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CFI enrollment below projections and nursing‑facility backbilling drive higher nursing payments; lawmakers discuss managed care transition
Summary
DHHS officials told Finance Division 3 that Choices for Independence (CFI) enrollment is below earlier projections and that recent nursing facility ownership changes and billing issues led to large backbills and higher nursing payments; committee members discussed, without deciding, whether to transition long‑term services into managed care.
Department officials told Finance Division 3 on March 10 that the Choices for Independence (CFI) waiver serves about 4,161 people while three‑month averages show about 3,688 individuals in nursing facilities; they also described a spike in nursing facility payments driven in part by backbilling and ownership changes.
Melissa Hardy said the CFI waiver (a 1915(c) Medicaid in‑lieu‑of nursing facility program) serves about 4,161 people, while nursing facility census averages approximately 3,688 people over a three‑month period. When lawmakers asked about projections tied to the CFI waiver, Hardy said the department would explain variances to the federal government and consider changes in the next waiver amendment because an increasing older population is not matched by the number of older adults who are Medicaid‑eligible.
Budget discussion focused on nursing facility payments. Department staff reported a jump in nursing facility expenses: the fiscal year 2024 budgeted amount was roughly $233 million while actual nursing facility expenses were approximately $263 million — a difference the department attributed in part to backbilling tied to change of ownership at facilities and pandemic‑era billing delays. Department staff said the state saw more than $14 million in backbills from prior years and that additional department‑wide transfers of $10 million or more were made to cover those obligations; officials estimated another $10–$30 million in transfers may be needed in the year to address backbilling.
Hardy and CFO Nathan White emphasized that nursing home increases reflected backbilled charges and enacted rate increases from HB 2 rather than a policy preference to favor institutional care. Committee members and department staff also discussed the budgetary effect of annualizing funding when new participants are added in year one of a biennium, which increases base costs in subsequent years.
Members raised the possibility of moving long‑term supports (CFI and related services) into managed care organizations (MCOs) so MCOs would have accountability for utilization, discharge planning and community transitions. Department staff cautioned that such a change is complex and would require technical assistance, stakeholder engagement and attention to person‑centered service design; they suggested study of other states’ experiences before any decision.
Ending: Lawmakers did not decide to change delivery models but requested further information about utilization trends, nursing facility ownership and backbilling drivers, and the potential risks and benefits of a managed‑care transition for long‑term supports.
