A memo circulated to members of the General Assembly gives a glimpse of the conflict between different branches of state government over the coming year’s Medicaid budget.
By Rose Hoban
State budget director Art Pope has waded into the budget fight between the two chambers of the General Assembly.
For the past week, members of the House and the Senate have traded barbs over their diverging interpretations of the coming fiscal year’s state spending. And the roadblocks to a final budget agreement boil down to two issues: Medicaid and raises for teachers.
Now Pope has responded to allegations made by Senate leader Phil Berger’s press officer, Amy Auth, that his organization, the Office of State Budget and Management, has been withholding “real numbers on Medicaid and the lottery.”
“You have been misinformed if you believe that OSBM and DHHS have a separate set of ‘real numbers’ that have not been provided to the General Assembly’s Fiscal Research Division,” Pope wrote in a memo to Senate budget conference committee co-chair Harry Brown (R-Jacksonville) dated June 24.
North Carolina Health News has obtained a copy of the memo that also went to all of the House and Senate budget conferees.
Pope’s memo is another salvo in an escalating battle of words between different parts of the state government over a revised budget being released by House members on Wednesday that includes a 5 percent raise for teachers. The House budget has the backing of Gov. Pat McCrory.
It comes after the Senate Appropriations Committee met on June 19 to discuss the disparity in House and Senate Medicaid budget numbers. At that meeting, senators complained publicly that Pope had been asked to present his office’s Medicaid numbers but that he had not shown up.
“This Medicaid portion of the budget is the linchpin to getting this problem solved,” said Sen. Bob Rucho (R-Matthews). “Would someone explain to me why we don’t have OMB or staff people from DHHS here to help us get to an answer so that we can move this budget forward?”
“If push comes to shove, we can issue subpoenas and have the numbers come to us,” Sen. Tom Apodaca (R-Hendersonville) said at that meeting. “Let’s don’t take that off the table.”
While Pope’s memo has not been widely distributed, a press release from Berger’s office late Wednesday called the budget put forth by the House and the executive branch “unbalanced, unsustainable.”
“We can’t accept unrealistic Medicaid estimates that would create an unbalanced, unsustainable budget. Art Pope and Nelson Dollar’s latest budget gimmick fails to account for the state’s deteriorating Medicaid situation and could violate North Carolina’s constitutional requirement for a balanced budget,” wrote Apodaca in the press release.
Pope’s memo attributed the disparity in the two budgets to different methodologies for calculating Medicaid’s year-end expenses, needs and any potential overruns.
“It appears the Senate methodology is to make a Senate estimate for Fiscal Year 2014-15, which in turn is based on a Senate estimate made last year for Fiscal Year 2013-14, which is in part based on even earlier estimates made in previous years,” Pope wrote.
Indeed, Senate budget writers have deployed analysts from the legislative Fiscal Research Division to calculate “worst case scenarios” that show an estimated Medicaid backlog of $143.8 million, according to a budget document provided along with Berger’s press release. That release also called for an additional $206 million for next year’s Medicaid budget, for a total adjustment of $352 million.
Fiscal research analyst Susan Jordan said that part of the challenge this year has been that the troubled NCTracks claims-payment system has not produced accurate data on enrollment and utilization.
“We have had accurate data before, and I’m hoping that once these systems get resolved and completed that we’ll get that accurate information again,” Jordan told lawmakers.
She said she thought it would be some time late next year before fiscal research analysts know what the accurate total expenditures are for Medicaid.
“They’ll have cash on the bottom line but they’ll have outstanding liabilities…. It’ll take a little while to reconcile all of those,” Jordan told lawmakers.
On the other hand, Pope wrote that the methodology used by OSBM and the Department of Health and Human Services “is to review, question and revise those old estimates based on the most recent year to date actual [emphasis his] information on expenditures, receipts and, more recently, enrollment.”
Pope said his office’s numbers were tracking closely what was proposed in the governor’s May budget, which estimated that Medicaid would have $70 million in cash surplus that could be carried forward into the coming fiscal year, which begins in five days. That $70 million would be sufficient to pay North Carolina’s share of about $205 million in claims made to Medicaid that still need to be paid.
(For every Medicaid dollar billed, North Carolina pays out about 34 percent, with the federal government paying the other 66 percent.)
Pope also wrote to lawmakers that another $60 million in cash was available to be set aside and carried over into next fiscal year.
“Now that the state has issued its last ‘check write’ for FY 2013-14 and based on the year to day actual receipts, we believe the cash surplus for Medicaid for FY 2013-14 to be carried forward to FY 2014-15 remains safely within this range,” Pope wrote, noting that for the first time in four years Medicaid has a cash surplus at the end of the fiscal year.
“OSBM still respectfully disagrees with the Senate’s “worst case” scenario for Medicaid based on old estimates,” Pope wrote.
Pope is scheduled to appear before another Senate Appropriations Committee meeting on Thursday morning at 8:30.
Pope Memo – June 24 (PDF)