Executive Office of Health and Human Services Fiscal Year 2013 Budget Hearings

1. Executive Office of Health and Human Services Fiscal Year 2013 Budget Hearings Secretary JudyAnn Bigby December, 2011

2. AGENDA • Overview of FY12 Budget • General • EOHHS • Public Testimony Policy Development - Confidential

3. Since FY09, the Patrick-Murray Administration, in partnership with the Legislature, has solved for deficits totaling over $14 billion. We have used a balanced approach of cuts, revenues and rainy day and stimulus funds to close several budget gaps. The state has implemented new policies to reduce long-term reliance on one-time resources and volatile tax revenues (capital gains). The state’s fiscal approach has been repeatedly recognized by the international credit ratings agencies. This fall, Massachusetts received an upgrade in its ratings, helping the state to reduce its long-term borrowing costs. Sound Fiscal ManagementRecognized results and policies Policy Development - Confidential

4. Tax Revenues Recovering… • …and have just this year reached pre-recession levels in nominal terms: • FY2008 = $21.009B (pre-recession) • FY2009 = $18.513B ($2.5B decrease) • FY2010 = $18.544B • FY2011 = $20.506B ($2B increase) • FY2012 = $21.010B (revised benchmark, as of October) Policy Development - Confidential

5. Budget OverviewWhat do we spend state dollars on? Approximately 55 percent of all state expenditures are for the purchase and operation of health care and human services programs for the Commonwealth’s residents and state employees. 73 percent of the state’s budget supports health care, human services and education alone. The costs of debt service and pensions total an additional 11 percent of total state spending. This leaves 15 percent of the budget for other purposes, including transportation, public safety, housing, labor programs, environmental protection, local aid and economic development. Policy Development - Confidential

6. EOHHS Spending Overview*seenote • EOHHS represents almost half of the operating budget • at approximately $15.24B for FY12* • MassHealth accounts for $10.44B, or approximately 68% of EOHHS’ budget, insuring 1.3 million people and purchasing services from approximately 20,000 vendors. • The remaining 32% of EOHHS’ budget is roughly split between: • Purchase of Service (POS) – services to clients that are purchased from approximately 2,000 outside vendors; and • Non POS Spending / Agency Operations – services provided directly by state governmental entities. • Off-setting the $15.24B in spending is an estimated $7.23B in revenue – meaning that EOHHS generates 47% of the total, leaving 53% or $8.01B at net state cost. * If trusts, federal grants, capital and other account types are added, EOHHS spending = $16.3B Policy Development - Confidential

7. EOHHS Spending Overview Policy Development - Confidential

8. Key Areas of the EOHHS Budget • Core Populations • Children / Youth • Transition Age Youth • Adults (general) • Adults with Disabilities • Adults with Behavioral Health Needs • Veterans • Elders • General Public • Service Areas • 24 Hour / Residential / Inpatient Programs • Emergency / Immediate Care • Transitional Care • Long Term Care • State Operated Acute Hospital Care • Community Programs • Economic Support • Food & Nutrition Support • Group / Day Programs • Direct Client / Family Support • Education and Employment Services • Clinical Medical or Psychiatric Care • Community Prevention, Public Health, Quality Assurance Policy Development - Confidential

9. FY2012 Budget Factors Across all EOHHS agencies, administrative spending as a percent of total spending has declined from 4.6% in FY01 to 3.0% in FY12, as EOHHS program spending has increased 74.2% FY01-12. Policy Development - Confidential

10. Governing Through Fiscal Challenges:EOHHS Initiatives • Despite facing significant challenges, we have been focused on ways in which we can better serve our consumers. Recent activities include: • Improving Outcomes and Services for Children, Youth, and Families in Need • A Children Youth and Families Advisory Committee, consisting of parents, advocates, youth, providers and legislators was formed to advise the Executive Office of Health and Human Services (EOHHS) on a plan for strengthening the children, youth and families’ service delivery system.  On behalf of the CYF Advisory Committee, EOHHS hosted a series of listening sessions to gather community input.  The Advisory Committee will submit a set of recommendations for improving the service delivery system to the Governor by the end of the calendar year. • DCF created a statewide foster care alumni association in Massachusetts to provide a networking and support system for former foster youth. • DCF and DMH collaborated to develop and implement a joint procurement program that will combine both residential placement and community supports, ensuring that services are based on the needs of youth and their families. This new continuum of services would foster community tenure, offer consistency of treatment, and increase opportunities for family engagement. Policy Development - Confidential

11. Governing Through Fiscal Challenges:EOHHS Initiatives • Promoting Improved Quality, Care Delivery, and Efficiency across the Health Care System • MassHealth has launched the Electronic Health Records (EHR) Incentive Payment program, which allows Medicaid to pay eligible professionals (EPs) and eligible hospitals that adopt and meaningfully use certified electronic health record technology. • MassHealth, with support from a $1M planning contract from CMS’s Center for Medicare and Medicaid Innovation, is developing a proposal for a State Demonstration to Integrate Care for Dual Eligible Individuals. This will improve access to medical care and community supports for the dual eligible population. • In the first two years (SFY09 and SFY10) of MassHealth’s new home- and community-based behavioral health services for children and youth (Children’s Behavioral Health Initiative, CBHI), over 22,700 children and youth have received either Intensive Care Coordination (11,900) or In-Home Therapy (15,900), ensuring that they receive services that are integrated and individualized to meet their individual needs. • MassHealth has obtained approval from CMS to implement the Money Follows the Person Program. This program will aid in the transition of members from long-term care institutions to the community, while securing additional Federal Financial Participation (FFP) which will be reinvested into community settings. • MassHealth has not limited eligibility and, as such, has prevented a rise in the uninsured populations during this period of record unemployment. Policy Development - Confidential

12. Governing Through Fiscal Challenges:EOHHS Initiatives • Promoting Self-sufficiency and Fostering Use of Community-based Resources • DDS has continued its work on Facility Consolidation and Closure. In the next 6 months, another 100 individuals are scheduled to transition into the community. The projected June 30, 2012 census of individuals remaining in the four institutions slated for closure is 82, with that number expected to decrease to zero (0) by June 30, 2013. • DDS has facilitated 464 community placements from nursing facilities to date under Rolland and the remaining 176 will be completed over the next 12 months. • There are now 128 participants in the two new Acquired Brain Injury Waivers who are either in the community or in active care planning for transitioning to the community before the end of this fiscal year. • DDS has promulgated an amendment to the behavior modification regulations; there is now a restriction on the use of aversives consistent with the prevailing standard of care in the field of intellectual and developmental disabilities. • More than 3,200 individuals with significant disabilities have been placed by MRC into competitive integrated employment. Policy Development - Confidential

13. Challenges: FY2013 State BudgetWhat factors impact the budget? There are 3 main drivers that impact the state budget next year: 1. Total Revenue Collections Tax revenue estimate based on collections to-date in FY12 FY13 consensus revenue estimate, based on economic picture ahead for Massachusetts 2. Unavoidable Spending Pressures From year-to-year the state faces increased cost pressure, for liabilities such as pensions and debt service This will require further efforts to control costs and reduce government spending 3. Loss of One-Time/Short-Term Resources The state’s reliance on one-time resources in FY12 fell dramatically from $1.9 billion in FY12 to under $600 million. One-time resources are limited in FY13 and the state budget will need to be developed responsibly to ensure there is not too much reliance on non-recurring revenues to remain in balance. Policy Development - Confidential

14. Challenges: Federal BudgetSpending reductions are expected • During the August compromise to raise the federal debt ceiling, the US Congress adopted rules intended to mandate deficit reduction measures: • A “super committee” was established and was charged to develop bi-partisan spending and revenue actions to reduce the deficit by $1.5 trillion over 10 years. • If the super committee was unsuccessful a “sequestration” mechanism was established which was to result in $1.2 trillion in automatic reductions in a number of areas of the federal budget. • Without agreement to-date it is unclear if the automatic reductions will be triggered (legislation deadline is January 15, 2012). • With federal budget reductions it is expected that safety net and other critical programs will be impacted. Policy Development - Confidential

15. Challenges: Developing Strategies for Budget Reduction • Prior reductions have eliminated nearly all areas of savings that do not impact direct client services • The FY13 budget challenges will not be met with small and across-the-board savings strategies • Program and administrative services integration as well as agency site co-location are ongoing but yield limited savings • Further facilities closures are planned but savings are a key component for community service development • Maintenance of Effort (MOE) and other requirements limit options for service eligibility / other changes in certain programs Policy Development - Confidential

16. Governor’s InvestmentsEfforts to improve state programs and outcomes • Governor Patrick’s four strategic initiatives include: • Stimulate job creation across the Commonwealth • Control the growth in health care costs for the state, local government and businesses • Reduce urban and youth violence • Eliminate the achievement gap among Massachusetts’ students • The annual state budget process helps align state resources with objectives such as these to ensure we measure and evaluate our performance in meeting our stated goals. Policy Development - Confidential

17. EOHHS Funding Priorities • Protect vulnerable populations from harm • Improve outcomes and services for children, youth, and families in need • Promote self-sufficiency through job development and support opportunities for vulnerable populations • Assist low-income individuals and families to meet basic needs • Foster the use of community-based settings as an alternative to the use of institutional care • Improve quality, care delivery, and efficiency across the health care system Policy Development - Confidential

18. Rules We respectfully request that all individual testify be no more than 3 minutes and panels that testify will have a total of 5 minutes. We’re all facing the need for creative solutions. Please use your time to suggest new approaches or areas that you’d suggest where we identify savings. Policy Development - Confidential