DHS program changes to save millions

By Kris Todd, Daily Reporter Staff

State residents warned: There's more to come

In order to slash over $132 million from its budget this fiscal year, Iowa's largest service agency is looking at sizable cuts to jobs, provider rates and service delivery.

While an Iowa Department of Human Services (DHS) spokesperson describes the impact of the cuts being made as "drastic" and "quite severe," Roger Munns is also trying to assure state residents and DHS clients that the state will make it through and the situation will turn around eventually.

The mission of the DHS is to "help individuals and families achieve safe, stable, self-sufficient and healthy lives" through the health care, nutrition, childcare and other programs it offers.

"We do this by keeping a customer focus while maximizing the use of federal funding and leveraging opportunities, and by working with our public and private partners to achieve results," explained Charles Krogmeier, who was appointed Iowa's DHS director in April.

"But, our budget is mostly somebody else's money," Munns, the DHS public information officer, added. "It's about 2-to-1 other funds, mostly federal. Our full budget for this fiscal year is more than $4.5 billion. Some of that extra money from the federal government is contingent on spending a dollar first. In Medicaid, for instance, we don't get any federal money until we spend a state dollar. ... The whole point here is if we spend fewer state dollars, oftentimes that means we get a lot fewer federal dollars. Or, a rather long way of saying that when you cut some state dollars, it has a broader impact."

As the department's director acknowledged the approved reductions will be painful the remainder of this fiscal year, Krogmeier reassured his top priority is to preserve "service and protection for Iowa's most vulnerable people," as well as to continue to "produce the results that Iowans demand of us."

"In meeting the need to cut our budget, we also have an obligation to cushion the impact on our employees and on the Iowans they serve," Krogmeier said in late October as he delivered his proposed DHS budget reductions to Gov. Chet Culver. "We cannot avoid a reduction in force, but we have put together a package that reduces the impact on our workers as much as possible. We have done this by recommending: Reducing or ending programs that are least effective or which service the fewest people; requiring providers of Medicaid and child welfare services to accept rate reductions for their work; using a majority of projected Medicaid carry-forward funds to help address budget shortages this fiscal year; and keeping current vacant positions unfilled."

The DHS ranks as the second hardest hit state department with 79 layoffs and 149 vacant positions scheduled to be reduced.

"Our strategy was to try to protect the front line workers," Munns reported. "They have already seen bleeding of about 80 positions just in the last year because of the hiring freeze. And, when I say front line positions, I mean people who work in the counties. These are the people who do two basic things: One is to process applications for our benefit programs. ... The other half of the house in the local offices responds to reports of child abuse or neglect. Those are the two basic functions of the local offices that we wanted very much to stop the bleeding."

According to Eileen Skogerboe, the DHS income maintenance supervisor for Clay and Dickinson counties, no field staff positions in our region are expected to be reduced or laid off through the governor's across-the-board order to cut.

DHS representatives have instead chosen to shift a lot of funds. For example, more than $50 million from the Medicaid fund balance scheduled to be allocated next fiscal year has been dedicated to this year's budget crisis.

Another strategy implemented involves reducing the rates paid to Medicaid providers -- everything from hospitals and doctors to podiatrists and nursing homes.

"We know the stress that this causes on providers. Some providers might say that the reimbursement rate now is going to be too low, and that they can't afford to take care of patients. That is a concern to us, and we hope that for most cases that will not happen," Munns said. "There were also a bunch of other strategies utilized which involved reducing or ending programs that we thought were either least effective or which helped the fewest people."

The Legislature has also directed DHS to make a recommendation to close one of the state's four mental health institutes -- based in Cherokee, Clarinda, Independence and Mount Pleasant -- and to distribute services to the remaining three. At the same time, Krogmeier is working on a reorganization of DHS offices. He's also considering the option of merging the eight department service areas, which are currently headquartered in Ames, Cedar Rapids, Council Bluffs, Davenport, Des Moines, Dubuque, Sioux City and Waterloo.

"Our current structure was set up in 2002. It's worked pretty well," Munns said, "but we have to make changes just because the money is shrinking."

More applications being received

Iowa Medicaid provides health coverage to approximately 400,000 elderly, children and disabled residents. More than 300,000 are receiving food assistance, better known as food stamps.

"In our local offices, we're seeing people who are applying for benefits that have never been in before. We've got a lot of people who have certainly always been very self-sufficient financially who maybe have been in a layoff status now for nine months already, and they're panic stricken," Skogerboe said. "So, we do have a lot of people coming in that are on unemployment. And, these are a lot of the people we haven't seen before who, number one, are coming in not only for their Medicaid insurance needs, because as we know COBRA is not very affordable, but maybe are applying for other benefits too to see what else they would potentially qualify for."

"There's a lot of unease," the local DHS income maintenance supervisor added. "And, I haven't seen an upswing yet in the mood or in any less need of applications that we're getting. It's been very steady."

Meanwhile, in DHS' attempt to hold harmless those who are least able to help themselves, Munns assured that individuals eligible to receive benefits will continue to receive them.

"If you are eligible for food assistance, Medicaid, welfare, subsidized childcare or any of the other programs that Iowa law provides, we're going to do our darndest to see that you receive those benefits," he said. " ... (You) will have to wait, though, because of the enormous caseloads on our front line workers. Just in the benefit side alone, that's half of what our local offices do. Caseloads are now well above 500, which means that it's going to take longer to get an appointment, to process an application and to make changes."

For some area customers, Skogerboe added, it may mean a bit longer wait for services.

She encouraged people to have patience.

"I don't want people to assume they won't qualify for anything. If there's any doubt, or if there is a need, by all means, people need to apply," she said. "We've made it very easy."

Application forms are available in local DHS offices. They're also accessible online 24 hours a day at www.oasis.iowa.gov.

Many application interviews, meanwhile, are currently being done over the telephone, Skogerboe said.

While regular local office hours are 8 a.m. to 4:30 p.m., a customer service call center remains open from 7 a.m. until 6 p.m. Monday through Friday. Representatives on this toll-free line can process changes on ongoing cases. Individuals may also report changes in their income, address and roommates, as well as in rent or utilities paid in English or in Spanish on the toll-free line, (877) 347-5678.

Looking to the future

A few items offered by DHS staff as potential reductions this fiscal year have been restored. Among them was the DHS director's suggestion to end chiropractic service for Medicaid patients. Iowa's governor deemed this proposed cut "too drastic."

"To provide revenue for those areas that we had proposed to cut, the governor decided to dig further into the proposed carry-forward, or the budget surplus in Medicaid," Munns explained. "Again, those dollars were originally planned to be used next fiscal year, the one that begins next summer."

The department spokesman said this financial move resembles the expression "robbing Peter to pay Paul."

"We acknowledge completely that this is the drawback for our strategy," Munns said. "We looked at all of those things, though, and decided that this would be the best way to handle it."

"If we had not committed any of the projected surplus to use for this year," he continued, "then the cuts would have been far more drastic. We're already planning to lay off 79 additional people, plus eliminating 149 vacant positions. Without the assistance of the budget surplus this fiscal year, that number would be far higher. And, without the assistance of the projected budget surplus, the across-the-board rate cut for our providers would have been just unbearable. But, this does deepen the problem for next fiscal year."

"In all fairness, I'm not sure what else they could do, in hopes that maybe things will surprise us and be better next year," Skogerboe said. "But, I certainly know at this point they're not banking on that."

"Once we do settle on how to handle this crisis this fiscal year, ... we must attack the budget for next fiscal year. And, that one looks dismal," Munns forecasted. "I think hang onto your socks when it comes to that year, because the federal stimulus money will be running out. And, if it's not extended, that will have a major impact on state funding. Plus, there are more and more people who are eligible for the benefit programs that we've talked about, which causes a continued strain on government resources.

"But, we as a service agency and we as Iowans, will survive this. I'm sure we'll come out stronger than ever. In the meantime, I would urge people now to have patience dealing with our (field staff). Their caseloads are just staggering."

* Next in the Series: Environment

A quick look at the DHS budget cuts:

* Temporary provider rate cuts for providers of both Medicaid and child welfare services are expected to save more than $18 million. Steeper cuts were prevented by using the majority of projected Medicaid surplus funds in fiscal 2010.

* Layoffs. Seventy-nine employees will be laid off. Most of them are at juvenile facilities in Toledo and Eldora, at the mental health institute in Independence, and in the central office in Des Moines. The DHS central office will be organized, with the details yet to be finalized.

* Reduction in pass-through funds. Appropriations allocated to counties for mental health services are included in the DHS budget, but are automatically reduced 10 percent by the governor's across-the-board order to cut. The reduction will have an impact on counties that will likely be offset by additional federal stimulus dollars received for Medicaid-funded services.

* Seventy-eight front line positions in county and regional offices have been held open. A strategy to prevent further losses means continued high caseloads for workers who manage benefit programs. To assist front line DHS workers, information technology projects are under way to assist in making their work more efficient.

* The 10 percent cut in state dollars will be managed by deferring infrastructure improvements at facilities in Glenwood and Woodward.

* Discontinue child support call center in Marshalltown. These calls will be reassigned to local offices.

* Delay implementation of several programs, including childcare regulation changes set to begin Jan. 1, 2010, that would require fingerprinting and national background checks of employees.

* Discontinue funding for juvenile justice drug courts.

* Eliminate payments for empty group care and nursing home beds.

* Reduce rates for foster care and for adoption subsidy by 5 percent.

* Require prior authorization of radiology tests paid by Medicaid and conduct a "correct coding" scan of all Medicaid claims to prevent overpayments.