idaho legislature

Idaho’s Catastrophic Fund Facing Its Own Catastrophe

By Sharon Fisher, 1-21-10

For people with no medical insurance and no resources who need medical care, the provider of last resort is Medically Indigent Health Care, known as the CAT (for Catastrophic) Fund. And between the number of people eligible for the fund, and the cost of the health care they need, the fund is in line to be hit with nearly twice as much in expenses as it has been budgeted for the current fiscal year – money the state is obligated by law to pay, said Roger Christensen, CAT Fund Board Chairman.

“If individuals meet the eligibility requirements, we cannot find any statutory authority to deny those claims due to lack of funding,” Christensen told the Joint Finance-Appropriations Committee (JFAC). “If they meet the statutory requirements, we’re required to pay the bills.”

Typically, people are considered eligible for the program if they would not have the ability to pay the bill within five years, Christensen said. The county in which the indigent person resided is responsible for the first $11,000 per year of the expenses, and the state is responsible for the rest. “The only tool we have is to push the bills forward into the next budget year, or when we have a supplemental [request approved],” he said.

For fiscal year 2010, which is halfway over, the fund received $19 million, Christensen said. At the current rate of bills, the fund will be in the red by $17 million by the end of the year. The fund has requested an $8 million supplemental from the general fund. “That still leaves us $9 million short,” he said. In addition, Governor C.L. “Butch” Otter recommended $4 million of the $8 million. JFAC has not yet begun voting on general fund supplemental requests.

2011 is worse. “The 2011 estimated budget” – which was $33 million – “was based on projections that we think now may have been optimistic,” Christensen said. Otter’s budget recommended $22 million.

The fund places liens on the equity, if any, in recipients’ homes, which go into effect when the house is sold or refinanced, Christensen said. In addition, if recipients are approved for other funding such as Medicaid or Social Security at a later point, the fund can be reimbursed (the county get 20 percent, the state gets the rest). Such reimbursements amount to about $3 million per year, he said. The fund also receives income from fines charged to people for driving without a seat belt, which amounts to about $150,000 per year, he added.

The 2009 Legislature passed a bill, S1158, that raised the counties’ contribution per person from $10,000 to $11,000 annually, as well as requiring the Department of Health and Welfare to conduct utilization reviews on medical claims, providing for an early determination as to whether individuals are Medicaid eligible, and performing third-party recovery of claims paid by the county and the state. Such efforts could save the fund about 3.5 percent of its costs per year – but require an investment of 2.6 percent, which amounts to about $1 million – which is not yet budgeted for.

“And yet, we can’t obtain the savings without expending the million dollars,” said JFAC co-chair Senator Dean Cameron (R-Rupert). “Hopefully when we get a program in place, it will generate savings quickly enough to be self-sustaining,” responded Christensen.

The fund is going to be saving some money on administration of the fund, after dismissing former state Republican chairman Blake Hall, who was paid $213,000 in fiscal year 2009. Currently, the fund is working with Hall’s legal firm on a month-to-month basis while the board finalizes a system whereby the Idaho Association of Counties (IAC) performs functions such as hosting the fund’s website and minutes, while the attorney general’s office provides legal counsel, Christensen said. This is expected to total about $125,000 to $130,000, he said.

JFAC members asked several questions, trying to find a way to limit the number of people eligible for the program. “It’s a lot of state money, and a lot of local control,” said Representative Jim Patrick (R-Twin Falls), noting that eligibility was determined by the commissioners for each county. “I like local control, but are there any strict guidelines to make sure they’re not too kind in some counties? I shouldn’t say ‘kind,’ but ‘less diligent,’” he amended. Christensen said the fund was reviewing and redoing some of its procedures and policies to develop more formal written guidelines.

But Dan Chadwick, IAC’s executive director, pointed out that for the counties’ fiscal year 2009, which ran between Oct. 1, 2008, and Sept. 30, 2009, out of 7,805 applications for assistance, there were 4,374 denials. “They don’t just approve these claims,” he said, though he noted that some of the denials might have been attributed to incomplete applications. For example, the county’s welfare director has an obligation to investigate the situation, he said.

Representative Frank Henderson (R-Post Falls) asked how the fund defined “resident.” “Certainly, we would never deny emergency medical care, but I know there were other cases where the county provided money for the summer period to a transient population, or people I would call ‘not legal residents of Idaho,’” he said. Christensen agreed that that was a policy issue to examine.

Senator Steve Bair (R-Blackfoot) asked about the administrative expense of hospitals and providers, which he said looked like almost half the costs. “I can’t make sense of it, either, frankly,” Christensen answered.

Representative Wendy Jaquet (D-Ketchum) asked, in the cases where the person was a seasonal or temporary worker, whether the fund could go back to the contractor or employer for reimbursement, and Christensen said they were looking into it. In fact, in some cases, counties in her district are actually buying insurance for the medically indigent, she said. “I’m aware of the practice,” Christensen said. “They figure it’s cheaper to purchase a health insurance policy for [the indigents].”

Cameron asked to what degree substance abuse was a cause of the medical incidents, and Christensen agreed that the fund may “review and refine” its standards around such incidents.

The increased costs of the program are also hard on the counties, which are limited by law from raising taxes more than 3 percent per year. “We’ve talked about exempting CAT claims from the cap,” said Chadwick. “But it takes a certain amount of willpower to get that kind of exemption through the legislative process, and there’s not much sympathy for that,” he said.

Meanwhile, Christensen was “almost fearful that our numbers are optimistic still,” he said. “What we thought was a spike was more of a trend.”

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