Lawmakers resumed legislative activity this week following a one-week break to observe the Easter and Passover holidays. It is a pivotal week as lawmakers unveil budget bills and will need to pass bills out to their respective committees by Friday. Next week, we expect lawmakers will begin to pass these budget bills off the House and Senate floors, which will set up three-way budget negotiations between the House, Senate and Governor as they attempt to complete their work to pass a balanced budget by May 17.

Yesterday, we got the first look at Health and Human Services (HHS) budget bills in the House and the Senate, and there are significant differences. Overall, the Senate HHS budget target aims to reduce spending by $100 million. The House budget target increases spending by $343 million over the base. Although the House closely reflects recommendations in the Governor's budget, a handful of provisions are included in both the House and Senate bills. Those include:

• A proposal to adjust to nursing home assessment practices requires an updated assessment for residents at the end of therapy or isolation. The proposal results in $3.9 million in budget savings for the biennium, including funding for nursing facility cost report auditors, additional costs of the consumer satisfaction survey and a case mix transition study. We are neutral on this group of proposals.
• There are acuity-based limits on customized living payments for clients on disability waivers. This proposal results in budget savings of $2.3 million for the biennium and was one of the proposals considered by the Blue Ribbon Commission in 2020.
• There is also a proposed expansion of an encounter alert system to improve coordination of care during transitions.

We expect that lawmakers may come forward with additional proposals to spend money from the federal American Rescue Plan. Lawmakers have been waiting for guidance about how they can spend the money. Therefore, while neither the House nor Senate Omnibus HHS budget bills have included our priorities for the federal dollars, including hero pay and adult day recovery grants, there may be other bills coming forward that could include these proposals. 

Senate-Only Provisions
Two bills in the Senate make up the HHS budget proposal and will be merged later in the Senate Finance Committee. We are pleased that the Senate has included several of our key priorities, including the following:

• Nursing Home Moratorium Exception Process: The Senate included the LTC Imperative's proposal to fund the nursing home moratorium exception process with an ongoing appropriation of $5 million annually. The proposal will address a backlog of upgrading physical plant needs and improve infection control in care centers. Senator Julie Rosen (R-Fairmont) initially introduced this proposal, and we are pleased the Senate has included it in their Human Services budget bill.
• $155 million for retention payments to Home and Community Based Service providers who serve Medicaid clients: This proposal is like an initiative passed in 2020 to help day service providers address the pandemic's impacts. The proposal uses almost $100 million in federal funds from the enhanced federal match in the American Rescue Plan. We support this provision because it will provide critical resources to adult day providers still needing financial assistance to reopen.
• Funding to conduct the actuarial analysis and put in place administrative structures necessary to implement the Program for All-Inclusive Care for the Elderly (PACE): We support this initiative that represents progress in establishing this new model of care in Minnesota
• An additional $1 million in funding for a grant program that supports quality improvement programs in customized living sites that serve a high percentage of elderly waiver clients
• Creating a floor payment of $122 per day for customized living providers who serve more than 80% elderly waiver clients

The Senate bill includes two proposals that may be of concern to LeadingAge Minnesota:

• Enrollment caps for the disability waiver programs: This proposal saves over $60 million in the biennium and more after that as enrollment counts remain frozen.
• Delaying payments to Medical Assistance managed care plans into the following fiscal year: This proposal saves more than $100 million and is designed not to impact payments to providers, but it is unclear how providers will be held harmless.

House Bill Provisions
Like the Senate, the House has two bills that make up the House's proposed HHS budget.

We are disappointed that the House HHS budget bills contain none of the LTC Imperative's key priorities. Furthermore, the bills include non-consensus language that would modify assisted living licensure provisions. We will continue to work with the House to build support for our priorities in the conference committee and to remove problematic language.

The House bills align closely with the Governor's budget proposal, including some of his proposals, such as Blue Ribbon Commission proposals to better coordinate durable medical equipment purchases and non-emergency transportation services and implement further the combination of the disability waivers under “Waiver Reimagine.”

Other provisions with an impact on senior care providers include:

• Paid family leave program: This was also included in the Governor's budget proposal, and the policy is carried in the House Workforce and Jobs bill. However, the HHS budget is impacted because it will have an impact on nursing home spending. The HHS bill includes state funding for startup costs and a 0.6% payroll tax on employers.
• Paid emergency leave for essential workers: The policy language for this bill is also carried in the House Workforce and Jobs bill and is designed to address emergency leave required by the pandemic. The proposal is retroactive to last March and applies to cases where the leave was not already paid by another source. It requires employers to refund Paid Time Off if the employee used PTO for COVID-19 leave. Costs for nursing homes are carried in the HHS bill.
• Authorizes DHS to work with more than one fingerprint collection vendor and extends the fingerprinting waiver to 180 days after the peacetime emergency: We have prioritized addressing the backlog of background checks that has been growing during the public health emergency.

We will continue to monitor these budget bills this week and provide an update in Capitol Conversations later this week.