Nevada faces $56 million Medicaid deficit this year

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Nevada Medicaid officials plan to ask lawmakers for a special appropriation to fill a deficit caused in part by an increase in health and behavioral services used by children and adults, the Current has learned.  

“Yes, we have a shortfall of $56 million for fiscal year 2019,” says Marta Jensen of the Division of Health Care Policy and Financing (DHCPF), the state department that administers Medicaid.  “It could go up or down. We’re hoping it goes down so we don’t have to ask for supplemental funding from the Legislature.”

Governor Brian Sandoval’s chief of staff, Mike Willden, says the state’s utilization review system should have anticipated trends in Medicaid billing from a population with “pent up demand” for health care.  

Willden says the budget hole is caused in part by the state’s failure to adequately monitor and limit referrals to behavioral health services.   

“I don’t think Medicaid has put the kind of controls in that they should have,” said Willden. “It’s like health insurance. If they tell you that you can go four times a year and you go more, you’ll have to pay for it. We have a growing population, and people who previously lacked coverage. There’s been a lot of discussion about what the service limitations should be. Why are their costs growing so rapidly, as well?” 

Willden said the state’s Medicaid office, charged with qualifying clients and approving services, is examining more than half a dozen “service codes that providers are billing for that seem to be getting out of control.”  

For instance, Willden says, Biofeedback billing has increased from less than $2.3 million in 2015 to $24 million in 2018.  Crisis intervention, according to Willden, has increased from $800,000 five years ago to just under $13 million in 2018.

“We do have some program efficiencies we’re looking at in several areas,” says Jensen.  “We have a $4.2 billion a year program with 96 percent going to claimants. We have limited staff to do that utilization review.”  

“It’s like Whack-a-Mole. We put our thumb on one service where we see over-billing and another pops up,” said Jensen.

The state’s July 2018 report on Behavioral Services indicates spending on Medication Training and Support is up 86% from 2017 to 2018. In fiscal year 2013 the state spent $46,000 on the category.  That ballooned to just under $24 million in the fiscal year that ended in June.

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State behavioral health spending has shifted away from Basic Skills Training, as illustrated by selected charts from a Department of Health and Human Services presentation.

The state’s report says “Medication Training is covered for monitoring of compliance, side effects, recipient education and coordination of requests to a physician for changes in medication(s).”

The number of patients receiving intensive Outpatient Psychiatric Services in Nevada increased from 54 in fiscal year 2013 to 6,516 in the fiscal year that ended in June.  Medicaid billing for the services increased from $166,432 to $49.9 million during the same period.

“Like any state agency, they are expected to live in the budget,” says Willden. “When they started coming over last April or May and said they are having a shortfall, we said start looking at the shortfall and make adjustments.”

Jensen says DHCPF, which was in the red for fiscal year 2018, borrowed from its FY 2019 budget to fill that deficit, leaving it in the hole for this fiscal year.  

“They can’t expect to overrun the budget by $56 million and run to the Legislature,” says Willden. “In April or May as they’re finishing up fiscal year ‘18 and they have a shortfall and need to get through and they take it out of ‘19 to make it up.  The only way to fix that problem is to go to get a special appropriation from the Legislature.”

Foster care bearing the brunt?

Providers of foster care for special needs children say the state is pulling the rug out from under children and providers to reduce the deficit. Documents from the state indicate officials are targeting a fiscal year 2018 reduction of $2.4 million and a fiscal year 2019 cut of $4.9 million from the budget for Basic Skills Training (BST), a reimbursement for remedial therapy that some special needs foster care agencies rely on to make ends meet.

State Medicaid officials point to high utilization of behavioral health services such as BST, biofeedback, psychosocial rehabilitation and intensive outpatient therapy as partially responsible for the deficit.  They declined to provide the Current with targeted cuts to other services.  

BST is a remedial service currently available to 450 special needs foster children for up to two hours a day. Providers are reimbursed $72.72 a day for the service.  That amount is scheduled to be cut to $56.52 on January 1, 2019 and foster children will be weaned from the therapy — from two hours a day for the first 90 days to one hour a day for the next 90 days.  Additional therapy must be medically necessary and approved by the state.

Until recently, providers of therapeutic services such as basic skills training have been performing their own assessments on their young clients.  The state has recently demanded independent experts perform the assessments that determine the services a foster child is qualified to receive.

“For us it’s millions of dollars a year,” says Dave Doyle, CEO of Eagle Quest, a foster care agency.  Doyle says Eagle Quest relies on the funds to support special needs foster care.  Doyle says Eagle Quest receives $62 daily from Clark County for room and board for each special needs foster child, which, combined with the BST reimbursement, pays the costs of coordinating care for special needs children in private foster homes.  Foster parents in those homes are paid between $40 and $80 a day by Eagle Quest, depending on the needs of the child.    

A year ago the state delayed implementing the same cuts, because of an outcry from providers. Now, because of the deficit, state officials say they are scaling down services and cutting reimbursements as they intended last year.

“There’s a fine line between being sure we’re responsible to CMS for taxpayer dollars and making sure children and adults get the service they need,” says Jensen of the state’s Medicaid office.  

A foster parent of special needs children who did not want to be identified told the Current that BST is essential to giving children with horrific pasts the best opportunity to live a productive life without being a burden and a risk to society.

Doyle appealed to lawmakers at the June 20th meeting of the Legislature’s Interim Finance Committee to “keep Medicaid and DCFS on track.”  

“These are the kids your hear about bouncing from ten to 20 placements,” Doyle told lawmakers. “Our children were promised by DCFS and DCHFP that before there’s any cuts there’d be a state plan amendment. This June we were told that was on the back burner and come July we may have to close our doors.”

At the same meeting, state child welfare officials testified BST is resulting in better outcomes for children and increased access to psychiatric care.

But child welfare experts from the Legal Aid Center of Southern Nevada (LACSN) contend BST is overused and a burden that keeps foster children from other activities.

“We are very alarmed at the continued misuse of BST when it is not needed,” said Xavier Planta, Deputy Directing Attorney at the Children’s Attorneys Project at LACSN.  “This is harmful to the children. It deprives kids of the right and ability to spend their life doing things that children should be doing. They lose the opportunity to play sports or participate in after-school activities because they have to participate in BST so that agencies can bill more.”

Doyle says he agrees that two hours a day is two much.  “That’s why we wanted to amend the state plan,” he says.

Jensen blames miscommunication between her agency and the State Division of Child and Family Services for the confusion.   

“I don’t think the amendment was ever filed with the Center for Medicare and Medicaid Services (CMS),” says Jensen.  “I was not present when promises were made. We put forth a rate decrease in July of 2017 and didn’t implement it for a year and a half. 

Doyle warned the changes to reimbursements could land foster children in Clark County’s emergency shelter, Child Haven. 

Before Medicaid expansion, the program covered 332,560 Nevadans.  Today, more than 631,000 residents are covered, almost half of them children.   Nevada is second in Medicaid expansion to only Kentucky, which is navigating a $200 million deficit.

Dana Gentry
Reporter | Dana Gentry is a native Las Vegan and award-winning investigative journalist. She is a graduate of Bishop Gorman High School and holds a Bachelor's degree in Communications from the University of Nevada, Las Vegas. Gentry began her career in broadcasting as an intern at Channel 8, KLAS-TV. She later became a reporter at Channel 8, working with Las Vegas TV news legends Bob Stoldal and the late Ned Day. Gentry left her reporting job in 1985 to focus on motherhood. She returned to TV news in 2001 to launch "Face to Face with Jon Ralston" and the weekly business programs In Business Las Vegas and Vegas Inc, which she co-anchored with Jeff Gillan. Dana is the mother of four adult children, three cats, three dogs and a cockatoo.

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