SB 322: RELATING TO MEDICAID.

A BILL FOR AN ACT

RELATING TO MEDICAID.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that strengthening long‑term care services and support is of broad interest nationally and in the State.  Recently, a Council of State Governments task force on effective and sustainable long-term care included a work group focused on sustainable funding.  The department of human services' med-QUEST division co-led the group, which authored a short briefing paper with national, state, and local recommendations. One of the recommendations included a rate study for home- and community-based services.

     The legislature further finds that the department of human services' med-QUEST division completed a study of home- and community-based rates paid for community care foster family homes, expanded adult residential care homes, and adult day health and adult day care centers and other community-based services.  The department of human services' med-QUEST division contracted Milliman, an actuarial firm, for a wide range of services and to conduct the study.  The study commenced in July 2022, and the department of human services' med-QUEST division issued the final report on December 30, 2022.

     The legislature also finds that a key part of the rate study was stakeholder outreach and engagement with home‑ and community‑based services providers and their associations, including the collection of provider cost and wage survey data and provider feedback on draft rate calculations.  Not surprisingly, the provider surveys showed significant wage pressure due to current labor market conditions.  The rate study methodology used wage and salary data for direct care staff and supervisors, employee-related expenses, transportation and administration, program support, overhead, and United States Bureau of Labor Statistics and industry wage indices to pay for employee benefits such as health insurance.

     The legislature believes that the COVID-19 pandemic dramatically impacted health care and long‑term care delivery systems.  Many of these changes, particularly as they relate to patient preferences, facility staffing practices, and technology utilization, will persist long after the pandemic abates.  Accordingly, now is an opportune time to revisit prior thinking about long-term care reimbursement and investigate ways that it can be reimagined to promote patient care quality, support livable wages for staff, and maximize efficiency.

     The legislature further finds that the department of human services' med-QUEST division should undertake rate studies to better understand how the pandemic has shaped long-term care providers.  These studies should consider how patient preferences have shifted away from institutional settings to home- and community-based settings; how patient needs evolve with the aging population; the growing complexity of patient care; and what can be done to align reimbursement with long-term trends in the State.  It is also necessary to give specific attention to programs that reward high-quality care; incentivize accepting and caring for medicaid beneficiaries, especially those with complex needs; pay wages necessary for the recruitment and retention of staff across the long-term care continuum; and consider updating the aging physical infrastructure of many of the State's facilities.

     The legislature also finds that it is important to focus on home- and community-based services providers who serve groups with high utilization of services and who have gone the longest without a rate update, such as case management agencies, community care foster family homes, adult residential care homes, expanded adult residential care homes, and adult day health and adult day care centers.  The legislature further finds that the Centers for Medicare and Medicaid Services are changing payment methods for nursing facilities.  State medicaid agencies will need to adopt new reimbursement methodologies that align with the new federal payment system.  These new systems create opportunities to revise how providers of long-term care are reimbursed to better meet current and future needs.

     Accordingly, the purpose of this Act is to appropriate funds for the achievement of full funding, including estimated payment increases, of medicaid home- and community-based services.

     SECTION 2.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for the achievement of full funding, including estimated payment increases, of medicaid home- and community‑based services.

     The sums appropriated shall be expended by the department of human services for the purposes of this Act.

     SECTION 3.  This Act shall take effect on December 31, 2050.

Report Title:

DHS; Medicaid; Long-Term Care Services; Home- and Community‑Based Services; Rates; Appropriations

Description:

Appropriates funds to the Department of Human Services to achieve the full funding, including estimated payment increases, of Medicaid home- and community-based services.  Effective 12/31/2050.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO MEDICAID.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that strengthening long‑term care services and support is of broad interest nationally and in the State.  Recently, a Council of State Governments task force on effective and sustainable long-term care included a work group focused on sustainable funding.  The department of human services med-QUEST division co-led the group, which authored a short briefing paper with national, state, and local recommendations. One of the recommendations included a rate study for home- and community-based services.

     The legislature further finds that the department of human services med-QUEST division completed a study of home- and community-based rates paid for community care foster family homes, expanded adult residential care homes, and adult day health and adult day care centers and other community-based services.  The department of human services med-QUEST division contracted Milliman, an actuarial firm, for a wide range of services and to conduct the study.  The study commenced in July 2022, and the department of human services med-QUEST division issued the final report on December 30, 2022.

     The legislature also finds that a key part of the rate study was stakeholder outreach and engagement with home‑ and community‑based services providers and their associations, including the collection of provider cost and wage survey data and provider feedback on draft rate calculations.  Not surprisingly, the provider surveys showed significant wage pressure due to current labor market conditions.  The rate study methodology used wage and salary data for direct care staff and supervisors, employee-related expenses, transportation and administration, program support, overhead, and United States Bureau of Labor Statistics and industry wage indices to pay for employee benefits such as health insurance.

     The legislature believes that the coronavirus disease 2019 (COVID-19) pandemic dramatically impacted health care and long‑term care delivery systems.  Many of these changes, particularly as they relate to patient preferences, facility staffing practices, and technology utilization, will persist long after the pandemic abates.  Accordingly, now is an opportune time to revisit prior thinking about long-term care reimbursement and investigate ways that it can be reimagined to promote patient care quality, support livable wages for staff, and maximize efficiency.

     The legislature further finds that the department of human services med-QUEST division should undertake rate studies to better understand how the pandemic has shaped long-term care providers.  These studies should consider how patient preferences have shifted away from institutional settings to home- and community-based settings; how patient needs evolve with the aging population; the growing complexity of patient care; and what can be done to align reimbursement with long-term trends in the State.  It is also necessary to give specific attention to programs that reward high-quality care; incentivize accepting and caring for medicaid beneficiaries, especially those with complex needs; pay wages necessary for the recruitment and retention of staff across the long-term care continuum; and consider updating the aging physical infrastructure of many of the State's facilities.

     The legislature also finds that it is important to focus on home- and community-based services providers who serve groups with high utilization of services and who have gone the longest without a rate update, such as case management agencies, community care foster family homes, adult residential care homes, expanded adult residential care homes, and adult day health and adult day care centers.  The legislature further finds that the Centers for Medicare and Medicaid Services are changing payment methods for nursing facilities.  State medicaid agencies will need to adopt new reimbursement methodologies that align with the new federal payment system.  These new systems create opportunities to revise how providers of long-term care are reimbursed to better meet current and future needs.

     Accordingly, the purpose of this Act is to appropriate moneys for the achievement of full funding, including estimated payment increases, of medicaid home- and community-based services.

     SECTION 2  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for the achievement of full funding, including estimated payment increases, of medicaid home- and community‑based services; provided that the department of human services shall obtain the maximum federal matching funds available for this expenditure; provided further that the department of human services shall pursue all funding sources known to the State, including private grants, prior to expending any general revenues appropriated pursuant to this Act.

     The sums appropriated shall be expended by the department of human services for the purposes of this Act.

     SECTION 3.  This Act shall take effect on July 1, 2025.

Report Title:

DHS; Medicaid; Long-Term Care Services; Home- and Community‑Based Services; Rates; Appropriation

Description:

Appropriates funds to the Department of Human Services to achieve the full funding, including estimated payment increases, of Medicaid home- and community-based services.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 592

Honolulu, Hawaii

RE:    S.B. No. 322

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Health and Human Services, to which was referred S.B. No. 322 entitled:

"A BILL FOR AN ACT RELATING TO MEDICAID,"

begs leave to report as follows:

     The purpose and intent of this measure is to appropriate funds to the Department of Human Services to achieve the full funding, including estimated payment increases, of Medicaid home- and community-based services.

     Your Committee received testimony in support of this measure from the AARP Hawaiʻi and two individuals.

     Your Committee received comments on this measure from the Department of Human Services.

     Your Committee finds that for many of the State's kupuna, receiving support in their own homes allows them to maintain their independence and actively participate in their communities and is preferred over institutional care.  However, your Committee further finds that inadequate Medicaid reimbursement rates have created significant wage pressure in the home care workforce, making it difficult to recruit and retain caregivers.  This measure provides funding to increase Medicaid reimbursement rates for home- and community-based services to increase the number of home-based care providers and ensure that individuals receive the right level of support in their homes rather than being placed in institutions due to a lack of alternatives.

     Your Committee has amended this measure by:

     (1)  Deleting language that would have required the Department of Human Services to:

          (A)  Obtain the maximum federal matching funds available for this measure's proposed expenditure; and

          (B)  Pursue all funding sources known to the State, including private grants, prior to expending any general revenues appropriated pursuant to this measure;

     (2)  Inserting an effective date of December 31, 2050, to encourage further discussion; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Health and Human Services that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 322, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 322, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Health and Human Services,