State Cost (Savings) Biennium Biennium

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1 Consolidated Fiscal Note SF3611-1A - "MA Work Engagement Requirement Waiver" Chief Author: Mark Johnson Commitee: Health and Human Services Finance and Policy Date Completed: 03/29/2018 Lead Agency: Human Services Dept Other Agencies: SPACE Minn Management and Budget State Fiscal Impact Yes No Expenditures Fee/Departmental Earnings Tax Revenue Information Technology YES YES - Local Fiscal Impact YES This table shows direct impact to state government only. Local government impact, if any, is discussed in the narrative. Reductions shown in the parentheses. State Cost (Savings) Biennium Biennium Dollars in Thousands FY2017 FY2018 FY2019 FY2020 FY2021 Human Services Dept SpaceGeneral Fund - - 4,259 2,963 6,959 State Total Space Space Space Space Space SpaceGeneral Fund - - 4,259 2,963 6,959 Total - - 4,259 2,963 6,959 Biennial Total 4,259 9,922 Full Time Equivalent Positions (FTE) Biennium Biennium - FY2017 FY2018 FY2019 FY2020 FY2021 Human Services Dept SpaceGeneral Fund Total Lead Executive Budget Officer's Comment I have reviewed this fiscal note for reasonableness of content and consistency with MMB's Fiscal Note policies. EBO Signature:Ahna Minge ----Date: 03/29/2018 Phone: ahna.minge@state.mn.us Page 1 of 17

2 State Cost (Savings) Calculation Details This table shows direct impact to state government only. Local government impact, if any, is discussed in the narrative. Reductions are shown in parentheses. *Transfers In/Out and Absorbed Costs are only displayed when reported. State Cost (Savings) = 1-2 Biennium Biennium Dollars in Thousands FY2017 FY2018 FY2019 FY2020 FY2021 Human Services Dept SpaceGeneral Fund - - 4,259 2,963 6,959 Total - - 4,259 2,963 6,959 Biennial Total 4,259 9, Expenditures, Absorbed Costs*, Transfers Out* Human Services Dept Space Space Space Space Space SpaceGeneral Fund - - 4,259 2,963 6,959 Total - - 4,259 2,963 6,959 Biennial Total 4,259 9, Revenues, Transfers In* Space Space Space Space Space Human Services Dept SpaceGeneral Fund Total Biennial Total - - Page 2 of 17

3 Fiscal Note SF3611-1A - "MA Work Engagement Requirement Waiver" Chief Author: Commitee: Mark Johnson Health and Human Services Finance and Policy Date Completed: 03/29/2018 Agency: Human Services Dept SPACE SPACE State Fiscal Impact Yes No Expenditures Fee/Departmental Earnings Tax Revenue Information Technology YES YES - Local Fiscal Impact YES This table shows direct impact to state government only. Local government impact, if any, is discussed in the narrative. Reductions shown in the parentheses. - State Cost (Savings) Biennium Biennium Dollars in Thousands FY2017 FY2018 FY2019 FY2020 FY2021 SpaceGeneral Fund - - 4,259 2,963 6,959 Total - - 4,259 2,963 6,959 Biennial Total 4,259 9,922 Full Time Equivalent Positions (FTE) Biennium Biennium Space FY2017 FY2018 FY2019 FY2020 FY2021 SpaceGeneral Fund Total Executive Budget Officer's Comment I have reviewed this fiscal note for reasonableness of content and consistency with MMB's Fiscal Note policies. EBO Signature:Ahna Minge ----Date: 3/29/ :22:25 AM Phone: ahna.minge@state.mn.us Page 3 of 17

4 State Cost (Savings) Calculation Details This table shows direct impact to state government only. Local government impact, if any, is discussed in the narrative. Reductions are shown in parentheses. *Transfers In/Out and Absorbed Costs are only displayed when reported. State Cost (Savings) = 1-2 Biennium Biennium Dollars in Thousands FY2017 FY2018 FY2019 FY2020 FY2021 SpaceGeneral Fund - - 4,259 2,963 6,959 Total - - 4,259 2,963 6,959 Biennial Total 4,259 9, Expenditures, Absorbed Costs*, Transfers Out* SpaceGeneral Fund - - 4,259 2,963 6,959 Total - - 4,259 2,963 6,959 Biennial Total 4,259 9, Revenues, Transfers In* Space Space Space Space Space SpaceGeneral Fund Total Biennial Total - - Bill Description This bill as amended requires DHS to develop and submit to the Centers for Medicare and Medicaid Services (CMS) a federal Medicaid demonstration waiver permitting Minnesota to require employment or community engagement activities as a condition of Medical Assistance (MA) coverage. The waiver must be consistent with the work requirements of the Supplemental Nutrition Assistance Program (SNAP) and the CMS guidance issued on January 11, 2018 related to administration of Medicaid work requirements. Upon approval of the federal waiver, the legislation requires DHS to apply work and community engagement requirements to enrollees eligible under the following categories: parents and caretaker relatives eligible under Minnesota Statutes section 256B.055 subdivision 3a adults without children eligible under section 256B.055 subdivision 15; and children ages 19 and 20 eligible under section 256B.055 subdivision 16. Enrollees are exempt from the work requirements if they are: pregnant under age 19 or over age 59 working a minimum of 30 hours per week or earning weekly wages equal to 30 hours at the federal minimum wage ($ per week) enrolled at least half time in a recognized school, training program, or institution of higher education are the primary or sole caretaker of a child under 18 or a family member who is incapacitated Page 4 of 17

5 receiving disability benefits are medically frail and determined physically or mentally unfit for employment by a health care professional subject to and complying to work requirements of the Minnesota Family Investment Program (MFIP) or SNAP; or enrolled in substance abuse treatment for a minimum of 10 hours or in a residential treatment facility. Under the bill, enrollees who are not exempt are required to meet the monthly work requirements beginning after three months of program eligibility. Enrollees must engage in at least 80 hours of work per month, community or public service, career planning, job training, or employment supports or a combination thereof and accept any bona fide offer of work to maintain ongoing health care coverage. Enrollees must verify compliance with work requirements to DHS through their county or tribal worker on a monthly basis. The bill requires DHS to assist enrollees in complying with work and community engagement requirements and link persons to additional resources for job training or other employment services, child care assistance, transportation, or other work supports. DHS must assess each person s disabilities, medical diagnoses, and other barriers to employment and identify appropriate work and community engagement activities as well as reasonable modifications and supports necessary for persons to participate in work or community engagement activities. The legislation also requires DHS to suspend the work and community engagement requirements in response to the local employment market and other circumstances that may inhibit compliance, and develop a good cause exemption process for individuals who do not satisfy the requirement. The bill language requires DHS to suspend MA benefits of enrollees who do not satisfy the monthly work and community engagement requirements and reinstate benefits once the enrollee satisfies the work requirements for 30 days. Section 2 requires the commissioner of MMB to transfer $5,000 each business day after October 1, 2018 from the DHS central office operations account to the state general fund if DHS does not submit the waiver to CMS. Assumptions This bill requires DHS to develop and submit a federal waiver permitting Minnesota to require employment or community engagement activities as a condition of Medical Assistance (MA) coverage. The CMS issued a State Medicaid Director letter on January 11, 2018 announcing the option for state demonstration projects that require work or other community engagement activities as a condition of Medicaid coverage. Medicaid demonstration waivers are granted at the discretion of CMS, however given the letter and recent approval of waivers permitting work requirements in Kentucky, Indiana, and Arkansas this fiscal note assumes that the waiver required by this legislation will receive approval. This fiscal note assumes an effective date of January 1, This legislation requires DHS to require work or community engagement as a condition of ongoing coverage for parents, 19 and 20 year olds, and adults without dependent children enrolled in MA. The bill specifies a number of exemptions Page 5 of 17

6 including being pregnant, under 19 or over age 59, earning wages at least equal to minimum wage multiplied by 30 hours, being the primary caregiver for a child under 18, satisfying MFIP or SNAP work requirements, residing in a high unemployment region, being enrolled in school, receiving CD treatment, or meeting a medical exemption. Enrollees who are not exempt must meet the work requirements beginning after three months of program eligibility. The legislation requires DHS to suspend the work and community engagement requirements in response to the local employment market and other circumstances that may inhibit compliance, and develop a good cause exemption process for individuals who do not satisfy the requirement. The estimate assumes that the work requirements would be in place for all new applicants starting January 1, 2020 and applies to each enrollee during their month of renewal in It also assumes that the exemptions under the statute are in place until renewal or upon receipt of additional information impacting eligibility through either the DHS system or through enrollee reports. All MA enrollees are currently required to report changes in circumstance that affect eligibility, and we assume enrollees would continue reporting changes to exemption status. Based on department data, MA enrollment in groups subject to work requirements averages about 398,000 MA enrollees in a given month. About 237,000 or 59.5% of this group would be exempt from work requirements based on information in the DHS eligibility systems. The DHS eligibility system contains enrollee data required to make eligibility determinations and is not able to make determinations for several exemptions in the legislation. The remaining 161,000 would be referred to counties for further review. It is estimated that about 87,000 enrollees would meet an exemption criteria, but would need to provide documentation to county eligibility workers within three months of eligibility. It is estimated that 20 percent of this group will not submit documentation within the three month timeline and must meet monthly work requirements starting in the fourth month. The estimated number of enrollees subject to work requirements is as follows: Enrollees who do not meet exemption criteria 74,000 Enrollees who meet exemptions but do not provide required documentation 17,000 Total 91,000 The estimated distribution of MA enrollees subject to work requirements is as follows: MA Adults without dependent children 75,000 MA Parents and 19 and 20 year olds 16,000 Total 91,000 The proposed work requirements impact the MA program in three primary ways. First, some enrollees subject to work requirements will lose coverage due to non-compliance. Second, there will be an increase in physician visits as a portion of the MA population will seek a medical exemption. Third, as enrollees are identified through medical exemptions, some people in the affected eligibility groups will pursue a disability determination and transition to MA coverage under a disability basis of eligibility. This estimate assumes a loss of MA coverage equal to 20 percent of the total group subject to work requirements once the requirements are fully phased in which would occurs outside the current budget horizon. This assumption is between the 13.7 percent of adults receiving at least one sanction for not meeting employment and training requirements in the MFIP program in 2017 and the 30 percent who lose coverage in MinnesotaCare following annual renewal. The 20 percent figure is the average coverage loss assumed across the entire year and not the unique number affected which includes those experiencing a short term coverage loss. Page 6 of 17

7 In March 2011, Minnesota expanded MA eligibility for adults without dependent children with incomes up to 75 percent of poverty, and in 2014 implemented the full expansion raising the income limit to 138 percent of poverty. This expansion and the subsequent increase of the income limit in 2014 allowed people with disabilities to enroll in MA based on income without requiring a disability determination. The number of individuals who enroll in MA under a disability determination has declined since the implementation of the ACA, and enrollees who meet a disability criteria of eligibility are enrolling in the adult expansion group. Accumulated forecast reductions for disabled enrollees related to this diversion to the adult expansion now amount to about 20,000 enrollees. This bill allows individuals to qualify for medical exemptions if they have serious medical conditions that render them unable to work or comply with the requirements laid out in the bill. However, in order to continue receiving care, county workers may refer them to the Social Security Administration (SSA) or the Minnesota Department of Human Services State Medical Review Team (SMRT) for a disability certification. This would allow them to receive MA under a disability basis. The number of SMRT referrals steadily declined following the MA expansion in March 2011, dropping from about 10,500 in FY2011 to just over 5,000 in FY2016. This fiscal note assumes that the loss of coverage will increase the number of SMRT referrals to near the levels experienced prior to the MA adult expansion. Based on health care claims data from department, it is estimated that there are roughly 6,000 enrollees each month who may meet medical exemption criteria, with roughly 90 percent of this group currently part of the adult expansion population. This estimate assumes that all medical exemptions must be satisfied by provider documentation. This estimate assumes an average of one additional annual provider visit for 5,000 enrollees per month seeking a medical exemption at the payment rate of a typical evaluation and management visit. This average assumes that some people will not need to see a provider at all and others may follow up to renew their exemption status between annual renewals. This estimate assumes that 400 of these enrollees seeking an exemption each month would be referred for a disability determination, increasing SMRT referrals to levels seen prior to the MA expansion. About 80 percent of SMRT assessments are approved, resulting a net migration of about 320 people per month from the adult expansion group to a disability basis phased in over FY 2020 and It is assumed that the group moving from the adult expansion group to coverage under a disability basis of eligibility does not utilize long term care or waivered services. The difference in cost for this change is related only to the difference in basic care costs reflected in managed care capitation rates and does not consider the additional cost of long term care or waivered services. This change has two main fiscal impacts. First, a loss of federal funding as coverage for the adult group receives a 90 percent federal match in 2020 while coverage under the disabled basis of eligibility is matched at the standard 50 percent. Second, the average capitation payment under special needs basic care is roughly 65 percent higher than capitation payments for adults without dependent children. Any change in the acuity of the two groups from this movement will show up in the claims experience, but any impact on capitation rates would occur well into the future. Administrative Costs Administering work requirements as a condition of health care coverage will require additional staff across the Health Care Administration at DHS and the Department of Employment and Economic Development (DEED). The Health Care Eligibility and Access (HCEA) unit within the Health Care Administration at DHS would require a 6 staff to Page 7 of 17

8 analyze, develop, implement and maintain the new set of complex post eligibility work rules and requirements, and to integrate and overlay these new conditions within existing policies, procedures and practices. These staff would also need to assist DHS Federal Relations in the development and maintenance of the waiver; develop and maintain policy related to work requirements (policy documentation, bulletins, manual material); respond to policy questions from counties, work with IT and others on system changes including review/revision of applications (online and paper), renewal notices and develop new notices, assist with the development of communications to workers and call center staff; and assist with appeal summaries. The Health Care Eligibility and Operations (HCEO) division is responsible for communicating, training and providing systems support to health care eligibility workers. They are also responsible for ensuring new and existing system functionality complies with policy. They will require 4 staff to work at the systems helpdesk to support workers and draft system instructions and 2 staff trainers to train, communicate and work with MNIT on systems. The Member and Provider Services (MPS) division receives calls from enrollees on any issue related to their health care coverage through MA or MinnesotaCare. When major initiatives or policy changes are implemented, the division fields a large number of calls from enrollees even if the county ultimately handles the case. Due to the significant change in policy and the complexities involved with this legislation, MPS anticipates a significant increase in call volume regarding benefits, notices, appeals, SMRT processes and inquiries regarding case status. The member call center currently answers an average of 24,000 calls per month from MA recipients. In 2017, a managed care contract termination required 300,000 people to select a new plan and calls to the member help desk increased by 154 percent. We expect a similar increase in calls resulting from the additional enrollee notices regarding work requirements each month, requiring an additional 32 additional call center representatives. In addition, MPS will require two new staff for the provider call center to assist with provider eligibility inquiries and other issues related to the policy change. They will also need one additional staff to coordinate communications related to notices, provider manual updates, and answer mail inquires. Two new FTEs will be required for training to assist with health care inquiries and coordinate training related to appeals, spenddowns, and eligibility maintenance. Lastly, one new FTE is required for testing of systems and ongoing quality assurance and quality control testing related to eligibility and claims payments. According to federal guidance, states receiving an 1115 waiver for work requirements must complete an annual evaluation of health and other outcomes both for those remaining covered under the Medicaid program and those losing coverage. This would require qualitative data analysis through enrollee surveys, stakeholder analyses, and evaluation of health care claims and enrollment data. This estimate includes costs for a vendor contract to administer a survey of MA enrollee experience, develop metrics to evaluate health and other outcomes, conduct data analysis, evaluate outcomes, and prepare findings for CMS review. The estimated cost of this contract based on the amount and type of work required of waiver evaluations is estimated at $750,000 annually. The estimate also assumes the cost of 1 FTE to manage the vendor contract, provide technical support and access to the DHS data warehouse, and compile analysis for federal reporting. The State Medical Review Team (SMRT) at DHS determines if MA applicants are eligible for the program because they meet Social Security disability criteria. The SMRT team currently has 10 case managers, and 2 case specialists, and 1 supervisor responsible for completing the case development and management required to make disability certification determinations. This legislation is expected to increase the SMRT referrals to levels observed before the MA expansion, requiring an additional 4 FTE in FY2020 and 8 FTE in This legislation requires DHS to link enrollees to employment and training services, and enrollees subject to work requirements must verify that they are either employed or actively seeking employment and engaged in job training and support services. The Workforce One (WF1) system maintained by MNIT at the Minnesota Department of Employment and Economic Development (DEED) tracks compliance with employment and training requirements for SNAP and MFIP, and this estimate assumes use of the WF1 system to track compliance with MA work requirements using employment and training vendors. DEED staff indicated the need for 6 additional staff to work with new employment and training providers that do not currently serve SNAP and TANF recipients and to train current providers on any procedures unique to tracking MA work requirements. It is assumed that funding for the additional DEED staff is appropriated to DHS and transferred to DEED via an interagency agreement. Estimated Staffing Needs to Implement Work Requirements Legislation FTE Count Division Function HCEA Waiver and policy development, policy manual, bulletins, notices, communications, Page 8 of 17

9 HCEA assistance with counties and appeals. Oversight and monitoring of county compliance HCEA SMRT Case Managers 4 8 HCA HRQ HCEO HCEO Waiver development and federal reporting Contract management and analytics support for federal reporting 1 1 Systems support, communications with counties, IT support, testing, systems instructions Systems call center to support counties MPS Member help desk MPS Provider call center MPS MPS MPS County bulletins and communications 1 1 Training, member inquires, forms development, updates to evidence of coverage Manual, testing eligibility responses, spenddowns, provider appeals 2 2 Testing of systems and ongoing QA/QC testing related to eligibility and claims payment 1 1 Non DHS FTE DEED Support for employment and training providers 4 6 Total FTE Section 2 requires MMB to effectively reduce the FY2019 DHS central office budget by $5,000 daily if the waiver application is not submitted to CMS by October 1, This fiscal note assumes that the waiver submission occurs within the specified timeline and that there is no impact to the DHS budget from this provision. IT Costs DHS consulted with MN-IT staff to determine the impact of this legislation on DHS IT systems. Administering work requirements would require significant changes across three DHS IT systems and the WF1 case management system owned by DEED. MN-IT staff estimated an 18 month duration for the IT work required to implement this legislation. The project duration assumes that the work is done in isolation without consideration of other priority projects currently planned for release or in discovery for 2018 and beyond on the METS, MMIS or ISDS roadmap. Implementing this legislation would result in delays to projects in the current METS roadmap which may have state budget implications and potentially result in federal compliance issues. The METS roadmap contains numerous projects, and changes to the project timeline have multiple interactions. The full effect of these delays will require additional analysis and are not represented in this fiscal note. IT work required in METS would include a new field on the eligibility file to indicate whether someone is subject to and meeting the work requirements, a new post eligibility screening tool to collect enrollee exemption information, and work within the METS interface to communicate with workforce management systems used by DEED. MN-IT staff and contractors will need to generate new rules and processes within METS to meet new reporting requirements and generate new enrollee notices, transmit and receive data between DHS and DEED systems, and enable eligibility workers to manage cases. This bill will require the development of five new enrollee notices. The postage costs for the system generated notices are reflected in the cost for METS system work. Page 9 of 17

10 The bill language requires DHS to suspend MA benefits of enrollees who do not satisfy the work and community engagement requirements and reinstate benefits once the enrollee satisfies the work requirements for 30 days. Suspending the coverage of people eligible for MA will require changes to the MMIS system to prevent capitation and claims payments. The cost of this change is reflected in the fiscal detail. Enrollees meeting work requirements of the SNAP and MFIP are exempt from the MA work requirements under this legislation. MFIP and SNAP recipient data reside in the MAIS system, and a new interface process will be required to automate this exemption for MA enrollees. The cost of this work is reflected in the fiscal detail. This estimate assumes ongoing use of the WF1 case management system to track participation in employment and training services. This would require a new two way interface between METS and the WF1 system to transmit referrals to employment and training providers and to report compliance data to METS. This estimate includes the cost of work within the WF1 system to interface with METS, hardware upgrades including new web servers and memory upgrades to handle additional volume, and changes to the case management pages to align with MA work requirements. It is assumed that expenditures for systems work needed to track work requirements will earn a federal Medicald match, but the federal guidance is unclear. Expenditure and/or Revenue Formula Minnesota MEDICAL ASSISTANCE Fiscal Analysis of SF Termination of MA Coverage MA Families with Children MA Work Requirements FY 2018 FY 2019 FY 2020 FY 2021 Total enrollment base 720,960 Estimated enrollment subjected to work requirements 16,000 Enrollment forecast 720, , ,613 Proportion subject to work requirement 2.2% 2.2% 2.2% 2.2% Potential enrollment subject to work requirements 15,984 16,013 16,148 Phase-in 0.00% 12.50% 87.50% Projected enrollment subject to work requirements 0 2,002 14,129 Percent projected to lose coverage -20.0% -20.0% -20.0% Enrollment projected to lose coverage 0 (400) (2,826) Average monthly capitation payment $ $ $ Page 10 of 17

11 Capitation months Total cost $0 ($754,762) ($13,298,166) Federal Share % 50.00% 50.00% 50.00% Federal Share $0 ($377,381) ($6,649,083) State Share $0 ($377,381) ($6,649,083) MA Adults without Children Total enrollment base 214,274 Estimated enrollment subjected to work requirements 75,000 Enrollment forecast 213, , ,407 Proportion subject to work requirement 35.0% 35.0% 35.0% 35.0% Potential enrollment subject to work requirements 74,616 74,708 75,747 Phase-in 0.00% 12.50% 87.50% Projected enrollment subject to work requirements 0 9,338 66,278 Percent projected to lose coverage -20.0% -20.0% -20.0% Enrollment projected to lose coverage 0 (1,868) (13,256) Average monthly capitation payment $ $ $ Capitation months Total cost $0 ($7,141,394) ($126,396,757) Federal Share % 93.50% 91.50% 90.00% Federal Share $0 ($6,534,376) ($113,757,081) State Share $0 ($607,019) ($12,639,676) 2. Additional Physician Visits in Exemption Process MA Families with Children FY 2018 FY 2019 FY 2020 FY 2021 Annual number of physician visits for exemption 7,200 7,200 7,200 Page 11 of 17

12 Phase-in 0.00% 12.50% 87.50% Annual number of physician visits for exemption w/phase-in ,300 Average cost per visit $ $ $ Payment delay 0.00% 33.33% % Total cost $0 $37,642 $790,483 Federal Share % 50.00% 50.00% 50.00% Federal Share $0 $18,821 $395,242 State Share $0 $18,821 $395,242 MA Adults without Children Annual number of physician visits for exemption 60,000 60,000 60,000 Phase-in 0.00% 12.50% 87.50% Annual number of physician visits for exemption w/phase-in 0 7,500 52,500 Average cost per visit $ $ $ Payment delay 0.00% 33.33% % Total cost $0 $313,684 $6,587,361 Federal Share % 93.50% 91.50% 90.00% Federal Share $0 $287,021 $5,928,625 State Share $0 $26,663 $658, MA Adults without Children to MA Disabled MA Adults without Children FY 2018 FY 2019 FY 2020 FY 2021 Annual increase in disability referrals 4,800 4,800 4,800 Proportion receiving disability status 80.00% 80.00% 80.00% Annual increase in MA disabled enrollees 3,840 3,840 3,840 Phase-in 0.00% 4.17% 79.17% Page 12 of 17

13 Projected change in avg monthly MA adults without children enrollment 0 (160) (3,040) MA adults without children capitation rate $ $ $ Capitation months Total cost $0 ($611,784) ($28,987,373) Federal Share % 93.50% 91.50% 90.00% Federal Share $0 ($559,782) ($26,088,636) State Share $0 ($52,002) ($2,898,737) MA Disabled Annual increase in disability referrals 4,800 4,800 4,800 Proportion receiving disability status 80.00% 80.00% 80.00% Annual increase in MA disabled enrollees 3,840 3,840 3,840 Phase-in 0.00% 4.17% 79.17% Projected change in avg monthly MA disabled enrollment ,040 MA disabled capitation rate (SNBC) $1, $1, $1, Capitation months Total cost $0 $1,012,960 $48,502,349 Federal Share % 50.00% 50.00% 50.00% Federal Share $0 $506,480 $24,251,174 State Share $0 $506,480 $24,251,174 Fiscal Summary - State Share FY 2018 FY 2019 FY 2020 FY 2021 MA Families with Children $0 ($358,560) ($6,253,841) MA Adults without Children $0 ($632,357) ($14,879,677) MA Disabled $0 $506,480 $24,251,174 Page 13 of 17

14 Total MA $0 ($484,437) $3,117,656 Fiscal Tracking Summary ($000 s) Fund BACT Description FY2018 FY2019 FY2020 FY2021 GF 33 FC MA Grants 0 (359) (6,254) GF 33 AD MA Grants 0 (632) (14,880) GF 33 ED MA Grants ,251 Subtotal MA Grants 0 (484) 3,118 GF 11 1, GF GF GF 11 1, GF 13 HCA Admin (FTE) 532 1,847 2,287 GF 13 GF 11 HCA Admin (Non FTE) HCA Admin ,043 GF REV1 35% (186) (909) (1,063) Total Net Fiscal Impact Full Time Equivalents 4,259 2,963 6, Long-Term Fiscal Considerations The cost of administering work requirements in the Medical Assistance program beginning in 2020 is not fully reflected in this fiscal note as the changes do not fully phase in during the budget horizon. The additional costs related to this proposal will continue beyond 2021 but the full impact is unclear. Local Fiscal Impact This legislation will result in additional costs to counties who are responsible for administering the MA program. Beginning in January of 2020, every month enrollees in the affected eligibility categories will be referred to county workers to either provide evidence to qualify for an exemption or to receive referrals in order to meet work requirements. Using the existing base population of 161,000 who will be referred to the counties for further review. The number of unique, unduplicated enrollees referred to the counties for further review at application and renewal is expected to be around 225,400. Counties must manage the work requirement and exemption status of all enrollees the system cannot exempt based on eligibility rules. In addition, they will be required to re-verify exemptions at each renewal. County workers will be required to provide 30-day extensions for individuals who are cooperating with the county worker in good faith to comply with the exemption requirements. They will also be responsible to adjudicate any appeals related to denial of exemptions or termination of health coverage benefits. The additional responsibilities outlined in this bill along with tracking ongoing compliance will result in additional work for county eligibility workers. Counties currently receive federal Medicaid funds for eligibility determinations but are responsible for the nonfederal share. Costs related directly to tracking compliance with work requirements, handling appeals, managing enrollee exemptions, and general eligibility case management may be eligible for federal Medicaid funds, but the guidance is unclear. However, the legislation also requires counties to refer enrollees who are subject to work requirements to additional resources for job training or employment services, child care assistance, transportation, or other work supports. None of these services are Page 14 of 17

15 eligible for federal Medicaid funds. References/Sources February 2018 Medical Assistance program forecast DHS Agency Contact: Patrick Hultman Agency Fiscal Note Coordinator Signature: Don Allen Phone: Date: 3/29/ :02:53 AM Don.Allen@state.mn.us Page 15 of 17

16 Fiscal Note SF3611-1A - "MA Work Engagement Requirement Waiver" Chief Author: Commitee: Mark Johnson Health and Human Services Finance and Policy Date Completed: 03/29/2018 Agency: Minn Management and Budget SPACE SPACE State Fiscal Impact Yes No Expenditures Fee/Departmental Earnings Tax Revenue Information Technology - Local Fiscal Impact This table shows direct impact to state government only. Local government impact, if any, is discussed in the narrative. Reductions shown in the parentheses. - State Cost (Savings) Biennium Biennium Dollars in Thousands FY2017 FY2018 FY2019 FY2020 FY2021 Total Biennial Total - - Full Time Equivalent Positions (FTE) Biennium Biennium Space FY2017 FY2018 FY2019 FY2020 FY2021 Total Executive Budget Officer's Comment I have reviewed this fiscal note for reasonableness of content and consistency with MMB's Fiscal Note policies. EBO Signature:Cole St. Arnold----Date: 3/29/ :20:42 AM Phone: Cole.St.Arnold@state.mn.us Page 16 of 17

17 State Cost (Savings) Calculation Details This table shows direct impact to state government only. Local government impact, if any, is discussed in the narrative. Reductions are shown in parentheses. *Transfers In/Out and Absorbed Costs are only displayed when reported. State Cost (Savings) = 1-2 Biennium Biennium Dollars in Thousands FY2017 FY2018 FY2019 FY2020 FY2021 Total Biennial Total Expenditures, Absorbed Costs*, Transfers Out* Total Biennial Total Revenues, Transfers In* Space Space Space Space Space Total Biennial Total - - Bill Description This bill relates to human services by requiring the commissioner of human services to seek a federal waiver to establish a work and community engagement requirement for certain medical assistance enrollees. Section 2 of the bill requires the commissioner of management and budget to determine if the commissioner of human services has submitted a medical assistance work and community engagement waiver by October 1, 2018, as required by section 1 of the bill. If the commissioner of management and budget determines that this requirement has not been met, it is required to transfer $5,000 from the central office operations account of the Department of Human Services to the general fund for each business day of noncompliance. Assumptions MMB assumes it would make a single transfer if necessary. The entry of this type of transaction is part of our regular work and would not require additional resources. Expenditure and/or Revenue Formula Long-Term Fiscal Considerations Local Fiscal Impact References/Sources Agency Contact: Agency Fiscal Note Coordinator Signature: Ruth McGlynn Phone: Date: 3/29/ :16:12 AM ruth.mcglynn@state.mn.us Page 17 of 17