Appropriations Committee Chairman Nelson on Friday presided over a lengthy Human Resources Division session during which members debated several budget amendments and funding-source changes for behavioral health, public health, developmental disabilities and related programs.

Committee members front-loaded a cost-containment amendment that would reduce the combined inflationary increases for three behavioral-health vendor residential contracts by roughly $2,000,000, from about $3.78 million to approximately $1.78 million. Representative Steeman proposed the reduction; the chair described it as a containment of the increase rather than a cut to current service levels.

The change was one of many adjustments discussed across divisions. Committee staff and Department of Health and Human Services (HHS) officials walked members through targeted rate adjustments, one-time projects and grant/contract choices that will be folded into an amended bill for committee action on Monday.

Why it matters

Members said the package seeks to balance provider pressures — including personnel and contracted services inflation — against an overall cost-containment goal. Several proposals affect ongoing service delivery (provider-rate changes, parity adjustments and a forensic-pathology contract), while others are one-time asks tied to capital or systems projects (lab moves, licensing systems, IT). Funding-source choices (general fund vs. the Community Health Trust Fund or SIF one-time funds) drove repeated debate.

Key decisions and proposals discussed

Behavioral health vendor inflation. Representative Steeman asked that three listed inflation lines — for crisis residential, addiction residential and recovery/rehab contracts — be combined and reduced by about $2,000,000, cutting the proposed aggregate increase from roughly $3.78 million to $1.78 million. Chairman Nelson and staff characterized the change as reducing the proposed increase (cost containment) rather than cutting existing contract amounts; the department would retain scope to negotiate contracts within the reduced increase.

QSP targeted rate parity. The committee reviewed a targeted rate increase package for qualified service providers (QSP) in Home- and Community-Based Services that aims to create parity across service lines (for example, chore services or nurse education) and to raise several currently underpaid services. HHS staff said the targeted adjustment is separate from and would be applied in addition to any uniform provider inflation, and that the adjustment is intended to equalize pay across QSP service types so workers are not paid differently for similar work.

Forensic pathology funding and UND contract. The committee considered an increase for the University of North Dakota (UND) forensic pathology contract tied to higher utilization; staff described a proposed increase of about $1.866 million funded from the Community Health Trust Fund. HHS said the state is also recruiting a permanent state forensic pathologist (a hard-to-fill position) and that UND currently performs increased autopsy workload under contract. Representative Steeman moved to shift the UND increase from the Community Health Trust Fund to the general fund; that funding-source shift was discussed but not decided. HHS noted the UND contract line has been carried in prior biennia and characterized the requested amount as ongoing funding to match workload.

Maternal and child health and public-health one-time projects. Members considered a proposal to reduce a maternal-and-child-health enhancement by $2,000,000 (general fund). Separately, several smaller one-time public-health projects were reviewed for SIF or other-fund financing: lab transition costs, public-health laboratory moves into a new building, forensic examiner electronic records ($278,000 cited), and a public-health lab equipment purchase tied to toxicology testing ($251,500 total across funds). HHS staff told the committee those projects are intended as one-time and should not carry forward into the next biennium as ongoing costs.

Domestic violence prevention and related supports. Representative Murphy asked to add $2.14 million to expand domestic violence and sexual assault services and safe-haven funding, proposing $1.7 million for domestic-violence/sexual-assault program categories and $440,000 for safe havens. The sponsor initially proposed using the Community Health Trust Fund but agreed with committee members’ preference to consider general-fund language; exact funding-source language was left for amendment drafting.

FASD clinic contract (UND). Representative Murphy proposed an $895,418 ongoing contract (vendor agreement) to sustain the Fetal Alcohol Spectrum Disorder (FASD) clinic operated by the University of North Dakota School of Medicine and Health Sciences. Committee staff and HHS discussed whether the funding should be a grant or a vendor contract; HHS said a grant would trigger 2 CFR part 200 federal grant rules even if funded with state general funds, and recommended a vendor contract to avoid those federal grant-compliance requirements. The committee directed the sponsor and staff to work with the committee fiscal staff to craft contract language.

IMD/medical services oversight language. The committee reviewed proposed language authorizing HHS to review medical assistance amount, duration, coverage, utilization and medical necessity and to implement adjustments tied to a contemplated $12 million general-fund underfunding scenario (a cost-containment measure). Krista Freming, Medical Services Division, told the committee such authority would allow programmatic adjustments (for example, utilization reviews and prior-authorization limits) to align appropriations with service demand when the legislature sets constrained funding levels.

Provider-specific requests and rural health initiatives. Members discussed targeted operating supports: a proposed supplement to the Anne Carlson Center (to help offset multi-biennium deficits), continuation of a $5-per-day basic care reimbursement funded from the healthcare trust fund, a $2 million requested grant to the Roughrider Network to support rural hospital collaboration and shared purchasing, and a $200,000 restoration request for an adaptive-program position tied to Botany/Winter Park recreational programming. Several representatives argued these targeted investments improve rural hospital stability and access to specialty services.

Regulatory and policy items. The committee flagged several nonappropriation items the department and legislators will pursue in language: potential removal of an accreditation requirement for certain developmental-disability providers (sponsors said accreditation can duplicate state oversight and add costs), clarification to allow longer leases (including proposed 99-year lease authority) of certain state hospital lands, and a study/report directive to develop draft law and rules for "long-term structured residences" — a highly structured 24-hour therapeutic residential mental health treatment option the department does not currently operate in the state.

Process and next steps

Committee staff (Keith) will compile the amendments and language discussed, and committee members intend to vote on the revised bill and amendments on Monday. Multiple members emphasized they expect further adjustment and that today's proposals should not be read as final decisions. HHS staff reiterated that some items are one-time obligations tied to SIF or trust funds, while others are ongoing and will affect future biennia and potential deficiency requests.

Quotes

"A grant agreement has to follow 2 CFR part 200 ... I think that would be better as a contract," HHS staff (Donna) said when members debated whether FASD clinic funding should be a grant or vendor contract.

"If this amendment is adopted, we would look at things such as continued stays at facilities, perhaps doing those types of evaluations more frequently than we normally do to ensure that that level of care is still medically necessary," Krista Freming of the Medical Services Division told the committee about proposed authority to adjust services under cost containment.

Ending

The committee recessed after instructing staff to fold the proposed amendments and funding-source language into an updated bill for a Monday morning session. Several items — funding-source shifts, the forensic-pathology funding source, and one-time SIF allocations — remain unresolved and were scheduled for final committee consideration next week.