A second measure designed to streamline state government advanced late Tuesday as the Senate voted to merge several agencies for the disabled and a rehab program for injured workers into a new social services bureau.

The legislation also freezes general Medicaid rates for nursing homes and care facilities for the developmentally disabled, suspends cost-of-living adjustments to welfare grants, reduces payments to pharmacies serving medical assistance patients, cuts a variety of health benefits for the poor and assesses a quarterly tax on net hospital revenues.

The bill, one of several omnibus policy measures to implement the $40.11 billion biennial budget adopted for the next two fiscal years, was approved 19-15 in the Democrat-controlled Senate minutes before midnight.

“We’ve been criticized for not making the tough cuts,” Sen. Toni Harp, D-New Haven, co-chairwoman of the Appropriations Committee, said of the fiscal plan that eliminated a $3 billion-plus projected deficit in the coming fiscal year. “Unfortunately these are the things we have to do to have a balanced budget.”

The bill now heads to the House of Representatives, which earlier Tuesday adopted a measure that would set new policies to drive down prison populations and order five separate mergers involving multiple public works-, technology-, consumer-, child protection- and public safety-related operations.

The Senate measure creates the new Bureau of Rehabilitative Services within the Department of Social Services. This new bureau will assume all responsibilities assigned to the Commission on the Deaf and Hearing Impaired, the Board of Education and Services for the Blind, the Workers’ Compensation Commission’s employee rehabilitation program and the Department of Motor Vehicles’ driver training for the disabled.

Gov. Dannel P. Malloy initially proposed reassigning services for the blind into Social Services and the Department of Education, which drew strong opposition from people served by the agency.

Under the new plan, the Bureau of Rehabilitative Services would be part of the state Department of Social Services for administrative purposes only. Its director would be appointed by the governor and have the powers of an agency head.

Malloy, who pledged repeatedly throughout last fall’s campaign not to shred Connecticut’s social services safety net, asked many care providers and populations in need to make do in the next two fiscal years with current funding levels–a philosophy the Democrat-controlled legislature has followed as well.

Medicaid payments for nursing homes, which remained flat each of the past two years, would do so again in 2011-12 and 2012-13 under the bill adopted Tuesday, with inflationary adjustments suspended both years.

The new budget adopted earlier this month does expand an existing provider tax on nursing homes that should allow Connecticut to leverage  additional federal health care funding. The Senate bill allows the social services commissioner to distribute that additional federal funding, projected at about $17 million, to the homes.

Another Malloy proposal built into the adopted budget and established through the Senate bill levies a new 4.6 percent quarterly tax on hospital revenues.

Patterned after a similar tax, or user fee, set up for nursing homes five years ago, this would both raise and then redistribute back to the hospitals just under $300 million.

This back-and-forth arrangement is allowed under complicated federal rules that count both the hospitals’ payments and the state’s redistribution as Medicaid expenditures, in turn qualifying Connecticut for more federal reimbursement estimated at nearly $150 million.

The implementer bill also makes several changes to Medicaid coverage for the poor, adding coverage of smoking cessation and more podiatry services to the program but trimming other benefits. These changes include:

  • Limiting coverage for non-emergency dental care for healthy adults to one dental exam, cleaning and set of bitewing x-rays per year. It is projected to save $20.1 million over two years.
  • Covering one pair of eyeglasses every two years, down from one per year. It’s expected to save $1.775 million over two years.
  • Repealing a law passed last year that allowed people whose spouses receive Medicaid coverage for nursing home care to keep more assets.
  • Lowering the amount of money people receiving Medicaid coverage in long-term care facilities can keep from monthly income from $69 to $60. Annual cost-of-living increases would be eliminated. The move is projected to save $4 million in the next two fiscal years.
  • Freezing assistance to households served by: Temporary Family Assistance, a federal welfare program largely for single women with children; and General Assistance, a state welfare program for single adults without children.

In addition, the DSS commissioner would be allowed to create an alternative benefit package for people covered in a Medicaid program for low-income adults. The commissioner could limit services in several categories, including office visits with health care providers, hospital visits, medical equipment, pharmacy services, non-emergency medical transportation and home care services.

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Keith M. PhaneufState Budget Reporter

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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