I am vetoing this section because I object to the use of harbor assistance funds for a project that has not been subject to department review and that is likely ineligible under the requirements of the harbor assistance program.
44.
Eisner Avenue
Section 9148 (6n)
This section requires the Department of Transportation to award a grant of $500,000 from the Local Roads Improvement Program in the 2005-07 biennium to the city of Sheboygan for the rehabilitation of Eisner Avenue in Sheboygan County if the city of Sheboygan and town of Sheboygan reach an agreement on the payment of the local match for the project.
I am vetoing this section because I object to the circumvention of the normal approval process for the Local Roads Improvement Program. A selected group of local government officials currently evaluates the need for these projects. It would be unfair to other local units of government if this project consumed funding that could have been utilized for local road projects that were approved through the established process.
45.
Safety Study
Section 9148 (3t)
This section requires the Department of Transportation to conduct an engineering study in the 2005-07 biennium of the segment of STH 58 in Sauk County between the Sauk County and Richland County line and CTH G. The department is required to make any recommended safety improvements.
I am vetoing this section because I object to this infringement on executive branch authority to manage programs. As part of managing the highway program, the department monitors pavement quality and performs engineering studies to determine safety improvements. This section limits the department's ability to devote resources to areas with the greatest need.
46.
Sugar River State Trail Underpass
Section 9148 (3s)
This section requires the Department of Transportation to incorporate an underpass for the Sugar River State Trail at the intersection of the trail with STH 69 in the village of New Glarus in Green County when the department rehabilitates that segment of highway in the 2005-07 biennium. If the village agrees with the department on a lower cost safety improvement project, the department may construct the lower cost improvement.
I am vetoing this section because this earmark is unnecessary. The department works with local governments and the public whenever a highway project is considered. In this particular case, there has been no decision from the community on how this specific part of the project should be constructed. This veto will allow the department the flexibility it needs to continue working with the community in developing a consensus on this project.
C.
HEALTH AND FAMILY SERVICES AND INSURANCE
Health and Family Services
1
Health Insurance Risk Sharing Plan (HIRSP) Privatization
Sections 140 [as it relates to s.
20.145 (5)], 156w, 320p, 320r, 522c, 535m, 535p, 535r, 1286c, 1354L, 1406f, 2032m, 2033m, 2033r, 2034c, 2034m, 2035c, 2035m, 2036c, 2036m, 2037c, 2037m, 2038c, 2038m, 2039c, 2039m, 2040c, 2040m, 2041c, 2041m, 2042c, 2042m, 2043c, 2043m, 2044c, 2044m, 2045c, 2045m, 2046c, 2046m, 2047c, 2047m, 2048c, 2048m, 2049c, 2049m, 2050c, 2050m, 2051c, 2051m, 2052c, 2052m, 2053c, 2053m, 2054c, 2054m, 2055c, 2055m, 2056c, 2056m, 2057c, 2057m, 2058c, 2058m, 2059c, 2059m, 2060c, 2060m, 2061c, 2061m, 2062c, 2062m, 2063c, 2065, 2429c, 2429e, 2429g, 2429h, 2429i, 2429j, 2429m, 2429p, 2429r, 9121 (13p), 9221 (3p), 9321 (4L), 9321 (4p), 9341 (19p) and 9421 (5p)
A404
These sections relate to the creation of a nonprofit organization with a 13-member board to operate the HIRSP insurance program for high-risk individuals, which is currently administered by the Department of Health and Family Services. The board would have responsibility for all functions related to HIRSP including: designing the benefit package; setting premiums, copayments and deductibles; and determining eligibility. The transfer of authority would be effective January 1, 2006. At that time, the program would no longer be attached to the Department of Health and Family Services for administration and oversight. Instead, the board would largely function independently with limited oversight provided by the Office of the Commissioner of Insurance, which would collect insurer assessments to transfer to the board and would ensure the board's benefit packages complied with general insurance laws.
I believe that turning to a nonprofit board to operate HIRSP, which is how many other states operate their high-risk pools, may be the appropriate approach for Wisconsin. However, I object to the proposal included in the budget because it provides almost unlimited authority to the board with extremely limited state oversight and inadequate protections for policyholders. I am, therefore, vetoing this proposal in its entirety to return to current law, but would support separate legislation in this area.
The proposal in the budget has several weaknesses. First, it would change the current residency requirement from 30 days to six months; thus delaying the ability of policyholders to obtain needed medical services. Second, the language would remove the list of HIRSP benefits from current law and, instead, allow the board broad discretion to define, modify or eliminate benefits. Third, under current law, low-income deductible subsidies are funded 50 percent by insurers and 50 percent by medical providers. The proposal changes this to a split of 60 percent paid by the participant, 20 percent paid by insurers and 20 percent by providers. This shift will cost policyholders an additional $3.5 million per year. This added policyholder cost is on top of what they already pay for health insurance, with a typical policyholder annual cost of over $8,000 per year for individual coverage.
HIRSP is highly regulated through Wisconsin Statutes and Administrative Rules and critics of the program contend the program needs greater flexibility to operate more like a commercial insurer. While this contention has merit, the proposal goes too far in terms of relinquishing state oversight and protections for policyholders.
I am willing to work with legislators and HIRSP stakeholders to develop separate legislation for consideration during the fall 2005 legislative session. Separate legislation should, among other issues, address oversight of benefit plans and premiums and deductibles.
2.
Authority to Transfer from the General Fund to Other Funds (Medical Assistance Trust Fund and Budget Stabilization Fund)
Sections 9255 (1) (b) and 9255 (2)
These provisions specify that the Department of Administration secretary may not lapse or transfer monies to the general fund from a specified list of program revenue appropriations if such lapses or transfers would be a violation of the federal or state constitution. These provisions also require a specified amount of funding be transferred from the general fund to the taxpayer protection fund (renamed in the bill from the budget stabilization fund).
I am partially vetoing the first part of these provisions because they include unnecessary and redundant language. Clearly, lapses or transfers that violate the Wisconsin Constitution or U.S. Constitution will not be authorized.
In the bill, it is assumed that $36 million from the sale of state-owned properties would be deposited in the general fund to offset the transfer of general fund revenues to the renamed budget stabilization fund. I am vetoing the transfer of revenues from the general fund to the taxpayer protection fund because these revenues need to be retained in the general fund in order to protect public education and property taxpayers.
The bill also assumed that the net proceeds from any sale of state-owned properties in excess of $36 million would be deposited into the budget stabilization fund. This language was eliminated in the veto under the State Government Operations Section, Budget Management, Item #3 which, among other things, reversed the renaming of the budget stabilization fund.
Despite the veto of this language, my Administration remains committed to managing state properties effectively and selling state-owned property to improve the fiscal stability of the state. In partially vetoing this section, the remaining language will authorize the Department of Administration secretary to transfer revenue from the general fund to any appropriation account or fund. With this authority, I am requesting the Department of Administration secretary to transfer the net proceeds from the sale of unneeded state-owned properties in excess of $36 million into the budget stabilization fund.
With this same authority, I am requesting the Department of Administration secretary to transfer $235,449,000 in fiscal year 2005-06 from the general fund to the Medical Assistance trust fund to be used for ongoing Medical Assistance expenditures. While this amount is $32,609,100 less than the amount transferred by the Legislature, I am directing the Department of Health and Family Services secretary to seek out opportunities to maximize federal revenues for the Medical Assistance program. This transfer, combined with the veto to restore the transfer of revenue from the transportation fund to the general fund (see Environmental and Commercial Resources Section, Transportation, Item #35), will provide greater flexibility for financing the state's commitment to public education and health care for elderly, disabled and low-income families.
A405
The Department of Health and Family Services currently has several projects under development to increase federal revenue for the Medical Assistance program, and these projects will be put forth when the appropriate federal and state approvals are secured. In addition, the secretary should continue to develop program improvements and reforms to contain costs in both this biennium and in the long run. The department has made great strides to lower the costs of prescription drugs and additional cost containment options continue to be developed. The department is committed to expanding use of community-based, long-term care services shown to reduce costs compared to nursing homes, and to continue to expand the use of managed care to serve both low-income families and persons with disabilities. All of these efforts will help ensure that the growth rate for Medical Assistance is contained.
Moreover, there are reasons to expect that costs in the Medical Assistance program will be lower in the next biennium. The state's seasonally-adjusted unemployment rate has dropped below five percent, and historical data shows that the Medical Assistance caseload drops shortly after unemployment drops below this threshold. In addition, Wisconsin continues to see gains in wages and employment that also will reduce pressure on the Medical Assistance caseload.
3.
Nursing Home Bed Assessment – GPR-Earned Revenues
Sections 537, 1222m and 1223
These sections specify that all revenue collected from an assessment on licensed nursing home beds should be deposited in the Medical Assistance trust fund. Under current law, $13,800,000 of these revenues in fiscal year 2004-05 were deposited in the general fund, and in future fiscal years, 45 percent of the total revenues from this assessment would be returned to the general fund.
I am partially vetoing these sections because I object to changing the existing arrangement under which a portion of the assessment revenues is returned to the general fund. This veto maintains the requirement that $13,800,000 in assessment revenues will be returned to the general fund each year, thereby reducing revenues in the trust fund by a corresponding amount. I am, therefore, directing the Department of Health and Family Services secretary to develop new programs and opportunities that will enhance revenues and decrease expenditures in the trust fund to offset the reduced revenues from this veto.
4.
Nursing Home Rate Increase
This provision increases reimbursement rates for nursing home services by an estimated 1.4 percent in each year of the biennium. I had recommended the same rate increase in my budget proposal, but funded this rate increase with an increased assessment on licensed nursing home beds. The assessment would have generated over $67 million in new federal funding over the biennium. This new federal funding made such a rate increase affordable, but the Legislature's budget instead diverts scarce GPR dollars from property tax relief.
I am lining out the appropriation under s.
20.435 (4) (b) and am writing in a smaller amount that deletes $5,141,700 GPR in fiscal year 2005-06 and $10,118,000 GPR in fiscal year 2006-07. By lining out the appropriation under s.
20.435 (4) (b) and writing in a smaller amount, I am vetoing the additional GPR in the bill that was added by the Legislature. I am also requesting the Department of Administration secretary not to allot these funds.
I continue to favor a $50 increase in the monthly assessment levied on licensed nursing home beds and would support separate legislation that implemented a $50 increase in the assessment. Such a proposal would provide for a larger rate increase than funded by this provision, and capture additional federal funds.
5.
Community Relocations Initiative
Sections 869 and 9121 (12r)
Section 869 specifies that the Department of Health and Family Services can only relocate a Medical Assistance eligible individual from a nursing home to a community care setting in cases where the individual has resided in a nursing home for at least 100 days. Section 9121 (12r) requires the department to submit a report to the Joint Committee on Finance by January 1, 2007, identifying the effects of the Governor's Community Relocations Initiative.
I am partially vetoing section 869 to delete the 100-day stay requirement because it would force individuals in need of long-term care services to remain in a nursing home for at least three months, even in cases when they could be placed in a community care setting long before the 100-day waiting period has expired. Since the intent of the Community Relocations Initiative is to prevent long-term institutional stays, I am directing the department to develop policies which will prevent individuals from entering a nursing home for the sole purpose of obtaining a community placement.
I am vetoing section 9121 (12r) because the department already has to meet significant reporting requirements related to the Community Integration Program II as part of its statutory obligations. Information about the Community Relocations Initiative can be included in existing reporting requirements and does not require a separate report.
6.
Functional Screen
Sections 1132f and 1217r
These provisions restrict the Department of Health and Family Services from using the long-term care functional screen to determine levels of care for nursing home residents and to set Medical Assistance reimbursement rates for nursing homes.
I am vetoing these provisions because I object to a permanent statutory ban on the use of the functional screen to determine levels of care for nursing home residents and to set reimbursement rates for nursing homes. The department will initially use the federal Minimum Data Set for data for level of care determinations rather than the functional screen. However, as the state continues to develop innovative ways to deliver long-term care services in a cost-effective manner, the functional screen could prove to be an important tool in establishing a single standard for measuring levels of care and determining reimbursement rates across all service delivery models in the future.
A406
7.
Nursing Home Reimbursement Rates
Section 1128m [as it relates to identifying payments to nursing homes]
This section directs the Department of Health and Family Services to identify the extent to which payments are made to nursing homes for direct care nursing services.
I am partially vetoing this section because there is no need for a permanent statutory requirement of this sort. The department can provide this information as part of its regular communications with the nursing home industry.
8.
Pharmacy Reimbursement – Rates for Brand Name Prescription Drugs
This provision maintains funding for a pharmacy reimbursement rate for brand name drugs at the average wholesale price (AWP) minus 13 percent. I had proposed a rate more aligned with prices paid by other insurers and purchasers of prescription drugs, at AWP minus 16 percent. The Legislature restored the funding and thus increased pharmacy reimbursement in the Medical Assistance, BadgerCare and SeniorCare programs.
Numerous independent reports have highlighted two problems with Wisconsin's reimbursement system for brand name drugs. First, the rate Wisconsin pays pharmacies for these drugs is significantly higher than pharmacies' acquisition costs. A 2004 report by the U.S. Office of the Inspector General found the average acquisition cost to pharmacies for single source innovator drugs is AWP minus 17.2 percent, 4.2 percentage points higher than what Wisconsin reimburses pharmacies for these drugs.
Second, the AWP-based system has been repeatedly shown to be an ineffective tool, easily manipulated by manufacturers. Wisconsin needs to eliminate the use of an AWP-based reimbursement rate and develop a methodology that is not only fair to pharmacies, but also provides the Medical Assistance program with a reasonable price. I am, therefore, directing the Department of Health and Family Services secretary to develop a new reimbursement system for consideration in the 2007-09 biennial budget.
I am lining out the Medical Assistance benefits appropriation under s.
20.435 (4) (b) and am writing in a smaller amount that deletes $2,270,300 GPR in fiscal year 2005-06 and $3,430,900 GPR in fiscal year 2006-07. I am also lining out the BadgerCare benefits appropriation under s.
20.435 (4) (bc) and am writing in a smaller amount that deletes $234,100 GPR in fiscal year 2005-06 and $386,400 GPR in fiscal year 2006-07. Finally, I am lining out the SeniorCare benefits appropriation under s.
20.435 (4) (bv) and am writing in a smaller amount that deletes $1,416,900 GPR in fiscal year 2005-06 and $2,202,700 GPR in fiscal year 2006-07. By lining out the appropriations under s.
20.435 (4) (b),
(bc) and
(bv) and writing in smaller amounts, I am vetoing the additional GPR in the bill that was added by the Legislature to increase the reimbursement for brand name drugs to AWP minus 13 percent. I am also requesting the Department of Administration secretary not to allot these funds. This veto will reduce the reimbursement rate for prescription drugs to AWP minus 16 percent.
9.
Pharmacy Reimbursement – Dispensing Fees
This provision maintains funding for a pharmacy dispensing fee of $4.38 per prescription. As with the reimbursement rate for brand name drugs, I had proposed a dispensing fee more aligned with prices paid by other purchasers of prescription drugs. My budget reduced the fee to $3.88 per prescription. The Legislature restored the funding and thus reversed the decrease in the dispensing fee paid under the Medical Assistance, BadgerCare and SeniorCare programs.
I am lining out the Medical Assistance benefits appropriation under s.
20.435 (4) (b) and am writing in a smaller amount that deletes $613,100 GPR in fiscal year 2005-06 and $865,900 GPR in fiscal year 2006-07. I am also lining out the BadgerCare benefits appropriation under s.
20.435 (4) (bc) and am writing in a smaller amount that deletes $57,800 GPR in fiscal year 2005-06 and $89,200 GPR in fiscal year 2006-07. Finally, I am lining out the SeniorCare benefits appropriation under s.
20.435 (4) (bv) and am writing in a smaller amount that deletes $648,900 GPR in fiscal year 2005-06 and $925,400 GPR in fiscal year 2006-07. By lining out the appropriations under s.
20.435 (4) (b),
(bc) and
(bv) and writing in smaller amounts, I am vetoing the additional GPR in the bill that was added by the Legislature to restore the dispensing fee to $4.38 per prescription. I am also requesting the Department of Administration secretary not to allot these funds. This veto will reduce the dispensing fee paid to pharmacies by $0.50 from $4.38 to $3.88 per prescription.
10.
Prohibition Against Limitations on Reimbursement for Psychotropic Medications
Section 9121 (14k)
This section prohibits the Department of Health and Family Services from imposing any limitations on reimbursement under the Medical Assistance, BadgerCare or SeniorCare programs for psychotropic medications, other than stimulants and related agents or selective serotonin reuptake inhibitors, which are prescribed to treat a mental illness. I am vetoing this section because I object to this limitation on the department's ability to manage costs, particularly with respect to managing use of the most expensive class of drugs available under these programs.
A407
The department, through its new Prior Authorization Advisory Committee, has taken great care in establishing an open, evidence-based process through which all prescription drugs can be evaluated for the implementation of reasonable, cost-saving policies. Moreover, in prohibiting any new limitation on reimbursement, the language would prevent the application of a lower average wholesale price discount as directed by the veto on the reimbursement rate for brand name prescription drugs (see Item #8). If this section were retained, it would increase costs in these programs by millions of dollars, diminishing the ability of the state to finance other vital health care services under Medical Assistance.
11.
Report on Physician Prescribing Practices
Section 9121 (14p)
This section requires the Department of Health and Family Services to submit by January 1, 2006, to the Joint Committee on Finance and appropriate standing committees of the Legislature, a report detailing the prescribing practices of every physician who is a certified Medical Assistance provider. The report specifically should identify: (a) the percentage of prescriptions written for generic drugs and for brand name drugs; (b) the number and percentage of prescriptions requiring prior authorization; and (c) the number of prescriptions for brand name drugs when there is a generic available.
I am vetoing this section because it creates an onerous reporting requirement and will not result in interpretable data that could be used for meaningful policymaking purposes. Some physicians may simply work in specialties where there are not many generic drugs available to treat their patients. The department already collects data, which is used both in prospective and retrospective drug utilization review, to ensure that prescriptions are appropriate and cost-effective. Given the unclear need for this additional data, I am vetoing the reporting requirement.
12.
Report on Capping the Number of Brand Name Prescription Drugs
Section 9121 (13n)
This section requires the Department of Health and Family Services to deliver a report to the Joint Committee on Finance by July 1, 2006, which analyzes the fiscal impacts of restricting the number of brand name drugs a Medical Assistance, BadgerCare or SeniorCare recipient receives in a given month. The report would identify both savings to the state and costs incurred by the department in implementing this policy. I am vetoing this section because it creates an unnecessary reporting requirement.
More importantly, I do not wish to have the department spending its time analyzing proposals that are poor fiscal and bad public policy. Such arbitrary restrictions to the access of medical services would have a disproportionate impact on those persons who are most vulnerable and most in need of services from the Medical Assistance program – persons with cancer, acquired immunodeficiency syndrome or mental health issues. States that have implemented similar caps have not demonstrated these policies generate any significant savings and may actually increase costs by exacerbating medical problems experienced by the chronically ill.
13.
Generic Drug Copayments
Sections 1144p, 1184c, 9321 (9w) and 9421 (11w)
These sections increase the copayment charged to recipients under Medical Assistance and BadgerCare for generic prescription drugs from $1 to $3, the maximum allowed under federal law. This copayment level is also the same as the copayment required for brand name prescriptions. This section was passed with the intention of reducing expenditures under Medical Assistance and BadgerCare by $1,807,600 in fiscal year 2005-06 and $2,530,600 in fiscal year 2006-07.
I am vetoing this section because it will actually increase, not decrease costs. The bedrock of the pharmacy program is the department's efforts to encourage the use of generic drugs, which save the state tens of millions of dollars every year. However, if recipients are required to pay the same copayment for generic drugs as for brand name drugs, they will have no incentive to use the less costly prescriptions. The department projects that this policy shift would increase the use of brand name medications, causing Medical Assistance and BadgerCare expenditures to rise by over an estimated $9 million in fiscal year 2005-06 alone.
14.
Outpatient Hospital Reimbursement Rates
This provision increases reimbursement rates for hospital services provided on an outpatient basis by $2,500,000 GPR in each fiscal year, an estimated five percent increase. I am lining out the appropriation under s.
20.435 (4) (b) and am writing in a smaller amount that deletes $2,500,000 in each year of the biennium. The state cannot afford this level of rate increase. Furthermore, providing hospitals a rate increase while all other providers have gone without increases for years is simply not fair. By lining out the appropriation under s.
20.435 (4) (b) and writing in a smaller amount, I am vetoing the additional GPR in the bill that was added by the Legislature. I am also requesting the Department of Administration secretary not to allot these funds.
15.
Essential Access City Hospital Payments
Sections 1135c, 1135d and 1135e
These sections modify current law provisions that govern the distribution of the essential access city hospital (EACH) supplemental hospital payment under Medical Assistance effective July 1, 2007. The intent of this provision is to expand the number of hospitals that qualify for this supplemental payment. Under current law and the existing Medical Assistance state plan, only one hospital qualifies for this supplemental payment.
A408
While I support the intent of helping inner city hospitals with a large volume of Medical Assistance recipients, I am vetoing these sections because they create an unfunded, advance commitment for the 2007-09 biennium. If the Legislature wants to change the qualifying criteria for this supplement to increase the number of hospitals that qualify, it should provide the funding to do so. Otherwise, this provision would either exacerbate the structural deficit going into the next biennium or it would result in a cut to the hospital currently receiving this supplemental payment. Therefore, I am removing this advance commitment. I support reviewing this item in a thoughtful and comprehensive manner which includes funding options that can be best addressed as part of the next biennial budget.
16.
Bariatric Surgery Prohibition
