DHS Director Tries to Calm Concerns over Budget as Bates Sounds Alarm

Sen. Alan Bates, the Senate chairman of the budget committee for human services, raised concerns that spending increases for people with disabilities were getting out of control, a point echoed by two Republicans on the Senate floor. But a DHS program director explained that structural changes at the agency were all hitting at once.

Sen. Alan Bates, D-Medford, raised alarm bells that Department of Human Services spending is getting out of hand, and steps may need to be taken in the new budget and future budgets to tighten its belt and ensure that safety-net services are sustainable.

“The OHA budget is probably manageable,” Bates said. “The DHS budget is not sustainable in its present form.”

“We’ve got a lot of work ahead of us,” echoed Sen. Jackie Winters, R-Salem, who sits alongside Bates on the budget subcommittee for DHS and OHA.

Earlier, Bates made his statements about a budget bill that was passed on to Gov. Brown that closes out the current budgets for the Oregon Health Authority and Department of Human Services. House Bill 5043 needed to pass before the state could consider the next two-year budget, which calls for a 20 percent increase in spending for the Department of Human Services. That undoubtedly caused as much as alarm as House Bill 5043, which merely takes $900,000 from the health authority and gives it to DHS so the latter agency can balance its books.

The Oregon Health Authority, partly because of savings produced by the coordinated care organizations, still has a $40 million general fund surplus which the state can use elsewhere to fill budget holes.

It was a reversal of fortunes from just six months ago, when OHA was $14.6 million in the red, accused of profligate spending on unnecessary hiring and DHS was in the black. “They hadn’t given us their numbers,” Bates told The Lund Report, explaining the drastic change in the budget forecast for DHS.

Bates conceded the state needs to await the outcome of a lawsuit between the Portland CCO FamilyCare and the Oregon Health Authority over reimbursement rates, but remains convinced the state would reap cost savings from the CCOs that will help the state match federal funding in future years.

His assessment was notable given Republican concerns that the state will have trouble covering the cost of the Medicaid expansion when Oregon has to ratchet up 2 percent of the costs in 2017, and 10 percent in later years.

“The rollup costs for 2017 and beyond will be substantial,” said Sen. Doug Whitsett, R-Klamath Falls.

The May forecast from the Office of Economic Analysis also showed the state receiving the windfall of federal investments from the Affordable Care Act, with 42,000 new jobs in the healthcare and education sector since 2007, at an average salary of $47,000.

Bates told The Lund Report the problems at DHS had to do with improper management of services for people with disabilities, with new beneficiaries getting a surplus of benefits without cost controls that existed for older clients before the agency’s 2013 “K waiver.”

DHS Responds

With his agency coming under fire, Mike McCormick, the program director of the Aging and People with Disabilities Division at the Department of Human Services, convened a stakeholder meeting Wednesday to explain the division’s increased costs.

McCormick spoke directly to Bates’ complaint about the management of the K plan or waiver, explaining that the new plan, approved with much fanfare two years ago as a federal investment in Oregon’s home- and community-based long-term care delivery system, has totally reworked how Oregon rations services.

Before, the state could categorically exclude people or limit services to certain groups. But the federal K rules don’t allow that. Instead, each Medicaid beneficiary who seeks long-term care, particularly in one’s home, is given an assessment, which sets the level of need.

McCormick said that a number of one-time factors all hit the agency at once in time for the 2015-2017 budget, indicating the increased costs did not mean that they were unsustainable.

“Everything’s hitting in this biennium of tremendous change,” he said.

Home care workers, who for years had scratched by at just over $10 an hour, got substantial pay increases up to $13.75 through a collective bargaining agreement hammered out with the Service Employee International Union Local 503.

It used to be that someone had to be over 65 and indigent or prove they had a disability to get long-term care, but McCormick said home care services are now available to anyone on the Oregon Health Plan, including the expansion population -- so long as they demonstrate the need for help.

The state is also letting people hold onto $500 of income they might receive on top of their $773 disability check. Previously, any money beyond the amount of a disability payment was applied to the cost of state services. That policy was changed in 2013, with the understanding that forcing people in poverty to pay every last free dime on receiving care was making it impossible for them to cover rent and other necessities, and even triggering them to live in more expensive care settings.

Over the long run, the investment in home- and community-based care will produce dividends. Caring for a senior in their home costs about $15,700 a year, compared to $36,800 to live in a nursing home.

In 2010, the state aimed to have half of all Medicaid seniors receive services in their homes -- a goal the state already met halfway through the decade, up from 38 percent in 2012.

The state hopes to reduce nursing home utilization from 16 percent to 10 percent of clients by 2020, and DHS is halfway to that goal, at 13 percent.

Another key goal outlined in 2010 was to aim for 3 percent of the state’s seniors to be served by Medicaid long-term care programs. That number has been reduced from 3.4 percent to 3.13 percent. “Those decimals represent a lot of money in our long-term care system,” he said.

Editor's Note: The original article misspelled the name and misidentified the title of Mike McCormick, the program director at the Department of Human Services' Aging and People with Disabilities Division.

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