the $100,000 restored to its budget from the deappropriation to launch a new "Pre-Medicaid Pilot Project" to deliver long-term care options counseling to help people who are not eligible for Medicaid in returning to their communities following a nursing home stay.  
  • The Office of Long Term Care Ombudsman gets a very small ($10,460) cut due to staffing changes.  The Managed Care Ombudsman is housed in this office.
  • ChildServe gets state help ($500,000) to add 12 beds to its facility for young adults needing intensive medical treatment and 24-hour skilled care.
  • Area Education Agencies (AEAs) are cut by an additional $15 million ($22.5 million total reduction compared to what is in Iowa law).  Among other things, AEAs help school districts in identifying and serving children who need special education services.
  • Rural communities get help in connecting to high speed Internet with $1.3 million in broadband grants.
There was no change in the amount of money going to:
  • Public transit ($1.5 million) and recreational trails ($1 million)
  • Public libraries ($2.5 million)
  • Vocational Rehabilitation ($5.7 million)
  • Entrepreneurs with Disabilities ($138,506)
  • Centers for Independent Living grants ($86,457)
  • Aging and Disability Resource Center ($750,000)
  • Brain Injury Services ($1.1 million)
  • Children's Mental Health Homes ($50,000)
  • ABLE Account Program, IAble ($200,000)
You can read more detail about the programs funded this year in our Bill Tracker at www.infonetiowa.org/news/bill-tracker/.  
The numbers used in this article came from the non-partisan Legislative Fiscal Bureau's end of session analysis (https://www.legis.iowa.gov/docs/publications/EOS/965688.pdf). They also provide excellent detail on each budget bill at www.legis.iowa.gov/publications/information/appropriationBillAnalysis.  Just make sure you look at the version marked "final."