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The Health and Human Services Budget Subcommittee met last week to talk about how the redesign of the mental health and disability services system was going.  County officials and state employees agreed that they are making positive progress as regions have now formed and are working on their agreements so they will be ready to go on July 1, 2014, when all regions need to begin working together to provide services.  Legislators were told as many as 11 counties continue to have financial difficulties in the transition to regions, but only a few will have longer term issues that may or may not be resolved once regions begin sharing their resources.

While the meeting started on a positive note, cracks in the system quickly started to show as legislators began asking questions about ongoing funding and an overall plan to move forward.  County representatives continued to express concern that there is no plan for continued funding of the system beyond next year, and laws in place now would require county funds to be returned to the taxpayers or the state if they see any savings because more people will now have health insurance.

Sen. Joe Bolkcom (Iowa City) and Rep. Lisa Heddens (Ames) were the most vocal with their concerns, and said the Legislature needs to do something this year to make sure redesign is funded and that the people that use the services know those services will be there in another year. There are a few things legislators say they will need to do in a bill this year:

  • Decide on permanent funding for regions.  The $29.8 million Equalization Fund is only in Iowa law until June 30, 2015.  So it will end after this next year unless legislators do something this session.  Some legislators want to make this permanent, so all counties are "equalized" and allowed to spend $47.28 per person living in their county.  While services are delivered and funded by regions, each county collects the money separately through property taxes and the state equalization fund.  Other legislators want to look for ways to make sure every county has enough money to provide services, and they think that the equalization formula still leaves some counties in financial trouble.

  • Decide how much money is really needed in the system.  Legislators said that regions need time to find out which core services they are able to fund, the number of people with intellectual disabilities and mental illness ("targeted populations") that will need those services, the number of people with developmental disabilities and brain injuries (not "targeted populations") that need services, costs to add core plus services, and gaps in the system that need to be filled.  Once regions are operational and can collect this information, legislators will know more about how much is needed.  For that reason, many legislators want to "freeze" the system where it is for a year or two and address future funding needs after more information is available.

  • Make a decision on the "clawback" that requires counties to repay any savings.  When legislators passed redesign funding last year, they included a requirement that counties track how much money they will save once people they were previously serving got health insurance through the Affordable Care Act or Iowa Health and Wellness Plan. Counties are tol track this savings this year, and will have to repay 80% of those savings next year.  That repayment either goes to the state (if they receive equalization payments) or back to their taxpayers in the form of property tax cuts. Counties say they have no idea how they are supposed to be tracking these savings, that DHS has not yet released a methodology for this, that they are already two months into the six-month tracking period, and that this repayment (called a "clawback") could potentially collapse the system.  Counties and some legislators are asking for this "clawback" to be eliminated; other legislators say they want to delay the "clawback" for two or three years until they have more information on services provided and people served; and some legislators (and the Governor) want the clawback to remain in place as is.

 The Mental Health & Disability Services Interim Committee met this summer, and made 26 recommendations (you can view the report here), including a one-year delay of the clawback. These recommendations include:

  • Passing the $29.8 million equalization funding early in session so counties and regions know the funding will be there at the beginning of the fiscal year on July 1, 2014.  The $29.8 million was included in the Governor's budget.

  • Change funding formula so that the $47.28 equalization formula is calculated on a regional basis, rather than county-by-county.

  • Delay the repayment ("clawback") requirement by one year and slowly phase in the repayment over several years.  So the 80% repayment wouldn't happen at once (no repayment in year one, then 10% in year two, 20% in year three..or some other type of phased in approach).

  • Look for ways to fund supported work and other work opportunities, as well as adding enough money to the prevocational and vocational rehabilitation budgets to draw down all federal dollars available.

  • Expand definition of core services to include core plus services, and make sure persons with brain injury or a developmental disability have access to regional services.

Senator Amanda Ragan (Mason City) is having a bill drafted to implement these recommendations. The bill will probably be an "Appropriations Bill" because it involves spending and tax issues, so it will not be subject to the funnel deadlines we talk about in the article above.  That means the bill can be discussed at any time during the legislative session.

Want to know which legislators supported these recommendations?  Click here to see the members of the interim committee that approved these recommendations.