CMS has given North Carolina until Jan. 1, 2013, to meet new personal care standards.

RALEIGH, N.C. (AP) — North Carolina’s Medicaid program will dodge two immediate fiscal crises because federal regulators agreed Wednesday to extend the deadline to carry out new personal care service requirements and state officials outlined ways to close a projected $150 million shortfall.

The Centers for Medicare and Medicaid Services (CMS) wrote the state Medicaid office that it would have until January 2013 to enforce new regulations to ensure people living at home and residents of adult care homes receive comparable personal care services. The paid assistance helps people with disabilities, older adults and the mentally ill with activities such as bathing, dressing and cooking.

State Medicaid officials said there wasn’t time to meet a previous May 1 deadline, especially given the streamlined rules for about 46,000 recipients statewide could have meant 4,000 people living in adult care homes would be disqualified for the service.

The Division of Medical Assistance, which runs the state Medicaid program, has been working for months on a longer extension. Final word of the extension came in a letter received by division director Dr. Craigan Gray less than an hour before a government oversight committee met to discuss the deadline and the shortfall.

“I think it is a far better day than it was yesterday,” state Health and Human Services acting Secretary Al Delia told North Carolina’s Joint Legislative Commission on Governmental Operations. The delay, Delia said, will give the division time to take other required corrective actions and work with legislative leaders and personal care services providers to adjust any unforeseen problems.

Without a resolution before May 1, it was possible — although unlikely — that the entire $414 million program would have been suspended, potentially causing adult care homes already on a narrow profit margin to stop serving residents and shutter their doors. Medicaid reimburses the homes for providing that kind of palliative care. Five members of North Carolina’s congressional delegation also recently wrote U.S. Attorney General Eric Holder asking him to intervene to obtain an extension.

“I never believed that the Obama administration was going to put (tens of thousands) of frail, elderly senior citizens and impaired people out on the streets of North Carolina,” said Rep. Nelson Dollar, R-Wake, co-chairman of the House Appropriations Committee. “The extension by the federal government was certainly a logical step.”

Democratic Gov. Beverly Perdue’s administration and Republican legislative leaders at the oversight committee also said they reached a tentative agreement on how to close the $150 million shortfall and keep paying doctors and hospitals through the fiscal year ending June 30.

State budget director Andy Willis told legislators that to up to $45 million for the gap can be found in Delia’s department to pay the bills until the Legislature returns to its budget-adjusting session in May. The General Assembly then would have to act to grant the executive branch authority to spend unused money within other parts of state government, which Republicans on the commission sounded willing to do.

Funds that could be tapped include money to repair and renovate state buildings, a severance reserve for laid-off state workers and about $145 million in excess revenue collections.

While shortfalls have been larger in recent years for Medicaid, which received $12.8 billion in federal and state dollars this year to provide health coverage for mostly poor children, older adults and the disabled, the din over the gap was no greater than it had been in recent months.

Perdue’s office has called the shortfall proof she was right to veto the state budget that contained — among other things — Medicaid cuts that were impossible to meet, resulting in the spending gap. Republicans said it was Perdue’s job to carry out the budget law because lawmakers overrode her veto.

Even with the crises averted, GOP leaders criticized Delia and his lieutenants for failing to keep them in the loop about efforts to extend the deadline for personal care service changes and parameters of the retooled program.

“We’re now told that we have an extension and it was based on an agreement (but) we don’t know what the conditions of the extension are,” said Sen. Pete Brunstetter, R-Forsyth.

Delia, who became acting secretary two months ago, defended the department’s actions and tried to refute accusations that it had known for years about problems federal regulators and the U.S. Justice Department had with personal care services.

The requirements, however, also are expected to cost the state an additional $37 million annually because there will be more consumers of the service overall, according to Delia, canceling out the 4,000 adult care home residents who lose the service.

The new rules will set essentially the same eligibility standards to receive Medicaid assistance for personal care services no matter where a person lives. Residents in adult care homes historically have had to meet less stringent eligibility requirements to qualify for Medicaid help, but the federal government and patient advocates argue that violates the law and court rulings because it creates a bias toward residents in institutional care and away from independent living.

Operators of adult care homes, whose residents include people with chronic health problems, Alzheimer’s disease or mental illness, say they’re worried new rules that include living standards for patients will be impossible to meet. The operators were expecting more details later Wednesday.

“We’re glad that the extension has been granted,” said Lou Wilson with the North Carolina Association of Long Term Care Facilities, which represents adult-care homes with 16,000 beds. Still, Wilson said, the delay doesn’t resolve other pending legal actions that could result in Medicaid ineligibility for thousands of additional home residents.

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